Shell’s APF Pension

Watch the 80-Point Pension Video here.

Full Transcript:

Are you on Shell’s APF pension and want to know how your benefit is calculated? This video is for you.

Many people at Shell are on the accumulated percentage formula pension, also known as Shell’s APF pension. If you were hired on January 1st, 2013, or later, this is your only pension option. Now let’s talk about the APF pension so you can see how your benefit is calculated.

It’s going to be easier if we walk through a hypothetical case study, so we’re going to walk through a case study for Jane. Now we talked about Jane in the last video talking about the 80-point pension, and we’re going to use the same statistics, except for this time, she spent her entire career on the APF pension. So, Jane hired on at age 25, and then she has 30 years of service before retirement, so therefore she retired at age 55. When Jane retired her average final compensation, meaning the average three years of her base and her bonus, was $333,000, and of course, we’re assuming that this occurs in 10 years because Jane’s 45 today. So, now that we know that her AFC is $333,000, you need to calculate her accumulated annual percentage. Now, the easiest way to do this is to look at the table in the Shell wealth SPD, or the one that’s also on the screen right now. So, as you’ll see, it starts at 3% per year and then goes up from there all the way to 16% per year. Now, when we sum this up for Jane, we’ll see that for Jane’s 30 years, starting at age 25, she has accumulated 259%. Now, we’ll multiply that by her average final compensation, which is $333,000, and we get a pension value of $862,000.

Now, different than the 80-point plan, this is the lump sum amount. This is not what she gets per year. If Jane chooses to take this in an annuity that value will be much smaller, it will be calculated based on interest rates at that time and what age she selects this for. Now if we look at apples to apples, the 80-point annuity will be much greater than the APF annuity. Now, with Jane, since she retires at age 55, being 25 when she started having 30 years of service, taking this as a lump sum in cash will be a high taxable impact. Therefore, Jane may want to consider rolling that into her Shell 401(k) or into an IRA at retirement. If you have questions about your APF pension and want help calculating the difference between the 80-point plant and the APF plan, please reach out to me.