Sources close to the firm, who asked not to be named, said if the deal goes ahead, the Dutch unit likely would dominate because it has a better long-term investment management track record than its U.K. counterpart.
At the end of 2003, the Shell U.K. plan reported five- and 10-year annualized returns of 0.8% and 5.7%, respectively. Figures for 2004 will not be available until June.
Stichting Shell Pensioenfonds, which is managed by SPB, posted five- and 10-year annualized returns 4.1% and 8%, respectively, at the end of 2003. For the periods ended 2004, it posted five- and 10-year annualized returns of 2.1% and 9.8%, respectively.
Commenting on the difference in returns, a London-based Shell spokesman, who asked not to be named, said: "Risk-adjusted performance comparisons between SPB and SPMS have not been undertaken. The (feasibility) study was to look at consolidating activities in Rijswijk. A judgment had been made that there was more to build on in terms of an investment process in Rijswijk than in London," he added.
Sources close to Shell say it appears unlikely the firm will look to outsource asset management as it has built up a well-regarded team of money managers in the Netherlands.
Almost all of the assets of the U.K. pension plan and around 75% of the Dutch pension plan are managed in-house, said Ms. Ruakere.
It is believed that the bulk of the Dutch pension fund's externally managed assets are in alternative investments such as hedge funds and private equity. No one at the company would comment.
At this stage it is not clear how other Shell group pension plans around the world with external money managers would be affected by a global asset management group, Ms. Ruakere said.
But executives at the €350 million Shell Belgian Fonds de Pension, Brussels, have put on ice plans announced last month to seek external money managers. The assets are entirely managed by SPMS, according to the 2004 edition of International Pension Funds and their Advisors.
Jan Vlietnick, pension fund manager, would not say why officials were reconsidering their decision to outsource, or who now manages the fund's assets. A decision is likely before the end of June, he added.
As of Sept. 30, assets of the $13.7 billion pension plans of the Shell Oil Co., Houston, were all managed externally by money managers including Alliance Capital LP, New York; Aronson + Johnson + Ortiz LP, Philadelphia; Dodge & Cox, San Francisco; Morgan Stanley Investment Management Inc., New York; Baillie Gifford & Co., Edinburgh; Barclays Global Investors NA, San Francisco; and Goldman Sachs Asset Management, New York.
Calls to U.S. plan executives were referred to the London office; Ms. Ruakere said officials there would not comment for the U.S. fund.
Merging the U.K. and Dutch units would likely create cost savings and "more robust operations," said Henk Bonder, spokesman for pensions at Royal Dutch/Shell, The Hague. "Otherwise we face the risk that we are too small and are not attractive enough to get the right people into the organization," he added.
The feasibility study is only looking at merging the money management and internal consulting of the two pension plans. Administration would remain separate for each plan, said Mr. Bonder.
At the end of December 2004, the Dutch pension plan was 69.3% invested in equities, 25.2% invested in fixed income and 5.5% in hedge funds. The latest report from the U.K. plan, for the year ended December 2003, shows an 80.6% allocation to equities, a 7.4% exposure to bonds, 4.8% in property, 6.1% in private equity and 1.1% in cash.