The trustee of the Shell Overseas Contributory Pension Fund, Bermuda, intends to complete a $200 million buy-in with Solen Life Insurance, a Royal Dutch Shell-owned insurance company, said the fund's annual newsletter to participants.
The £3.9 billion ($4.8 billion) pension fund's trustee consulted with its legal and actuarial advisers, said the newsletter dated September.
“To help reduce investment risk, pension schemes are increasingly looking to insure some or all of their pension scheme obligations with an insurance company,” said the newsletter. “There is no impact or change to benefit design or to the structure of your benefits as a result of the 'buy-in' project,” added the newsletter.
A spokesman for Shell declined to comment.
The value of the fund's assets increased 1.3% over the year ended Dec. 31. Its funded level improved to 103% from 102% at the end of 2014. For the first six months of 2016, the SOCPF portfolio returned about 5%, vs. 2.9% for the year ended Dec. 31.
However, the newsletter added that the fund's actuary estimates that the funding position was about 92% at June 30. “This reflects the fall in long-term interest rates following the EU referendum result,” it said.