2. It is important that you take an active approach as far as your pension is concerned.

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1 January 1, 2018 How your SNPS pension works Why should I make the effort to read this document? Your SNPS pension is intended as retirement income. That income should be adequate for you, but what that means is different for everyone. Therefore it is in your own interest that you understand the basics of how your pension scheme works. For example, at SNPS, you can make particular choices to make your pension fit your personal circumstances and preferences better. These options are available to you once you have activated your personal profile onwww.shellpensioen.nl/mijnpensioen. If you don't visit the website it will be a missed opportunity! Contents: 1. Introduction 2. It is important that you take an active approach as far as your pension is concerned. 3. Yield and risk are inextricably linked. 4. Logging onto the website gives you access to pension information that is important to you. 5. Don't put off dealing with your pension: it's a matter for today. 6. Investing your pension capital is at your own expense and risk. 1. Introduction Founded on July 1, 2013 The SNPS Pension Fund was set up in 2013 and administers two pension schemes: a gross scheme and a net scheme. The gross pension scheme applies to all employees who entered company service on or after July 1, 2013 or existing employees whose base country is the Netherlands from that date. As a participant in SNPS you accrue pension capital on your gross salary up to the established tax threshold. The net pension scheme concerns all employees whose base country is the Netherlands and whose salary exceeds the tax threshold. Therefore this also concerns employees who entered company service before July 1, The net scheme is a comprehensive pension scheme which enables an adequate pension to be accrued on salary that exceeds the tax threshold. Participation in the net pension scheme is not compulsory. Page 1

2 Both pension schemes administered by SNPS are in line with Shell's business values: credible, affordable and competitive. Credible: the pension schemes are administered by a pension fund whose key values are collectivity and solidarity. Due to critical mass the cost per participant can be kept low because it creates purchasing power. Solidarity is evident from the sharing of underwriting risks. Affordable: participants can make full use of the options available under tax legislation. Shell thereby ensures that the maximum permitted contributions are invested. During the period that your pension capital accrues the contributions are invested entirely into your pension, with no deduction of profit margins. Regardless of their age, participants pay 2% of their salary as pension contribution per month in both schemes. The employer tops this up to the tax threshold each month. Competitive: pension is the most important secondary benefit and is therefore an important aspect of the EVP (employee value proposition) that Shell HR offers to reward new and existing employees. As an employer, Shell and the Central Staff Council (in which employees are represented) are jointly responsible for establishing the contents of the pension scheme. The Pension Fund is then responsible for the administration of this pension scheme. The gross and net pension schemes administered by SNPS are regular defined contribution schemes (under the Pensions Act: pure defined contribution agreements). This means that contributions or net contributions (these contributions are paid monthly by the employer and employee together) are made available to the fund, which then invests them individually at the participant's expense and risk. SNPS helps participants choose the right investment profile: investment packages are preselected and arranged as standard portfolios. Participants who don't make an active choice are automatically assigned the default: a mix of widely spread investments, which focus on risk and yield equally in the long term. This limited freedom of choice ensures that costs are limited considerably in comparison to a more comprehensive selection. Furthermore, this also protects participants from taking irresponsible financial risks: after all, not all participants are experienced in making personal financial plans where pensions are concerned. Additionally, both schemes cover a number of risks. This guarantees any dependants (partner and children) an income in the event of your death. In addition, in the event of incapacity for work, you receive benefit until your retirement date and you continue to accrue pension at the same time. On your retirement date you use the accrued capital to purchase a pension benefit from an external insurer. Page 2

3 2. It is important that you take an active approach as far as your pension in concerned The Board of SNPS shapes the way pension schemes of Shell in the Netherlands are administered. The SNPS pension schemes are defined contribution schemes with fixed amounts of contributions to be paid in. The pension result is not known in advance because it depends on three factors: 1. contributions paid in; 2. the return on investment they have achieved; 3. interest rates at the time that a lifelong pension benefit is purchased from an external pension insurance company. When SNPS was established Shell imposed a number of administration-related conditions. Therefore, the SNPS pension offers participants the choice of three Life cycles profiles of which the so-called neutral Life cycle profile is used by default. The investment policy is administered in accordance with the "prudent person" principle. That means: investing in the interest of the participants, for example by spreading investments well and investing predominantly in regulated markets. The prudent person principle is laid down in law and is assessed annually by the independent certifying actuary. SNPS is an independent legal entity (foundation) and is therefore legally independent of the Shell Group. This separate legal form protects the accrued capital against liability for debts on the part of the employer. SNPS is managed by a one-tier board which consists of supervisory Board Members (an equal number of employee representatives and employer representatives and an independent Chair) and executive Board Members in service of Shell Pensioenbureau Nederland. The Board of SNPS has elected to have the selection and monitoring of investment funds carried out by Achmea Investment Management. Pension administration has been outsourced to Syntrus Achmea. However, the Board of SNPS retains ultimate responsibility for the correct and timely administration of the outsourced activities. In 2017, collectivity was introduced through the Collective Variable Pension (CVP) as part of the SNPS pension schemes. In the CVP it is possible for pension capital to (continue to) be invested collectively after retirement: this is known as "continued investment". Therefore the pension capital will continue to yield a return, even after pension commencement. In addition, it is possible to gradually purchase CVP entitlements in SNPS from the pension capital accrued at that time, ten years before the official retirement date. This means participants are not completely depending on the interest rate on the retirement date. Shell assumes that participants will take part in the CVP. However, participation is not compulsory. You can find comprehensive information about the CVP on and in the Collective Variable Pension brochure on under downloads Page 3

4 The Board's points of departure for setting up the administration of the scheme: "Lifetime": what matters is a future income, not just asset accrual. An adequate "pension ambition": the Board aims for participants to obtain a pension income that is expected to be adequate, given the defined contribution. The Board limits fluctuations in that expected income in the final years before retirement. The website provides participants with an indication of this expected income and they can use it to calculate the impact of changes in their personal circumstances (Life events).consequently they can make informed decisions about their investment choices or decide that they also want to save outside the fund. The Board is active and business-like and stimulates participants to be involved. Participants bear the full risk and therefore need to be able to make informed decisions. Freedom of choice and manageability must be kept in balance: a good default solution, recommended by the fund, supplemented by a limited number of clear distinctive investment options The strategic investment policy is not static: the world (including the world of finance) is dynamic, and so the policy is reviewed on an annual basis to see whether it needs to be reconsidered. 3. Yield and risk are inextricably linked The Board of SNPS has certain Investment Beliefs on the basis of which the broad outline of the investment policy of SNPS is determined. You can read the full text in "Statement of investment principles" in the downloads section on These Investment Beliefs are summarised below: Return is the reward for taking risks; the investment policy poses inevitable risks, but they are taken with care. Diversification improves the ratio between risk and yield. The investments are spread across several investment categories Active management may add value. Costs are a certainty, yield is not. Involved shareholdership stimulates good governance and corporate responsibility. At SNPS your investments are made with a view to the long term. Before retirement the value of investments will always continue to fluctuate with the economic climate and the financial markets. Large peaks and deep troughs are mostly smoothed out over time and therefore have hardly any noticeable impact on the level of your pension benefit. This is borne out because you contribute an amount every month and therefore Page 4

5 encounter higher and lower rates (a sort of averaging that mitigates downside risk). Because there is no guarantee and no promise is made about the level pension capital will reach, there is, in principle, no funding shortfall or underfunding at SNPS. Pension capital is accrued individually: the individual's own protected pot, which cannot ever be used for anything other than his pension. This also is the case if you make a (preliminary) decision to take part in the CVP. 4. Logging onto the website gives you access to pension information that is important to you SNPS has gone digital: among other things, this means that it endeavours to communicate electronically with participants as much as possible. The personal portal is at the heart of this. After entering employment or becoming a pension scheme participant you can log onto the portal using DigiD. What do you see when you log in? In order to familiarise you with the pension scheme we have listed the most important components for you. Once you have accessed the website through you will access your own personal dashboard. All basic information is immediately visible and you can click on certain sections for more detailed information. The dashboard provides basic information to help you consider three factors that play a role in your financial planning: 1. How much pension can I expect to receive? 2. Will that be sufficient for my situation at that time? and 3. What choices can I make now to ensure that the expected pension income matches my pension wishes? The portal has a layered structure. Firstly, you are asked to determine your risk profile. This immediately becomes the base for the Life cycle profile that is used for your investments: Neutral, Defensive or Offensive (Aggressive). Your preference for a risk profile can change, for example as a result of changes in your current circumstances. You can always alter your risk profile in the portal. By default SNPS invests according to the Neutral Life Cycle profile. You must decide for yourself whether to continue investing in line with that profile or opt for Defensive or Aggressive. Page 5

6 How much will I receive? An indication of your pension situation is shown on the first page. Here you will see a forecast of your expected pension income at a glance (set by default to the retirement age of 68), including AOW, and all amounts are shown as monthly net amounts. You can manually add any pension accrued elsewhere (for example at previous employers). To complete your income overview you can also add your own capital such as savings, annuities, any expected inheritance etc. here. The amount shown in expenses is filled in by default and comes from NIBUD. It is based on average expenses of Dutch people on a comparable income. You can also adjust the expenses overview manually. Is that sufficient? To help you, in addition to your expected pension income you also see your pension income in the scenario of an economic downturn and an expected monthly pension shortfall/pension surplus. Because you can make adjustments yourself, you can make your pension scheme meet your current wishes or your expected future circumstances. You can also see the impact of various major changes (life events) in your personal situation (including periods of leave, divorce, dismissal or working abroad temporarily) on your expected pension situation. The portal provides estimates of future expenditure on fixed costs, transport, living, holidays etc. By making your own adjustments you can make these fit your personal situation optimally. My actions and archive In the "My actions" section you can adjust your risk profile. In this section, you can verify whether your details are complete and correct. Or check whether your partner is enrolled with the fund for a partner s pension, and make any adjustments. You can also check your contact details and amend these if you wish. Important personal correspondence, the annual UPO for example, can be found in "My archive" on the portal. Ensure that your personal profile has been activated on the website: it's in your interest! Page 6

7 5. Don't put off dealing with your pension: it's a matter for today Share prices, interest rates and exchange rates fluctuate constantly. Investments are an opportunity to increase yields and they come with certain risks. But they are made in a well-considered manner and only after careful research. Therefore it is important to spread the investments over the various investment categories. Furthermore, investing for pensions always means long-term investment. This is taken into account in the composition of the Life Cycle profiles. The Board of SNPS has translated its Investment Beliefs into the composition of the three Life cycle profiles, each with different yield expectations and expected risks. You determine according to which Life cycle profile you wish your contributions to be invested: Neutral, Defensive and Aggressive. The Neutral profile is the mix of risk and return that SNPS has set as standard (the default option). The Defensive profile aims to give more protection against falling share prices, but the expected long-term yield is lower than that of the Neutral profile. The opposite applies to the Aggressive profile: whereby the expected yield is higher than the Neutral profile, with less protection against falling share prices. All three Life cycle profiles are in line with the "prudent person" principle. How do you invest? Regardless of the Life cycle profile you choose for your investments, your pension capital is always invested in line with the Return, Mix & Match principle. Depending on your age, investments are made within the several investment portfolios in varying proportions: the further from retirement you are, the more risk you can take in investing for a correspondingly higher-than-average yield expectation. The level of risk is actively reduced as you approach retirement age and investment focus turns to increased protection from falling share prices and interest-rate risk, resulting in below average yield expectations. The four investment portfolios each have their own characteristics: 1) Portfolio Return (real estate equities and high yield bonds) 2) Portfolio Interest (Corporate bonds) 3) Portfolio Match 1 (Government bonds and medium-term duration) 4) Portfolio Match 2 (Government bonds and medium-term duration) As explained, your age is taken into account in the distribution of investments. The composition of your investment portfolio is constant until you are 17 years from your official retirement age, after which the distribution of investments is adjusted. Page 7

8 Investment in line with the Return, Mix & Match principles is divided into three phases: 1. Return phase: the focus here is on yield. Retirement age is far away during this phase which means that fluctuations in value can still be smoothed out effectively. The goal is to grow your pension pot as much as possible in the long term. Yield is mostly accrued by means of shares. Depending on your investment profile, this is a Return investment portfolio or a combination of Return and Interest. 2. Mix phase: this phase beings 17 years before your retirement age, and at this stage the focus starts to turn from yield to portfolio risk management. Depending on your investment profile, investment is now based on a combination of the Return and Interest investment portfolios. 3. Match phase: this concerns the last 10 years before retirement age. a) In case of participation in the CVP, the individually accrued pension capital will be gradually converted into entitlements in the CVP. The CVP entitlements are invested in accordance with the fixed CVP investment mix, which specifically set up for the collective scheme including the phase during which participants are (almost) retired b) In case of non-participation in the CVP, the individual pension capital remains invested in full according to the chosen risk profile. This includes further reduction of risks in this phase with a view to the approaching date of purchase. This concerns risks associated with fluctuations in share prices and interest. The proportion of the Return, Interest, Match 1 and Match 2 portfolios depends on the risk profile and age of the participants. More information about the investments? Factsheets with more comprehensive information about the distribution of investments in the investment portfolios are available to download at For a general view of the investment policy please see further information available in the "Statement of investment principles" in the downloads section at Contribution payments Contributions and investment results combine to form the capital with which you eventually purchase a pension from a pension insurance company of your choice. The maximum contributions permitted under the tax threshold are invested for your SNPS pension, this is age-dependent. You pay 2% of your pension basis, regardless of your age, your employer pays the rest. Premiums for risk insurances during employment (incapacity for work, death) are paid in full by Shell. You can see the contribution tables at Page 8

9 Who pays what? SNPS is non-profit making. There are costs involved in investing. SNPS endeavours to keep investment costs as low as possible because they have a direct impact on yield. Therefore a number of measures have been taken. For example, investments are in held in investment funds rather than in individual equities. This provides a good distribution and at the same time this way of investing collectively is relatively cheaper. Therefore, only institutional investment funds are selected because they carry a relatively low administration fee due to their size. These pension administration costs and investment management costs are borne by SNPS. The only costs borne by participants are transaction costs and management fees. Switching between investment funds and monthly purchases are kept to a minimum to keep these as low as possible. This keeps the total costs for participants very low. For more information about costs please refer to the (concise) annual report, which can be found on Transparency about costs The Pension Fund Code of Governance, which sets standards for pension fund governance that were established by the pension sector, also contains a passage about administration costs. For instance, the Board must report on the costs of administration of the pension scheme in the Annual Report. The Federation of Dutch Pension Funds protects the interests of participants and retirees in collective pension funds to maintain a quality and reliable pension system. In accordance with the recommendations of the Pension Federation of Dutch Pension Funds, the Board of SNPS provides insight into the administration costs, where data is available. The administration costs consist of pension management, asset management and transaction costs. Pension management costs Pension management costs include pension administration costs, communication costs, management costs, administrative office costs and costs of external advisors and certifiers. These costs are borne by the the Pension Fund (and therefore financed by the employer). Asset Management fees The asset management costs, which shall be borne by the Pension Fund, consist primarily of the fee that is paid with respect to the Outsourcing Agreement and the fixed fee for the safekeeping of securities. Given investment management costs charged for comparable pension annuity products on the market, the Board is convinced that costs at SNPS are acceptable. Page 9

10 Transaction costs and Management Fees Costs charged for the Lifecycle portfolios can be split into transaction costs (custody fees and settlement costs) on the one hand, and asset management fees on the other hand. There are additional costs that are charged by the managers of the underlying investment funds. 6. Investing your pension capital is at your own expense and risk Contributions are invested individually at SNPS at the participants' expense and risk. By means of the available investment options (Life Cycle profiles) the Board has set limits to the investment choices to be made by participants and former participants, and their associated risks. The most significant risk to participants is the investment risk (particularly marketable securities and interest-rate risk). This risk is inherent to investing. This means that yield is the reward for taking risks. Risks are therefore inevitable in the Investment Policy, but must be taken with care. This is one of the Board's Investment Beliefs. This is translated into the implementation of the investment portfolios as follows: Far reaching adjustments to the investment portfolios are only made on the basis of an ALM. A survey is conducted among the Board to establish its acceptance of risk prior to the study. An important parameter here is the expected pension result. The Board aims for the highest expected pension result possible at an acceptable level of risk. Furthermore, the investment risk is adjusted over time, since The broader the horizon, the greater the recovery capacity, and Participants must be protected against significant loss of expected income relatively close to the target retirement age of 68. Furthermore, the investment portfolios are diversified sufficiently i.e. spread across several investment categories, countries, sectors and companies for example. The Board periodically assesses whether these profiles are still in line with the applicable principles and a match for the choices that participants and former participants make. The Collective Variable Pension reduces the risk that on the retirement date a lifelong pension benefit will have to be purchased at a relatively inopportune juncture, for example if the value of the accrued pension capital has decreased due to market developments or because the purchase price of pension benefits is high due to relatively low interest rates. Page 10

11 Furthermore, continued investment can help to mitigate affection of the actual value of the accrued pension capital by inflation. The Life cycle portfolios largely invest in underlying investment institutions that operate in Euros. Other investments are made in a number of underlying investment institutions which are in denominated in other currencies. The currency risk associated with the latter category is not always hedged. Transparent about risks Transparency is a characteristic of the SNPS pension scheme: at the portal you can see how high your pension is expected to be and how high it will be in an economic downturn. The way in which your capital is invested is focused on your anticipated future pension income. Furthermore, you can also see how much pension capital you have already accrued and how that capital is expected to develop over time. Your pension capital grows based on monthly contributions and the investment results produced by the chosen Life Cycle profile. Risks are taken into account in the composition of the Life Cycle profiles. You bare these risks until you retire. The risk is then borne by the pension administrator from which you purchase your pension. In the CVP the pension capital is invested collectively and participants share various risks with each other. A detailed overview of risks is included in the SNPS Annual Report, which can be found under downloads on Tailor-made pensions You are participating in a flexible pension scheme. That means that you can fine-tune various points of your pension to your personal requirements. Firstly, you can choose the way in which your capital is invested and at what level of risk by selecting a profile (Neutral, Defensive or Aggressive). Furthermore, as you approach retirement age you can make choices to make your pension scheme fit your income requirements. The target retirement age is currently 68. You can retire between the ages of 55 and 68, but with the permission of your manager you can also elect to defer your pension for a maximum of five years after your AOW age. You can find more information in the brochure about pension choices on the downloads page of You can calculate the financial impact of the various options at Changes in your situation Several events in your life, both private and work, will impact your pension. For example, working more or less, shift work, changes in salary, also getting married, separating, taking leave (Life-cycle scheme, pregnancy) or long-term sickness. In the case of all these changes it is important to consider the impact on Page 11

12 your SNPS pension. Some changes are communicated automatically to SNPS by your local municipality; others must be communicated by yourself. For example, if you are cohabiting you must enrol your partner for a partner s pension yourself, and vice versa if you separate. In all cases, failure to communicate changes in good time can result in your dependants not receiving some or the entire pension they are entitled to! On your personal portal ( you can see how these changes affect the accrual of pension capital for you and your dependants. "How your SNPS pension works" is a brief background summary of the pension scheme and the structure of the investments of Shell Nederland Pensioenfonds Stichting (SNPS). This publication has not been verified by an external auditor and no rights can be derived therefrom. The pension regulations that apply to you are leading, both for the gross and net schemes. You can find the pension regulations at The companies in which Royal Dutch Shell plc has direct or indirect participating interests are separate legal entities with their own identity. In this brochure, "Shell" is used as a collective term to refer to the various Shell employers and joint ventures affiliated with the Shell Pension Fund. Page 12