v3.25.2
Retirement benefits
12 Months Ended
Dec. 31, 2023
Employee Benefits [Abstract]  
Retirement Benefits Retirement benefits
Retirement benefits are provided in most of the countries where Shell has operational activities. Shell offers these benefits through funded and unfunded defined benefit plans and defined contribution plans. The most significant pension plans are in the Netherlands, UK and USA.
Other post-employment benefits (OPEB) comprising retirement health care and life insurance are also provided in certain countries. The most significant OPEB plan is in the USA.
23. Retirement benefits continued

Financial position
$ million
Dec 31, 2023Dec 31, 2022
Obligations(78,024)(73,481)
Plan assets79,96176,756
Asset ceilings(335)(371)
 Surplus
1,6022,904
Retirement benefits in the Consolidated Balance Sheet:
Non-current assets9,15110,200
Non-current liabilities:(7,549)(7,296)
Non-current liabilities - Pensions(4,448)(4,417)
Non-current liabilities - OPEB(3,101)(2,879)
Total1,6022,904
Retirement benefit expense
$ million
202320222021
Defined benefit plans:
Current service cost, net of plan participants' contributions7311,1001,385
Interest expense on defined pension benefit obligations3,0721,5841,223
Interest income on plan assets(3,417)(1,732)(1,160)
Interest expense on OPEB obligations166120128
Current OPEB service cost365760
Other [A]262246(343)
Total8501,3751,293
Defined contribution plans474420403
Total retirement benefit expense1,3241,7951,696
[A]Mainly related to plan amendments and curtailments on pension and OPEB plans.
Retirement benefit expenses are presented principally within production and manufacturing expenses and selling, distribution and administrative expenses in the Consolidated Statement of Income. Interest income on plan assets is calculated using the same rate as that applied to the related defined benefit obligations for each plan to determine interest expense.
Remeasurements
$ million
202320222021
Actuarial (losses)/gains on obligations:
Due to changes in financial assumptions on pensions [A](1,513)28,8401,915
Due to changes in financial assumptions on OPEB [A](264)52759
Due to experience adjustments on pensions [B](491)(2,956)136
Due to experience adjustments on OPEB [B]
2301,480
[C]
322
Due to changes in demographic assumptions on pensions [D](299)27(320)
Due to changes in demographic assumptions on OPEB [D](38)25(111)
Total(2,375)27,9432,001
Return on plan assets in excess/(shortage) of interest income
1,243(20,612)8,185
Other movements44(349)5
Total remeasurements(1,088)6,98210,191
[A]Mainly relates to changes in the discount rate and inflation assumptions.
[B]Experience adjustments arise from differences between the actuarial assumptions made in respect of the year and actual outcomes.
[C]Includes $782 million to reflect the impact of prescription drug rebates.
[D]Mainly relates to updates in mortality assumptions.
23. Retirement benefits continued
Defined benefit plan obligations

2023
$ million, except where indicated
Pension benefitsOther post-employment benefits
The NetherlandsUK USA
Rest of the world
OPEB [A]
Total
At January 124,60817,79114,79313,4102,87973,481
Current service cost18414521517936759
Interest expense9048816955921663,238
Actuarial losses
929257832285722,375
Benefit payments(1,032)(1,014)(956)(757)(88)(3,847)
Other movements252(63)189
Currency translation differences9011,014(122)361,829
At December 3126,74619,07415,57913,524
[B]
3,10178,024
Comprising:
Funded pension plans26,74618,73414,69511,29871,473
Weighted average duration16 years15 years11 years13 years14 years
Unfunded pension plans3408842,2263,450
Weighted average duration16 years8 years11 years11 years
Unfunded OPEB plans3,1013,101
Weighted average duration13 years13 years
[A]Mainly related to post-retirement medical benefits in the USA.
[B]Rest of the world includes pension plans in Germany ($3,647 million) and Canada ($3,930 million) which are the largest pension plans in this category.
2022
$ million, except where indicated
Pension benefitsOther post-employment benefits
The NetherlandsUK USA
Rest of the world
OPEB [A]
Total
At January 135,34029,91319,00318,2134,867107,336
Current service cost286259282261571,145
Interest expense2984894173801201,704
Actuarial gains
(8,806)(9,793)(3,730)(3,582)(2,032)(27,943)
Benefit payments(942)(1,124)(1,088)(771)(178)(4,103)
Other movements374130(91)(154)37296
Currency translation differences(1,942)(2,083)(937)8(4,954)
At December 3124,60817,79114,79313,410
[B]
2,87973,481
Comprising:
Funded pension plans24,60817,47413,92511,25867,265
Weighted average duration17 years15 years12 years13 years15 years
Unfunded pension plans3178682,1523,337
Weighted average duration15 years9 years12 years11 years
Unfunded OPEB plans2,8792,879
Weighted average duration14 years14 years
[A]Mainly related to post-retirement medical benefits in the USA.
[B]Rest of the world includes pension plans in Germany ($3,477 million) and Canada ($3,482 million) which are the largest pension plans in this category.
23. Retirement benefits continued
Defined benefit plan assets

2023
$ million, except where indicated
Pension benefits
The NetherlandsUKUSA
Rest of the world
Total
At January 127,98621,96314,24312,56476,756
Return on plan assets in excess of interest income833(999)6098001,243
Interest income1,0351,0946796093,417
Employer contributions [A]
41934274(23)704
Plan participants' contributions1116734
Benefit payments(1,032)(1,014)(957)(703)(3,706)
Other movements(6)(16)(13)17(18)
Currency translation differences1,0201,242(731)1,531
At December 31 30,26622,32014,83512,540
[B]
79,961
[A]Includes the netted amount of $225 million received from the captive structure in relation to pension plans reinsured in Rest of the world.
[B]Rest of the world includes pension plans in Germany ($2,730 million) and Canada ($3,504 million) which are the largest pension plans in this category.
2022
$ million, except where indicated
Pension benefits
The NetherlandsUKUSA
Rest of the world
Total
At January 137,09633,72018,05515,624104,495
Return on plan assets in excess of interest income(6,576)(8,682)(3,523)(1,831)(20,612)
Interest income3145524064601,732
Employer contributions2285440841731
Plan participants' contributions1116532
Benefit payments(942)(1,124)(1,088)(735)(3,889)
Other movements(9)150(15)(184)(58)
Currency translation differences(2,136)(2,723)(816)(5,675)
At December 3127,98621,96314,24312,564
[A]
76,756
[A]Rest of the world includes pension plans in Germany ($2,538 million) and Canada ($3,497 million) which are the largest pension plans in this category.
Type of pension assets
20232022
Quoted in active markets:
Equities12%13%
Debt securities71%70%
Real estate1%—%
Other—%1%
Unquoted
Equities12%13%
Debt securities4%2%
Real estate
7%7%
Investment funds3%4%
Debt repurchase agreements [A](11)%(14)%
Cash1%4%
[A]Debt repurchase agreements are mainly related to UK member defined pension plans to fund liability-driven investments. In addition to these contracts, derivatives including interest rate and inflation swaps are used in the principal defined benefit plan in the Netherlands for liability matching strategies.
Employer contributions to funded defined benefit pension plans are based on actuarial valuations in accordance with local regulations and are estimated to be $480 million in 2024.
23. Retirement benefits continued
Characteristics of significant defined benefit and defined contribution plans and regulatory framework
The Netherlands
The principal defined benefit pension plan in the Netherlands is a funded career-averaged pension arrangement with retired employees drawing benefits as an annuity, with a surplus of $3,520 million reported as at December 31, 2023, (2022: $3,378 million surplus). While the plan was closed to employees hired or rehired after July 1, 2013, it currently remains open for ongoing accrual for existing active members. Active members account for 23% (2022: 23%) of the total defined benefit liability in the Netherlands. From July 1, 2013 onwards, new employees in the Netherlands are entitled to membership of a defined contribution pension plan.
In line with Dutch regulations, the defined benefit pension plan has a joint Trustee Board with trustee representatives nominated by the Company, the Central Staff Council and retired members. The defined benefit pension plan also has an Accountability Council comprised of members nominated by the Company, the Central Staff Council and retired members. Furthermore, there is a Supervisory Committee, which includes external experts from the pension industry, to oversee management, compliance and operations of the fund. The defined contribution pension plan has a one-tier Trustee Board with an independent chair, trustee representatives nominated by the Company and the Central Staff Council, as well as two executive board members. The defined contribution fund also has an Accountability Council comprised of members nominated by the Company and the Central Staff Council. Both Trustee Boards are responsible for administering the plans in line with the Dutch "Pensioen Wet" (PW), including corporate governance, investment strategy for the pension plans' assets and paying member benefits, and are required to act in the best interests of the members.
As per July 1, 2023, new pension legislation ("Wet Toekomst Pensioenen") came into effect in the Netherlands which needs to be implemented latest January 2028. This legislation aims to create a more resilient and adaptable pensions system that can better accommodate demographic changes and economic fluctuations while providing adequate retirement income. The legislation requires all future pension accruals to be in a defined contribution framework and also intends that benefits accrued in pension funds are converted into a defined contribution framework. The new regulatory framework will have an impact on both the defined benefit pension plan and the defined contribution pension plan. The necessary changes to the pension plans require Central Staff Council consent and acceptance by the Trustee Boards of the pension plans. It is our expectation that consent will be obtained during 2024 and that following this, a transition plan will be offered to the Trustee Boards for acceptance. Shell will continue to monitor and take appropriate actions when and as necessary, as required by the law. There remains a degree of uncertainty regarding the potential outcome and impact on Shell's earnings, cash flows and financial position.
UK
The three largest defined benefit pension plans for employees in the UK are funded final salary pension arrangements with retired employees mainly drawing benefits as an annuity with the option to take a portion as a lump sum. The three plans are separate and independent plans and cannot be netted against each other. In total, the plans reported a surplus of $3,246 million as at December 31, 2023 (2022: surplus of $4,172 million), which is after netting of unfunded plans of $340 million (2022: $317 million) which are reported as non-current liabilities on the balance sheet. All three plans were closed to new employees hired or rehired. However, two plans currently remain open for ongoing accrual for existing active members. Active members account for 16% (2022: 17%) of the total defined benefit liability in the UK. From March 1, 2013, onwards new employees in the UK are entitled to membership of a defined contribution pension plan.
In line with UK regulations, the principal defined benefit pension plan is governed by a corporate trustee whose board is comprised of four trustee directors nominated by the Company, including the chair and four member-nominated trustee directors. The defined contribution pension plan is governed by a corporate trustee whose board is comprised of three company-nominated directors, including the chair and two member-nominated trustee directors. The trustees are responsible for administering the plans in line with the Trust Deed and Regulations, including setting the investment strategy for the pension plans' assets and paying member benefits, and are required to act in the best interests of the members of the pension plans.
USA
The principal defined benefit pension plan in the USA is a funded final average pay pension plan with a surplus of $140 million reported as at December 31, 2023 (2022: $318 million surplus). After retirement, all retirees can choose to draw their benefits as an annuity, whereas others also have the choice to take their benefit in a lump sum. There is also an unfunded defined benefit pension plan with a deficit of $884 million (2022: $868 million deficit). The benefits under this plan are taken primarily in a lump sum. In addition, the Company provides a defined contribution benefit plan. The funded defined benefit, unfunded defined benefit, and Shell's defined contribution pension plans are subject to the provisions of the Employee Retirement Income Security Act (ERISA). Active members account for 23% (2022: 24%) of the total defined benefit liability in the USA.
Both the funded defined benefit pension plan and the defined contribution pension plan are governed by trustees who are appointed by the Plan Sponsor and are named fiduciaries with respect to the plans. The trustees are generally responsible for investment-related matters, appointing the Plan Administrator, maintaining general oversight and deciding appeals of participants.
In line with Shell group's strategic objectives and risk management, on January 30, 2024, the principal defined benefit pension plan in the USA, Shell Pension Plan, entered into a contract with "The Prudential Insurance Company of America" to settle $5,052 million of pension liabilities. The settlement price consisted of $4,920 million of pension assets. As a result of this transaction, all legal and constructive obligations for a tranche of benefits provided by the Shell Pension Plan have been eliminated. A gain on settlement of $101 million (after tax) will be recognised in Shell's Consolidated Statement of Income in 2024.
23. Retirement benefits continued
USA OPEB
The Company also sponsors "other post-retirement employee benefits" (OPEB), mainly in the USA. The OPEB plans in the USA provide medical, dental and vision benefits, as well as life insurance benefits to eligible retired employees. The plans are unfunded, and the Company and retirees share the costs with a deficit of $2,267 million reported as at December 31, 2023 (2022: $2,135 million deficit). The plan that provides post-retirement medical benefits in the USA is closed to employees hired or rehired on or after January 1, 2017. Certain life insurance benefits are paid by the Company.
Significant funding requirements:
Additional contributions to the Dutch defined benefit pension plan would be required if the 12-month rolling average local funding percentage falls below 105% for six months or more. At the most recent (2023) funding valuation, the local funding percentage was above this level.
There are no set minimum statutory funding requirements for the UK plans. A professional qualified independent actuary, appointed by the trustee board, undertakes a local funding valuation typically every three years. The most recent completed funding valuation for the principal defined benefit plan was undertaken as at December 31, 2020, and revealed a funding ratio of 103% and therefore no sponsor contributions (except for salary sacrifice contributions) were payable under the schedule of contributions.
Under the Pension Protection Act, US pension plans are subject to minimum required contribution levels based on the funding position.
No contributions are required based on the most recent funding valuation.
Associated risks to which retirement benefits are exposed
There are inherent risks associated with defined benefit pension and OPEB plans. These risks are related to various assumptions made on valuation of the liabilities and the cash funding requirement of the underlying plans. Volatility in capital markets or government policies, and the resulting consequences for investment performance, interest and inflation rates, as well as changes in assumptions for mortality, retirement age or pensionable remuneration at retirement, could result in significant changes to the funding level of future liabilities. In case of a shortfall, there could be a requirement to make substantial cash contributions (depending on the applicable local regulations).
These inherent risks are managed by a pension forum, chaired by the Chief Financial Officer, which oversees Shell's pension strategy, policy and operations. The forum is supported by a risk committee in reviewing the results of the assurance process with respect to pension risk.
Investment strategies
Long-term investment strategies of plans are generally determined by the relevant pension plan trustees using a structured asset/liability modelling approach to define the asset mix that best meets the objectives of optimising returns within agreed risk levels, while maintaining adequate funding levels.
Principal and actuarial assumptions
The principal assumptions applied in determining the present value of defined benefit obligations and their bases were as follows:
rates of increase in pensionable remuneration, pensions in payment and health-care costs: historical experience and management's
long-term expectation;
discount rates: prevailing long-term AA corporate bond yields, chosen to match the currency and duration of the relevant obligation; and
mortality rates: published standard mortality tables for the individual countries concerned adjusted for Shell experience where statistically significant.
The weighted averages for those assumptions and related sensitivity information as at December 31, 2023 are presented below. Sensitivity information indicates by how much the defined benefit obligations would increase or decrease if a given assumption were to increase or decrease with no change in other assumptions. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation from one another. The weighted averages are at nominal terms and based on market expectations at December 31, 2023.
23. Retirement benefits continued

$ million, except where indicated
Effect of using alternative assumptions
Assumptions used
at nominal rates
Increase/(decrease) in defined benefit obligations
Dec 31, 2023Dec 31, 2022Range
of assumptions
Dec 31, 2023Dec 31, 2022
Rate of increase in pensionable remuneration [A]3.9%4.0%
-1% to +1%
(828)915(833)921
of which the Netherlands3.3%3.3%
of which UK4.1%4.1%
of which USA4.6%4.6%
Rate of increase in pensions in payment1.9%2.1%
-1% to +1%
(5,599)6,713(5,542)6,657
of which the Netherlands2.4%2.6%
of which UK2.8%3.0%
of which USA—%—%
Discount rate for pension plans4.1%4.5%
-1% to +1%
10,560(8,472)10,522(8,328)
of which the Netherlands3.3%3.7%
of which UK4.6%4.8%
of which USA4.9%5.0%
Inflation rate for defined benefit obligation [B]2.0%2.2%
-1% to +1%
(6,034)7,300(6,002)7,271
of which the Netherlands2.4%2.6%
of which UK2.9%3.1%
Expected age at death for persons aged 60:
Men88 years87 years
-1 year to +1 year
(1,166)1,143(1,130)1,103
of which the Netherlands88 years88 years
of which UK87 years87 years
of which USA87 years85 years
Women89 years89 years
-1 year to +1 year
(1,006)1,041(993)1,077
of which the Netherlands90 years89 years
of which UK89 years90 years
of which USA89 years86 years
Rate of increase in health-care costs [C]7.0%6.4%
-1% to +1%
(338)422(298)372
Discount rate for health-care plans [C]5.6%5.7%
-1% to +1%
457(358)401(309)
[A]Based on active members.
[B]Excluding US funds in the weighted average inflation rate, because of the insignificant impact on the defined benefit obligation.
[C]Mainly related to post-retirement health-care benefits in the USA.