6 Financial Planning Strategies Using Your Shell Benefits

1. Understand the various savings options available to you.

It’s helpful to understand the differences and benefits of these options, so you can take full advantage of these opportunities, regardless of your age.

As a Shell employee, you have four ways to save:

• The Shell Provident Fund is Shell’s 401(k) plan.
• The Shell Provident Fund Benefit Restoration Plan (BRP). Once you begin making more than $330,000 this year, Shell begins making contributions to a BRP instead of to your Shell Provident Fund. Ensure you have an allocation and investment strategy in place if you expect to reach this salary limit.
• Retirement income benefits through the Shell 80 Point and Alternate Pension Formula (APF) pensions. Most Shell retirees have earned funds in a qualified pension plan. These pension fund formulas calculate what you’re entitled to in retirement. Among others, choosing a lump sum or annuity, timing when you will begin your payments, and interest rates are factors to consider.
• The opportunity to purchase additional Shell shares through the Global Employee Stock Purchase Plan (GESPP) at a 15 percent discount from market prices.

2. Save more by maxing out your 401(k) contributions.

Ensure you’re maxing out pre- and after-tax contributions in the Shell Provident Fund.

• If you’re under 50, you can contribute up to $22,500 (2023) between pre-tax and Roth contributions.
• If you’re over 50, you’re allowed to contribute an additional catch-up amount of $7,500, for a total contribution option of $30,000 (2023).
• In addition to the $30,000 or $22,500 in Provident Fund contributions, you can also contribute an additional $10,500  in non-Roth after-tax savings. 
• Consider a potential backdoor Roth strategy if you’re a high-income earner and cannot contribute to a Roth directly.

Based on your tenure, Shell also makes a generous contribution — between 2.5 and 10 percent — on your behalf. You can change your contributions through Fidelity NetBenefits.

If you're not getting over $73,500 into retirement savings, you're missing out. Learn more here.

3. Choose your contributions wisely.

You have the option of making pre-tax, after-tax, or Roth contributions to your 401(k). Each of these contributions has its benefits, and the best choice for you will depend on your personal goals and financial plans. Here are a few of the key strategies we discuss with clients to make the most of their 401(k) contributions: 

• Annually convert after-tax money from your fund to a Roth IRA for tax-free contributions and growth.
• Coordinate annual backdoor Roth contributions in addition to your workplace savings. This can add up to $7,500 to your Roth IRA every year, depending on your age.
• Max out your Provident Fund contributions before earning $330,000 of income (2023).
• Purchase additional shares through the GESPP. You can make contributions to the GESPP (up to $5,954 in 2023) from January to November, either in monthly increments or all at once. 

4. Use tax planning to time your financial decisions.

It’s imperative that you time major financial decisions in accordance with a strategic tax plan. There are many Shell benefits and other retirement-related considerations which can either save or cost you substantial amounts if timed incorrectly.

For many Shell employees, these include:

• Distributions from the Shell Provident Fund 401(K) plan.
• Payouts from the Shell Provident Fund Benefit Restoration Plan (BRP).
• Retirement income through the Shell 80 Point & Alternate Pension Formula (APF) pensions.
• Acquiring and divesting strategies for RDSA acquired through the Global Employee Stock Purchase Plan (GESPP).
• Bonus or vacation payouts
• Severance packages

5. Know your pension/retirement date calculation.

The date you choose to retire can significantly affect the total pension funds available to you and your tax impact. For example, sometimes, retiring 15 days later can save you a huge amount of taxes on Shell BRP payouts. Consider the various scenarios related to your age, retirement month, and interest rate trends, so you can select the most beneficial timetable. 

6. Start saving as early as possible.

It’s important to start saving in plans like the 401(k) and GESPP as early as possible, so you can use time and market returns to your advantage. When you consider the value of compounded growth of these accounts and the potential that even just a few years can add to the bottom line, it’s never too early to begin putting together your retirement strategy and preparing for the future.