Huge pension 'blackholes' have appeared in the both the private and public sector over the past 10 years. Many private companies have gone bust or applied for help from the government-backed Pension Protection Fund (PPF), blaming the weight of final salary schemes on their books as unsustainable.
Alex Keddie, an independent pension expert, believes employers must redesign the reward packages offered to retain and motivate staff.
Keddie said: "This is a clear wake up call for employers that they need to be more creative in their approach to reward schemes and take this opportunity to re-evaluate their employee benefits package to keep staff and entice top flight executives.
"The days when we saw our parents retire to the golf course are over. Employees will have to understand that the defined contribution pension is the new trend."
Other oil and energy companies may follow Shell's lead, he added, due to the growing number of engineers and contractors who have set up as limited companies and are no longer full-time employees on the payroll.
Shell plans to introduce a defined contribution scheme for new members.
One of the UK's largest unions Unite has condemned the decision claiming it is "turning the screw" on workers.