Wednesday, December 23, 2020

Passblue: The UN Pension Fund’s Latest Flareups and Hazards to Whistleblowers, 23 December 2020


At the $79.4 billion United Nations pension fund, continuing tensions came to a head this month when the UN participant representatives to the pension board — elected representatives of 85,000 active UN staff members — wrote on Dec. 2 to the General Assembly body that oversees the fund about their concerns on a range of issues regarding the fund’s administration and governance.

The fund has a long history of whistleblowers calling attention to dubious actions and malfeasance by the fund’s leadership that have been later substantiated by internal audits. In this latest flareup, tensions are bound to intensify unless Secretary-General António Guterres steps in to end a pattern of unsavory actions by the board against the UN participant representatives.


Saturday, December 12, 2020

UN Pension Fund: UN Participants Representatives' letter to the Secretary-General concerning the Board Chair's attempt to muzzle them, 12 December 2020

The UN Participants Representatives wrote to the Secretary-General today about the UN Pension Board Chair's attempt to discredit, intimidate, and muzzle them. In their open letter, they note that "The UNJSPF is a public pension fund. A veil of silence is neither a good idea nor is it a good management technique. Our Board meetings should be open to the current and future beneficiaries of the fund as they are in similar pension funds referred to by the independent entity “Mosaic” in its report, Annex XIV to the Board document."


Friday, December 11, 2020

UN Pension Board Chair tries to muzzle the UN Participants Representatives, 11 December 2020

In a letter dated 8 December 2020 to the Chair of the General Assembly’s Fifth Committee, the Chair of the UN Pension Board, Martha Helena Lopez, also Assistant Secretary-General for Human Resources, doubled down on  the Board’s longstanding attempts to suppress the voices of the UN Participants Representatives to the Board and block transparency.  (See letter below).

Describing them as a “small sub-group” of Board members, Lopez accuses them of breaching confidentiality obligations, and of violating UN staff rules and regulations about seeking to influence Member States.


In fact, the UN Participants Representatives are the duly elected representatives of 85,000 active UN staff –i.e. two-thirds of participants in the Fund for whom $50 billion is entrusted. 


Their crime? To have carried out their duty as Board members and briefed the General Assembly, which has ultimate oversight of the fund, on their concerns. These concerns, as they have indicated, include mis-spending of the Fund's budget, attempts to remove the Fund from the jurisdiction of the UN Appeals Tribunal (UNAT), attempts to disenfranchise hundreds of Fund staff/participants by excluding them from Board membership, reporting of fraud, and their views on Board governance reform. Hardly high treason, as Lopez seems to imply.


As members of a subsidiary organ of the GA, the 5th Committee is entitled to understand their concerns and to understand any problems with how the fund operates. It’s well known that other groups on the Board do the same. 


The UN Participants’ Representatives would be remiss in their legal fiduciary duty if they did not make their concerns clear. 


Further, Lopez knows as well as anyone else that commenting on the board report, a public document, does not breach confidentiality. 


Lopez sends her message to the Fifth Committee Chair on behalf of the Board. Were the UN Participants Representatives, who are members of the Board with voting rights, given the courtesy of seeing her note before it was sent to the Fifth Committee? Or is this really a statement solely on her own behalf? It wouldn't be the first time that Lopez appears to confuse her roles of head of UNHR and Pension Board member.

This latest attempt to discredit, and bully and intimidate the UN Participant Representatives into silence is part of a pattern of such behavior by the Board leadership.  

There is much in the UN Participants Representatives' note to the Fifth Committee (see Note below) that the Board may indeed wish to suppress, such as paragraph 13 that cites their concern "about the lack of disclosure pertaining to fraud or presumptive fraud against the UNJSPF" and their recommendation that  "the General Assembly reiterate its requirement for accountability of the Board in line with oversight role."  

The UN Pension Board has serious governance challenges and significant variances with the best practices of other pension funds, as detailed in internal UN audit reports of the past several years and in a recent governance study mandated by the General Assembly (see  governance audit A/73/341 and the Mosaic study annexed to A/75/9).

The UN Participants Representatives have over the years demonstrated immense courage and perseverance in continuing to advocate for the interests of their constituencies in the face of such intimidation, of which Lopez’s letter is merely the latest salvo.  


See links to:

Click 'read more' (below)  to read the Board Chair's letter to the Fifth Committee Chair, and the UN Participants Representatives Note to the Fifth Committee.    

Sunday, November 29, 2020

The UN Pension Fund wants to invest in derivatives, 12 years after they brought down major financial institutions, November 30, 2020

 UN staff unions




In 2008 poorly judged derivative trades brought down Lehman Brothers, Merrill Lynch, AIG, Northern Rock and many others. The world economy took a huge hit and millions lost their savings.


Now the UN Pension Fund, whose investment policy comes under the responsibility of Secretary-General Antonio Guterres, has asked permission from the General Assembly to start trading derivatives.


It is not clear that Pension Fund staff have the necessary expertise nor that such trading meets the four criteria of safety, profitability, convertibility and liquidity used by the Fund, particularly in today's unpredictable environment.

UN staff expect the Pension Fund to act in a conservative manner. For many the Fund is their only source of retirement income.


The request was reported by the Advisory Committee on Administrative and Budgetary Questions ( paragraph 11). With typical understatement, it expressed caution and trusted "that detailed information on the proposed use of derivative instruments and the authority required to engage in margin trading will be provided to the General Assembly at the time of its consideration of the present report."


The UN participant representatives, who represent UN staff on the Pension Board have been made aware of the request and will be following up to ensure staff money remains safe.



Wednesday, November 25, 2020

Shifting the Mindset of the UN Pension Board – A Bridge Too Far? by Lowell Flanders. November 25, 2020

                                                            by Lowell Flanders*


The Mosaic Report – Comprehensive Review of UNJSPF Governance



The Mosaic review of the governance structures of the UN Joint Staff Pension Fund was commissioned pursuant to General Assembly resolution 74/263 (2019). Mosaic Governance Advisors, LLC (“Mosaic”) an independent external entity with expertise in pension fund governance matters, conducted a comprehensive and objective analysis of the governance of the United Nations Joint Pension Staff Fund (“UNJSPF” or the "Pension Fund") from June 19, 2020 to July 13,2020.


Review objectives


The objective of the analysis was to compare UNJSPF to best practices applied in international public pension organizations, and make recommendations regarding:


–Governance Structure of the United Nations Joint Pension Staff Board (“UNJSPB” or “Pension Board”) and its Committees.

–Pension Board role, responsibilities, and practices that are relevant for the proper governance of the Fund.

–A strategy to transition UNJSPF governance to align with best practices.


Not measuring up


The most shocking conclusion of the report is the significant “variance between UNJSPF governance practices and pension fund governance best practices in all the areas we reviewed.” To put it in plain language: our Pension Board just doesn’t measure up to what is considered best practice among other Pension Boards. 


Unwieldy Board sessions


Another surprising revelation has to do with the size of the Board with “attendance at UNJSPF Board sessions in excess of 100 people.” This included: (a) Board members with voting rights (33); (b) Alternates (29); (c) Representatives of the member organization's Staff Pension Committees (25); (d) Non-voting representatives (4) and alternates (2) of the Federation of Associations of Former International Civil Servants ("FAFICS").  This makes Board sessions not only unwieldy but also distorting because “the Board rarely votes and instead relies on a consensus-based approach which takes into consideration the views of non-voting Board members, alternates, and others in attendance.” It’s a kind of helter-skelter approach to decision-making because whoever happens to be there gets included in the consensus. In most best practice jurisdictions, only those Board members with voting rights get to make the decisions. 


Mosaic concluded: “The Board should: (a) seek changes to the Regulation to create a smaller, more nimble Board; (b) strive for consensus, but adhere to the Rules which specify that a vote be taken by a majority of the Board members present; and (c) limit the use of alternates and non-voting members to strengthen Board accountability and align fiduciary decision-making to those with a Board seat.”


Fair and equitable vs rotational representation


Until now, the composition of the Pension Board has been based on the principle of “fair and equitable representation” of the different constituent groups, such as Governing bodies, member organizations and staff participant representatives from different member organizations. As the Fund grew with new participants and more member organizations, including retirees, it became more difficult to maintain a strict formula to satisfy the principle of "fair and equitable," and the concept of rotational representation between different groups was introduced to address the situation. How to best organize this rotation in a fair way became an ongoing issue for the Board.

Thursday, November 12, 2020

Passblue: The $75 billion UN Pension Fund: Kicking Reforms down the Road, November 12, 2020

A new governance study has confirmed what many United Nations Joint Staff Pension Fundobservers have long surmised: there are significant variances between the fund’s own operations and best practices and those of pension funds elsewhere.

The areas reviewed by Mosaic Governance Advisors, who prepared the study, include standards of professional and ethical conduct, conflicts of interest and oversight of culture.

There were certainly clues as to problems: two internal audits conducted by the UN Office of Internal Oversight Services, one a comprehensive governance audit in 2018 (A/73/341) and the other an investment office governance audit in July 2020 (A/75/215), found that the fund’s culture needed to change to address conflicts of interest and other threats to the fund’s health and sustainability.

The standard response to turmoil in the 71-year old, 212,000-member fund, currently worth $75.2 billion, has been to make serial changes in its top leadership while an entrenched old guard in the fund and on the board ensures that improvements are slow to arrive and are largely cosmetic.

Tone at the top

The 2018 internal governance audit, mandated by the UN General Assembly, called for the pension board to ensure that the pension administration “sets the appropriate tone at the top with regard to integrity and ethical values.”

The 2020 internal investment governance audit found that the fund’s Office of Investment Management under Sudhir Rajkumar, Secretary-General António Guterres’s former representative for investments (a position known as the RSG), lacked “an appropriate tone at the top with regard to the highest ethical standards of behaviour that are expected of officials entrusted with fiduciary responsibilities.”

Player and referee 

The 2020 investment audit substantiated the allegations of the four UN participant representatives to the board and their alternates, who represent 85,000 UN staff members, that the investment office suffered from a toxic work culture that included retaliation against personnel. It also found a lack of safeguards on decision-making and conflicts of interest in the investment office.

In addition, the audit found that the “merging of management and oversight functions in a single post has enabled the Representative to set the rules and to act as ‘player’ and ‘referee’ at the same time,” which may “stifle critical review of proposals and compromise the due diligence, including risk analysis, that is performed by subordinates of the Representative. . . .”

Rinse and repeat

While the pension board warmly endorsed policies put in place by Rajkumar over his two-year tenure, which lasted from January 2018 to March 2020, the participant representatives tried to alert Guterres to practices that they said exposed the fund to more risk and decreased liquidity. But it was to no avail.

These actions followed an earlier pattern. Beginning in 2014, the participant representatives raised allegations about conflicts of interest in the fund’s administration arm and faced vigorous pushback by the board. In 2018, when the comprehensive governance audit was published, the board, except for the UN participant representatives, rejected most of the findings and recommendations and tried to discredit the auditors.

The General Assembly responded by making sweeping reforms and requested the board to review and report on many of the same important governance recommendations that it had rejected (74/263).

A client-averse culture

For too many years, the fund administration’s practices have reflected a client-averse culture. A UN internal audit published in 2017 confirmed the UN participant representatives’ allegations that over a two-year period beginning in 2016, the administration severely underreported the scope and extent of an unprecedented backlog in pension payments.

This year’s report by the Board of Auditors substantiates their concerns that the fund administration’s claim of a “more than 90 per cent” compliance rate to process initial separations within 15 days is based on stopping and restarting the clock when documents are discovered to be missing.

The same report also confirms concerns that the deployment of the head of the fund’s Geneva office (a financial expert) and another chief of finance to nonfinance posts in New York City headquarters was based on false assumptions of underperformance. The auditors discovered the real reason the Geneva office processed fewer cases — it had fewer staff for a similar number of clients. The staff transfers resulted in underservicing beneficiaries from Europe, the Middle East and Africa as well as a loss of institutional financial knowledge and leadership. The former head of the Geneva office has since been involuntarily placed in another UN office while still being on the fund’s payroll.

Participant representatives view this situation and the longstanding matter of the dismantled fund executive office — where two senior personnel were relocated in 2016 to another UN office where both remained on the fund’s payroll until one was transferred recently — as a breach of the fiduciary duty to use pension funds solely for the administration and payment of benefits.

The curious case of the former head of investments

On March 29, as Covid-19 rocked financial markets and investments in the fund took a nosedive (from $71.9 billion on Dec. 31, 2019 to $63 billion on March 31, 2020, a drop of about 10 percent), Guterres’s spokesperson announced Rajkumar’s departure without explanation, saying that the secretary-general was naming Pedro Guazo as his acting representative.

Only three months earlier, Guterres had renewed Rajkumar’s contract for two years, despite allegations by the UN participant representatives of a hostile work culture and risks to the system of checks and balances, a situation that the internal audit largely confirmed.

That the value of market assets has rebounded to $75.2 billion as of Oct. 23 doesn’t belie concerns that Guterres’s apparent inaction in response to anxieties about the investment office and his renewing Rajkumar’s contract could have exposed the fund to further risk in the volatile Covid-19 economic environment.

‘If it ain’t broke. . . .’

Returning to the 2020 external governance study (Mosaic) that revealed variances in standards of professional and ethical conduct, the consultants also found significant differences between that of the UN fund and other pension funds’ best practices in board size; composition and allocation of seats; and the terms, roles, purpose and responsibilities of the board.

The board’s decision to have its governance working group further examine Mosaic’s study and submit a report to its next session are cause for wonder about the prospects for implementing the proposed reforms, given that the working group had earlier produced an anemic report to the General Assembly on many of the same topics and that triggered its request for an external review initially.

Despite the study’s findings of significant variances between the pension fund’s governance and best practices in all the areas it reviewed, a UN retiree representative voiced repeatedly to the board that “if it ain’t broke, don’t fix it.” Chief among his criticisms was that the study exceeded its mandate and that the fund simply had no peer because of its “unique global nature,” both well-worn responses of his group to calls for change.

Representatives of UN retirees are influential members of the board and its committees, and they punch well above their weight as a retiree organization with nonvoting status on the board and that counts a mere one-third of UN retirees among its membership. They led the board’s rejection of the Assembly’s request to consider modalities for UN retirees to directly elect their representatives.

It is the same retiree representative organization that the 2018 comprehensive governance audit cited for conflicts of interest and “the appearance of collusion . . . [with] the Fund secretariat to challenge the authority of the Secretary-General and the General Assembly in governance matters of the Fund. . . .”

Swimming against the tide

On the 33-member tripartite board, composed of elected participant representatives, UN executive heads and governing bodies, the UN participant representatives are often isolated in their positions. They have been targets of intimidation and efforts to prevent some of them from taking their seat on the board. In addition, one person in the group was unlawfully suspended last year.

The representatives have nevertheless consistently pushed for timely benefit payments and a system to alert members that their benefits are about to be forfeited. At the annual (virtual) board meeting in July, they worked with other board members to stop amendments to regulations proposed by the chief executive of pension administration, Rosemarie McClean. The amendments would have curtailed benefit eligibility for widows and children not declared to the UN while the staff member was working.

As noted in the board’s 2020 report, the representatives continue to push back against attempts to increase the fund’s operating costs, to enable the board to remove itself from the jurisdiction of the UN Appeals Tribunal and to prevent fund staff members from running for board seats.

Ominously slow to change

The participant representatives noted in a communiqué to their constituents after the July board meeting that the fund is in a good financial position, “due in part to the unprecedented level of intervention of governments and central banks to maintain the high value of financial markets.”

Although Guazo, the new acting head of investments, said he was committed to addressing the investment audit’s recommendations, the participant representatives remain concerned about the slow rate of implementation.

Symptomatic of the fund’s inability to change its culture and similar to the situation in the pension administration after the departure of the previous head, Sergio Arvizù, the participant representatives note that some senior personnel who had roles in constructing the failed policies — as revealed in the recent investment governance audit — still have their jobs.

Restoring trust

McClean took up her functions as chief executive of pension administration in January. She noted in her presentation to the board meeting in July that “the Fund needed a clear strategic direction and improved trust among its stakeholders.”

Indeed, among the findings of the Mosaic study, it noted “insufficient clarity, transparency and communication at all levels within the governance structure and with stakeholders” and said that “rebuilding trust should be a priority.”

The cumulative message from internal audits and the Mosaic study is that while cosmetic changes are possible, meaningful reform cannot be realized without a radical change in the fund’s culture. But breaking that grip is challenging, particularly when the old guard remains firmly in place and a lack of term limits keeps some board members installed for decades.

As one example of superficial change, Michelle Rockcliffe, a participant representative, cites the fund’s response to the General Assembly’s directive to split the role of chief executive officer into two separate functions. In her view, “the manner in which the separation has been carried out has diminished the role of the secretary of the board, and ensured that the General Assembly’s goal of eliminating inherent conflicts of interest and making that role fully independent of the chief executive of pension administration has been undermined.”

Cutting to the heart of fund culture, the UN participant representatives emphasize that while the General Assembly has asked the board to develop a code of conduct, a number of members appear keen to use it to reduce transparency while leaving conflicts of interest unresolved.

 The General Assembly: more action needed

Audits, studies and Assembly reforms can go only so far when the people responsible for the fund’s oversight and management have neither the ethical culture nor the political will to carry them out.

Ian Richards, a UN participant representative and former president of the Coordinating Committee for International Staff Unions and Associations (CCISUA), told PassBlue: “Staff are really worried about how their pension fund is being administered and have asked us to fix it. They also want it kept within the jurisdiction of the UN tribunal. We’ve done all we can. Now the General Assembly needs to act on the evidence before it. It can’t kick the can down the road.”

The Assembly must decide on which recommendations it will follow from the Mosaic report. That includes acting on its own 30-year-old request for reform and fair and equitable representation on the pension board.

Only then can the fund begin to improve its culture and become the ethical and efficient organization it was always meant to be.

Link to article here:


Tuesday, September 15, 2020

UN Pension Fund: critical need for culture transformation in investments, says UN internal audit, 15 September 2020

UN internal auditors substantiate findings of the UN Participant Representatives to the Pension Board and state that the UN Office of Investment Management is in critical need of a transformation to a harmonious, high-performing and ethical culture. (A/75/215, link to the full audit below).


The UN Participants to the Pension Board said the following in their recent communique to their 85,000 active UN staff constituents: 


"How We’re Protecting Your UN Pension – Report from the Board (September 8, 2020)


We highlighted critical audit findings


OIOS audit on OIM governance. Last year we raised the alarm on the toxic work culture, allegations of retaliation, and lack of safeguards on decision-making within the investment team, and the management of conflicts of interest. OIOS (the internal auditors) substantiated these findings. While the new RSG (Representative of the Secretary-General for Investments) has committed to addressing these we continue to be concerned about the slow rate of implementation of changes relating to behaviours that would not be acceptable in financial institutions. OIOS also recommended that OIM (the Office of Investment Management) be directed by a CIO (Chief Investments Office). We therefore believe that the position should be advertised…..


Our work to jmprove the management of your investments is paying off


The new head of the Office of Investment Management, known as the representative of the Secretary-General (RSG), presented the state of the Fund’s investments. While the current economic situation remains volatile, the Fund is in a good financial position. This is in part due to the unprecedented level of intervention of governments and central banks to maintain the high value of financial markets. Furthermore, a number of concerns we raised last year with the management of our investments are expected to be addressed by the incoming RSG (as discussed during our townhall last April. We will be following up closely.


With regards to environmental, social and governance (ESG) criteria for investment, something you all have been vocal about, we are pleased to hear that after two years of mobilization by us based on your feedback, a policy will be finalized soon.”

Link to the audit:

See the full UN text of the Participant Representatives' communique here: