18 May 2015
To AFICS/NY President and
Governing Board
Please find below an
open letter to Participants and Beneficiaries of the UN Staff Pension Fund,
which we are requesting that you post on the AFICS website.
Dear Participants
and Beneficiaries of the UN Joint Staff Pension Fund,
We wish to refer to
the petition launched on 6 May 2015 requesting the Secretary-General not to
approve the changes proposed by the Chief Executive Officer (CEO) of the
Pension Fund in a Memorandum of Understanding (MOU) between the UNJSPF and the
Secretariat.
Some have wondered
who we are and whom we represent. We are a group of “concerned citizens,”
participants and beneficiaries, many of whom are also members of AFICS.
While it is true that some of us are getting old, we haven’t yet lost our grip
on reality. We are still able to understand the plain meaning of language and
to identify unstated bureaucratic agendas when they stare us in the face.
The petition did
not come out of the blue. It was a follow-up and amplification of a previous
petition that was started on 15 May 2014 by UN staff organizations in Geneva
and New York. If you follow the link that was provided for that first petition
(http://bit.ly/1gsLyfq), you will see
that the issue of the MOU has been dragging on for over a year with the same
concerns still being expressed as the CEO seeks to move forward on his original
proposal.
Most participants
and beneficiaries would not know the content of the MOU because it was stamped
as “Confidential” and was not intended for general circulation or discussion.
If the MOU is as innocuous as claimed, why hide it behind a cloak of
confidentiality? It should be open to all participants and beneficiaries since
it has an impact on our life savings. After the staff meetings on
31 March 2015, the MOU was in fairly wide circulation around the Secretariat
and copies became readily available.
It is true that the
MOU appears to be a fairly anodyne document. Most of the text could lull anyone
into complacency. It says at one point, for example, “United Nations Secretariat's administrative issuances concerning
human resources management (i.e., Secretary-General's Bulletins, Administrative
Instructions and relevant Information Circulars) shall apply to the Fund,
except where the Chief Executive Officer of the Fund (the "Chief Executive
Officer"), in consultation with the Representative of the
Secretary-General, decides that an administrative issuance, or a particular section
of an administrative issuance, is generally incompatible with the requirements
of the Fund.”
The problem,
however, comes with the Annexes to the MOU where the CEO specifies which
administrative issuances he may decide are “generally
incompatible with the requirements of the Fund.” These exceptions run to two full pages and the list is not
limited, since it “may be amended from time to time.”
The most troubling
of the exceptions concerns rules governing ethics,
gifts, conflicts of interest and procurement. We all know about “pay to play”;
the prize of course is the Fund itself. A former SG’s Representative to the
Pension Fund on investments told a meeting of retirees in 2014 that the
pressure on pension fund managers to give in to players who want to pay for this
action is unrelenting. In his view, the UN’s rules governing ethics and the
receipt of gifts give the Fund’s managers some protection, but the potential
rewards are substantial, and not everybody wants to be protected.
Many of you will
recall a previous attempt to divert a substantial portion of the Fund's assets
to unconventional investments. There was a proposal to index the North American
portfolio to one of the common stock market averages, which would have involved
selling off the portfolio first. Then, as now, there were also two camps, one
advocating the sell-off of the portfolio and the other seeking to maintain the
status quo. The Pension Board was forced to take an unprecedented vote on the
matter, but made the wrong decision based on assurances from a senior UN
official from the banking industry (who has since returned to banking) that
this change was in the best interest of the Fund. It was a matter of sheer
chance and the slowness of the procurement process that forestalled the sell
off of the portfolio. If that sale had gone through, just prior to the 2008
stock market crash, we would now be faced with a shortfall amounting to some
US$20 billion by some estimates.
Now, the CEO is
proposing that the Fund no longer be bound by these same UN rules. Why? How
will this benefit the Fund? How will this ease the day-to-day running of the
Fund (which the CEO has cited as a reason for change)? How will it help ensure
the safety of our investments and our Fund? How exactly will relaxing the rules
on gifts and the code of ethics work, should the SG agree to ease them? The CEO
claims that the changes he is asking for in these exceptions to the UN’s rules
and regulations will give him more “flexibility” in running the UNJSPF.
In response to our
petition, the President of AFICS, on 12 May 2015, sent through the UNJSPF, a
letter defending the MOU and outlining the positions the AFICS leadership had
taken with regard to alternative investments discussed at the meeting of 16
April 2015 with the Chef de Cabinet (CDC).
The AFICS letter
misses the point when it says: “These flexibilities would in no way alter the
two part structure of the Fund.” The structure obviously wouldn’t be affected,
but the operations of the Fund would be, opening the door to “pay to play”
ethics.
The letter further
misstates our position on the structure of the Fund and the linkage between the
MOU and the Fund’s Investment Management Division. We stated clearly, “The trend signaled by this MOU is the
full incorporation of the Investment Division under the authority of the CEO.” We did not say this would happen immediately, but that over
time this is the direction in which we are headed if this MOU is approved as
is. We were trying to point out dangers of which the AFICS President
seems either unaware or is reluctant to acknowledge.
The key take-away
from the President’s letter is that it was only on 10 May (four days after we
launched the petition) that AFICS sent its "most recent message to the
Chef de Cabinet ... [in which] AFICS/NY stressed that the MOU must respect all
UN and UNJSPF rules and regulations and maintain the strict separation between
the liabilities and assets sides of the Fund; for her part the RSG must ensure
that there will be no change to present investment policy, meaning no increase
in alternative investments, including hedge funds."
Earlier in her
letter, the President states that the Chef de Cabinet, "assured
participants [in the meeting of 16 April] that there were no plans to increase
investments in hedge funds now, or in the medium- or long- term."
Most of us who attended that meeting heard from the Chef de Cabinet that there
was no cause for concern, but no specific assurances were given. If the Chef de
Cabinet is now making this assurance, through AFICS, we are deeply grateful and
reassured because this is the first time we have heard it. Having it in writing
from the CDC would be preferred, however.
These are exactly
the issues covered in our petition. We are gratified that the AFICS leadership
now says that it has finally adopted the positions that many of us have been
advocating all along. If this is what AFICS truly supports, then it
should be urging all its members to sign the petition. It is inexplicable that
the AFICS leadership would seek to discourage members from signing the petition
and thereby diminish the limited leverage it gives to staff representatives in
their further negotiations on these issues.
It was not our
intention to set up a dispute with the leadership of AFICS. We have said all
along that AFICS is the appropriate avenue of representation for retirees. At
the same time, we cannot sit idly by while actions are taken that have the
potential to compromise the integrity of a pension system that has produced
admirable results since its inception in the 1940s. It may seem a conservative
position to take, but: “If it’s not broken; don’t fix it.”
It is for these
reasons that we urge all participants and beneficiaries to sign this petition
aimed at protecting the viability and health of our Pension Fund.
Signed:
Anna
Theofilopoulou, Loraine Rickard-Martin, Lowell Flanders, Barbara
Tavora-Jainchill, Somendu Banerjee, Curling Smith, Julie Thompson, Luis E.
Alvarez, Ted Folke, Mik Magnusson, Marilyn Dantis, Barbara Van Elsen, Consuelo Brannon,
Matthew Chip Bhima Logan, Mary Eliza Kimball, Troy Setiawen, Margaret Reade
Rounds, Narda Ishmael, Marian Awwad, Colette Mninski, Veronica T. Garcia,
Yohannes Mengesha, Julie Griffith, Martin Bentz, Mampela Mpela, Joao Marcedo,
Jotaze BM, Karen Albert, Joan Seymour, June Knesl, John David Werner, Donald L.
Lee, Maria Teresa Mauro, Mousa Olayan, Alias Ahmad, Carmen Goss, Alicia
Dorrego, Loida Madrigal, Negla H. Chawky, Zamira Kushmuradova, Denise Nolan
Operman, Diane Bailey, Vivian Pliner, Lucine Tegnazian
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