Friday, September 4, 2015

Pension matters: the AFICS/FAFICS President seeks to reassure her constituency -- inquiring minds. That’s us! 4 September 2015

The AFICS/FAFICS President newly returned from the Pension Board meeting held from 20 to 24 July 2015, described in her ‘Highlights’ of the meeting (5 August 2015) her continued full-throated support for the revised draft Memorandum of Understanding granting the Fund CEO more ‘flexibility’. (You may recall that USG Takasu placed the MOU on hold on 10 July 2015). The President's 'Highlights' also included a  lament she'd delivered at the Board about “polemics, agitation, distraction” (that’s us!) that had “damaged” the image of the UN and the Fund.

The day before, on 4 August, she wrote a letter to the Secretary-General in which she described herself as ‘uneasy’ about issues related to the appointment of the Fund's Investment Committee and revision to the financial rules (see links below to her letters of 4 and 24 August, and Mr. Takasu’s reply of 21 August).

The situation she said was “anomalous …diluting leverage and authority…could politicize …erode confidence in the governance of investments…[and put] at risk the system of checks and balances in the Fund”, a situation, she said, that required the Secretary-General’s prompt correction.

USG for Management Takasu responded on 21 August assuring the AFICS/FAFICS President that “all these concerns will be thoroughly addressed and appropriate action will be taken”, ending by summing up his position as follows: “the Secretary-General has full confidence in the RSG to address the issues which you have identified.”

The AFICS/FAFICS President begged to differ. Sorry, she says, “we fully recognize and respect” the SG’s delegation of authority to the RSG. But, she says, it goes too far: “we also consider that no delegation can grant authority to its recipient which could exceed the provisions of the regulations”.

For those who have been following pension matters, you’re aware that the AFICS/FAFICS President has not yet acceded to the 12 June request by 82 AFICS members for a meeting under AFICS by-laws to discuss pension matters before the Pension Board meeting held in July.

You’ll also recall that AFICS/FAFICS President has consistently dismissed our concerns about the draft MOU (“not retiree business”, she said) and about media reports that the Fund appeared to be moving toward riskier investments such as hedge funds.

The AFICS/FAFICS President now wishes to hold the SG to account on investment management and oversight issues because, she says, of “a need to reassure our constituency that the Pension Fund governance complies with the Fund’s own regulations.”

Her “constituency.” That’s us! In a UN Pension Blog post in early August, I expressed skepticism about why the wolf (AFICS/FAFICS President) seemed to be going after the fox (the RSG) and what that might mean for the welfare of the chickens (that’s us!).  As also mentioned, certainly there’s no question of the soundness of the issues about investment management and oversight raised with the SG by the AFICS/FAFICS President. 

Much as we would wish to suspend skepticism,  so far we've found very little that reassures us in the actions of the iAFICS/FAFICS President. 

So, questions remain: Why is the AFICS/FAFICS President suddenly honing in on shortcomings in the Investment Management Division (IMD) headed by the RSG, while continuing to stalwartly support the draft MOU, the subject of a petition signed by more than 3000 Fund participants and beneficiaries expressing concerns about its potential to breach the system of checks and balances that has kept the Fund healthy for the past 65 years when others have failed?  

Is her new-found launch into investment issues yet another effort to support a power grab by the CEO? And when does she intend to convene the meeting requested on 12 June 2015 by 82 AFICS members under the AFICS by-laws? Perhaps all will be revealed at the meeting, if and when it's ever convened. Inquiring minds would like to know. That’s us!

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