Monday, July 11, 2016

UN staff unions petition to the Pension Board and the Secretary-General: Protect our pension fund! 11 July 2016

The annual Pension Board meeting will take place in Vienna from 14 to 22 July. Today, our staff unions launched a campaign and a petition calling on the Board members and the Secretary-General to “Refuse the new financial rules that remove the fund from the UN and allow outsourcing of investments; protect the independence of fund staff by rescinding the new human resources policy; [and] pay new retirees on time” (see link below to the statement and petition).

The CEO reportedly returned last week from a swing through European capitals with his entourage (Deputy CEO, Legal Adviser and brand new Chief Communications Officer) in full-throated public relations mode, allegedly lobbying Board members in advance of the upcoming meeting.  According to the CCISUA petition to the Board he is gearing up to push through the Board revisions of the Fund’s new financial rules to advance his privatization agenda including “liberal outsourcing to banks and hedge funds.”

To add to concerns, this is happening at a time when investment performance is below standards under an RSG who, according to media sources, was replaced as Chief Investment Officer in the Maryland State Retirement and Pension System in 2003, which came in last compared with comparable funds in the United States under her tenure (link to related media articles below). The fund which has consistently exceeded its benchmark (measure of long-term solvency) is now increasingly sliding backward, missing the benchmark target by the end of March 2016 by 0.93 per cent, and by the end of May 2016, by 1.2 per cent.  
 Further, letters addressed to the Secretary-General by the Pension Board’s Assets and Liabilities Monitoring Committee (11 February and 7 March 2016) cite an administrative and risk assessment vacuum in the Investment Management Division (IMD), because of poor recruitment and investment procedures and inadequate oversight (see blog articles dated 5 and 24 June 2016).

The RSG dismissed these concerns as “misunderstandings”, at the AFICS assembly on 19 May 2016. It was also a “misunderstanding”, she said, that the Committee’s 7 March letter expressed concern about her statement at its 2-4 February 2016 meeting concerning "possible changes to the Fund's investment philosophy and approved risk appetite"

Were these new financial rules to be approved, according to the CCISUA campaign, they would allow the RSG to “outsource investment to independent investment managers . . . [and] in doing so, the RSG can circumvent UN procurement rules and use ‘alternative informal methods of solicitation’ to choose those banks and hedge funds.”
Description: new powers would also amplify those already accrued by the CEO in the form of a memorandum from HR to the CEO dated 17 May 2015 in effect delegating to him the SG’s authority  over all staff matters and in the view of some, going well beyond the original revised MOU which he had pushed for since 2014, and which DM said it placed on hold on 10 July 2015 to allow for “further dialogue with concerned parties”. (Reliable sources say that any consultations that may have been held did not include staff representation).

There’s sharp disagreement on the cause, extent and status of the backlog in pension payments. DM accepts the CEO’s claim that 97 per cent was eliminated by 31 May 2016. The staff unions contend the real figure is 36 per cent and request an audit (CCISUA letter to the SG in their letter dated 13 June 2016). DM in its response of 27 June 2016 says an audit was initiated on 11 May 2016 and that results will be available in the fall.  (Recall here the leaked email to OIOS from the AFICS/FAFICS President, dated 1 June 2016, running interference for the CEO in the form of a number of reasons why, she said, an OIOS audit of the backlog was both inadvisable and unnecessary).

Regarding allegations of mismanagement brought against the CEO by some Fund staff last year, reliable sources say that OIOS conducted a “special review audit which does not rise to the level of an investigation”. 

On 3 June 2016, the CEO announced to Fund staff that he had selected an OIOS staff member for a D1 post of Chief of the Information Management Systems Service (IMSS), a candidate who as “Chief of the Information and Communications Technology Audit Section for the UN Secretariat [OIOS. . . has been associated with the UNJSPF since 2007”, as stated in his email message.  Informed sources say the selection and announcement were made before the deadline for applications.

Clearly the extent and status of the backlog matters because of the distress and hardship caused to those who continue to wait for procedures and delays over which they have no control, and what it says about the Fund’s efficiency and management culture.  It raises the fundamental question of putting more managerial responsibilities into the hands of someone who has not successfully carried out the ones he already has.

The CEO’s motives in his push for a revised MOU and revised financial rules matter because privatization puts at risk the current system of checks and balances that has served the Fund well for 75 years, particularly in an atmosphere of historically low investment performance, and an Investment Management leadership that has so far failed to meet the challenge.

Instead of placing even more power in the hands of the Fund’s leadership, the Board and the Secretary-General must act to restore trust and staff morale with a new management style that is open, transparent and accountable, and enjoys the full confidence of staff and retirees. The status quo has been allowed to fester for far too long. We need responsible and accountable action on our behalf. The health and longevity of our fund depend on it.

The launch of today’s campaign by the staff unions demonstrates that the issues on both sides of the Fund have now reached a level of gravity and urgency that demands our collective attention. Join us in calling on the Pension Board and Secretary-General to  act to prevent changes that may place our retirement savings at risk. Please sign the petition now!

UN staff unions' statement and petition:


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