UN Staff Unions/CCISUA petition (please sign now!) to Pension Board and UN Secretary-General, 11 July 2016

"PROTECT OUR PENSION FUND: STOP ITS EXIT FROM THE UN AND OUTSOURCING TO WALL STREET

LINK TO FULL CCISUA STATEMENT (TEXT BELOW):

http://www.ccisua.org/2016/07/11/save-pension-fund/

PLEASE SIGN NOW (LINK TO PETITION BELOW)!

New proposal paves way for Exit of pension fund from UN and outsourcing of investment - Act Now to protect our fund!

• Proposed financial rules remove pension fund from the United Nations and allow liberal outsourcing to banks and hedge funds.

• This is backed by new human resources policy that reduces independence of staff who manage our money and exacerbates climate of fear inside Fund.

• No result yet from investigation into allegations of fraud by the CEO.

• Pension payment delays remain significant despite claims to the contrary.

• To protect our retirement income, unions call on Board members to block new financial rules, on Secretary-General to rescind human resources changes and for a change in the Fund’s leadership.

PETITION LINK: https://secure.avaaz.org/en/petition/The_Board_of_the_UN_Pension_Fund_and_SecretaryGeneral_Ban_Kimoon_Save_our_pension_fund/?cRtCggb

On 17 July, the board of the UN Joint Staff Pension Fund, meeting in Vienna, will be asked to consider new financial rules (http://www.ccisua.org/wp-content/uploads/2016/07/DraftFinancialRules.pdf) that remove the Fund from the UN and allow investments to be outsourced to banks and hedge funds with no procurement process required.

This comes as the pension fund CEO, Sergio Arvizu, has obtained new flexibilities in how he manages his staff, giving him space to favour those who turn a blind eye to internal rules and procedures and retaliate against those who don't, thus further removing the fund from the UN.

Meanwhile newly retiring staff continue to wait months for their first pension and the CEO remains under investigation by OIOS following serious allegations (reported in the press: http://www.ai-cio.com/channel/regulation,-legal/un-pension-accused-of--massive-fraud-/ and http://www.innercitypress.com/unpf3newcontroversyicp032915.html) made against him by his own staff.

Up to now our fund of 250 staff has operated effectively and conservatively under the UN financial regulations. If the new rules are approved, it will become difficult to prevent the outsourcing of investments. Our $50 billion in assets at the Fund would generate tens of millions of dollars in fees for banks and hedge funds - money that should be going to us, the staff. In doing so, our fund risks joining the many other public sector pension funds that lost money in Wall Street.

It is important that the 33 members of the board, entrusted with our money, listen to us. Twice the CEO has tried to increase his powers in the Fund, twice You the staff have campaigned to block him. Now he is trying again with a series of measures whose cumulative effect will be damaging to the fund. We need to stand firm and defend our interests and our future.

We hope you will join our campaign to save our fund. Please sign this petition (https://secure.avaaz.org/en/petition/The_Board_of_the_UN_Pension_Fund_and_SecretaryGeneral_Ban_Kimoon_Save_our_pension_fund/?cRtCggb). It is backed by the federations of staff unions of the UN Secretariat, funds and programmes, and specialized agencies.

The petition calls on the Board 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.
• Pay new retirees on time.

FURTHER READING - SOURCE DOCUMENTS AND REFERENCES BELOW

New attempt to remove the Fund from the United Nations and outsource to Wall Street banks and hedge funds

Under the tagline “securing the fund’s future” the CEO is proposing financial rules for the Fund (http://www.ccisua.org/wp-content/uploads/2016/07/DraftFinancialRules.pdf), to replace the UN’s financial regulations under which the Fund, a UN entity (although serving a number of agencies), currently operates.

The new rules, drafted at the initiative of the CEO who requested the Board to request him to do so, make no reference to the UN financial regulations and treat the Fund as an independent entity with the full ability to outsource the investment of our assets to banks and hedge funds. The only references to UN financial  regulations are for occasions where the UN may be asked to act as a service provider. While the General Assembly had endorsed the concept of having such rules, the new document in fact contains regulations which, if endorsed, will remove the fund from the UN and allow the liberal outsourcing of investments.

The CEO has justified replacing those regulations with his own proposed financial rules as necessary for a fund that pays out $2 billion of pensions a year. However, these same regulations, which the CEO wants to replace, allow the UN itself to pay out over $5 billion a year in salaries and procurement. Further, the strong checks and balances in the current regulations have helped the Fund avoid problems seen in other pension funds such as misappropriation, outsourcing of investment to banks and hedge funds, and exploding administrative costs, and have shown themselves fit for purpose.

Key concerns are (with references so you can see for yourselves):

• The head of investments, called the Representative of the Secretary-General (RSG), can outsource investment to independent investment managers (D.13), a technical term for banks and hedge funds.
• In doing so, the RSG can circumvent UN procurement rules and use “alternative informal methods of solicitation” to choose those banks and hedge funds (F.2).
• The RSG, may also choose in which banks to deposit the Fund’s US$50 billion in assets for custody purposes, with no oversight (D.4).
• The CEO may freely choose which banks to use for making payments (D.1).
• The rules remove the need for budgeted expenditures to be certified - in the UN they must be certified even if budgeted (C.13).
• The CEO may make unbudgeted expenditures without prior clearance by the board or General Assembly, and without oversight or restriction, since the board only meets once a year (E.8).
• Overall, both the CEO and RSG are not required to go through the UN for procurement, regardless of the amount (F.1), and this despite past allegations of conflict of interest made against the Fund’s leadership.
• The CEO and RSG shall decide on how internal audits take place, thus undermining the purpose of internal audit. There is no longer a requirement to use OIOS (H.2). It should further be noted that an OIOS official who used to audit the Fund was recently selected for a D-1 position at the Fund. This conflict of interest was never reported.

Pension payment delays remain significant despite claims to the contrary

Staff retiring from UN organizations report waiting up to six months before receiving their first pension payment, putting thousands in financial penury. This is largely due to the mismanaged implementation of a new IT system for processing and paying pension benefits, called IPAS. The problems started in May 2015, when IPAS was switched on. Without checking that IPAS worked, the old system was switched off. IPAS only started working, but partially, that September.

The Fund’s CEO has since last summer refused to acknowledge the severity of the problem nor propose adequate steps to deal with it. He has variously blamed other organizations and his own staff for the delays, without taking any responsibility for the suffering of retirees. He also ignored advice that could have prevented the crisis in the first place.

The Fund’s board chairman, Olusoji Adeniyi, has denied the severity of the problem. In February 2016 he informed staff unions, who had asked the board to convene an extraordinary meeting, that:

"the bulk of the backlog will be practically eliminated by early June. The Fund will be returning shortly thereafter to processing times of between one and two months after receipt of all separation documentation and payment instructions and provided there are no documentation discrepancies… an extraordinary meeting of the Pension Board would be unnecessary and counterproductive."

(Full letter: http://www.ccisua.org/wp-content/uploads/2016/07/Letter-from-PB62-Chairman-to-SU-presidents-Feb-2016-FNL.pdf)

Despite this promise and despite performance targets set by the UN to reduce the backlog completely by the end of May, the ongoing backlog still remains significant. Further, checks show that when the Fund provided the UN and PWC with data to claim that the backlog, as it stood at 1 March, had been eliminated, that data omitted over 400 cases from 2015. Staff union forecasts, which the Fund has acknowledged as correct, show the backlog being eliminated by end 2016.

New human resources policy undermines independence of staff who manage our money and exacerbates climate of fear inside Fund

In 2014 we campaigned to block new staff rules for the Fund that would have separated it from the UN. Last year we campaigned, again successfully, to block a memorandum of understanding with the UN that would have achieved the same thing. At the time, the Secretary-General’s chief of staff, Susana Malcorra promised that no changes would take place without consultation the staff unions. Yet in April this year the UN Assistant Secretary-General for Human Resources Management issued this memo (http://www.ccisua.org/wp-content/uploads/2016/07/OHRMASGMemo.pdf), which goes well beyond the proposed flexibilities that were successfully blocked last year and effectively creates a new human resources policy at the Fund.

Given the Fund CEO’s practice of using flexibilities to favour staff with whom he either has a close relationship or who are willing turn a blind eye to internal rules and procedures, we believe that the following flexibilities, which are not limited in time and yet are banned within the UN, will discourage Fund staff, who are UN staff, from standing firm on the rules that protect our money, will lead to principled staff being sidelined, will create a department managed on the basis of favouritism, and exacerbate an existing culture of fear.

It should be noted that the mismanaged implementation of the new IPAS pension system relates in part to the CEO’s lack of communication with his middle managers, his ignoring the suggestions of experts within the Fund and fear of his staff to point out errors.

Features of concern in the memo are:

• No minimum post occupancy or prior lateral move requirements. This allows the rapid promotion of some (but not all) staff without the need to gain broad technical and management experience required for senior positions.
• Retired staff may be rehired for up to a year without the posting of a temporary job opening. This means that current staff are unable to compete for positions at higher levels as these will be filled by former staff and not advertized.
• Staff with temporary appointments may apply for the posts they sit on without any period of ineligibility, a practice that was discontinued at the UN for reasons of fairness.
• ASAT tests will not be required for recruitment of GS staff, at a time when the Fund more than ever needs qualified staff to handle the payment delays.
• Staff may also be retained beyond retirement, denying career progression to current staff, preventing succession planning and discouraging the transfer of skills."