STATEMENTS MADE DURING THE 71ST SESSION OF THE FIFTH COMMITTEE
Note: Important to read the full statement of the Director of External Audit. (LINK BELOW; report symbol is A/71/5, Vol. 1)
Read in full other statements as well LINK TO FULL STATEMENTS BELOW).
SOME STATEMENT HIGHLIGHTS: A total of nine temporary positions should be sufficient to address the additional workload; there is insufficient justification for the creation of two P- 5 positions, including the Senior Communications Officer; in 2015 the Fund did not meet its long-term target of an annualized real rate of return of 3.5 per cent; reiterates its concern regarding the high number of vacant posts; seriously concerned about continued investment underperformance; seriously concerned about the effect of vacant posts on investment underperformance; emphasize strengthening internal control and oversight and “strongly discourages any attempt to create a separate entity or use he external consultants in this regard”; serious concern about the backlog in pension payments and request additional information on provisional payments; look forward to the OIOS audit and results of the end-to-end review, and trust there will be lessons learned by the Fund; create a mechanism for more frequent review of underperforming securities; “establish the client query and complaint redressal system structures as recommended by the Board, and ensure and ensure that the quality of the customer service provided is monitored and adjusted as needed;" in the absence of approved guidelines for the selection of external managers, the Fund may "miss the opportunity to hire better external managers and to negotiate more favourable terms and condition."
EXCERPTS FROM THE STATEMENTS:
Board of Auditors
"The Board has made 17 recommendations in its current report. The Fund has accepted all the recommendations.Management of External Fund Managers: In 2011, the UNJSPF decided to treat the selection of external managers as an investment decision rather than a procurement exercise. This needed preparation of separate guidelines for selecting and evaluating Managers of External Funds. However, even after more than four years, the guidelines have not been finalised. In the absence of approved guidelines, the Fund might have to renew the contracts with the existing Fund Managers and thereby miss the opportunity to hire better external managers and to negotiate more favourable terms and condition.Overall Conclusion: In the Board's view, the UNJSPF has not taken any proactive steps to mitigate its foreign exchange losses, which amounted to $1.49 billion during the current year ($1.96 billion in 2014). The mechanism of decision making in the investment management division needs to be strengthened by filling up the vacancies in decision making positions, and taking steps to improve performance and reduce losses. There is scope for improvement in the benefit processing and client services particularly in redressing the complaints of the beneficiaries. The Fund should take proactive steps in collaboration with member organisations to expedite the receipt of documents required for calculating and awarding pension benefits."
Vice Chair of the ACABQ
“The Committee considers that a total additional workforce of nine temporary positions should be sufficient to address the additional workload. The Committee also considers that insufficient justification was presented for the creation of two P-5 positions of SeniorCommunication Officer and Senior Management Analyst and therefore the Committee recommends against the establishment of these two positions. . . the Advisory Committee notes that, in 2015, the Fund did not meet its long term target of an annualized real rate of return of 3.5 per cent. A major driver for this underperformance being the foreign exchange losses caused by the strengthening of the US dollar vis a vis other currencies. The Committee trusts that efforts will be made to meet the long term objective of the Fund.
The Advisory Committee reiterates its concern regarding the high number of vacant posts in the Investment Management Division of the Fund and urges the Fund to fill all vacant posts expeditiously.”
Thailand on behalf of the Group of 77 and China
“11. Turning to the investment of the Fund, the Group notes that the Fund had an inflation-adjusted negative real rate of return of 1.7per cent in 2015 compared with a positive real rate of return of 2.4 per cent in 2014·. The Group also notes with serious concern that investment income fell by US$ 5.26 billion or 76 per cent in 2014 compared with2013, and by a further US$ 2.12 billion or 127 per cent in 2015 compared to 2014, thus adversely affecting the performance of the Fund over the short-term period and potentially attracting a negative impact on the long-term objective being fully funded. In this regard, the Group recalls that by its resolution 70/248 the General Assembly requested the Secretary-General to make every effort to improve the Fund's investment performance. The Group is seriously concerned on the continued underperformance and that the Fund did not meet its long-term target of an annualized real rate of return of 3.5 per cent. The Group will be interested to receive measures in placeto address this negative trend.
12. The Group is also seriously concerned that key posts of Director of Investment Management Division, Deputy Director for Investments, Deputy Director for Risks and Compliance and Chief Operating Officer were vacant in 2015 creating managerial vacuum and possibly contributing to poor performance on the investment of the Fund. The Group will seek specific explanation on the matter and on whom were held accountable for this anomaly
16. The Group also would like to emphasize the continued strengthening of the internal control and oversight arrangement. We strongly emphasize the need for the Pension Boardto ensure that the internal oversight on the Fund is carried out by using the existing expertise in the United Nations, namely Office forInternal Oversight Services. The Group strongly discourages any attempt to create a separate entity or use he external consultants in this regard.”
Statement on behalf of the Member States of the European Union
“The principle duty of the UN Joint Staff Pension Fund is to provide retirement, death, disability and related benefits for the staff of the United Nations and other member organisations of the funds, and ensure there are sufficient assets available to pay for these benefits. We note that the Fund failed to meet its performance objective of a 3.5% annualised real rate of return in both 2015 and 2014, and that there was a fall in investment income over both years. We look forward to exploring how the Secretary General can meet his fiduciary duty to participants of the Fund, including by ensuring that vacancies in the investment management division are filled in a timely manner.”
United States Mission to the United Nations
“Regarding the Fund's operations, my delegation expresses serious concern about the past and present backlog for the payment of entitlements and pensions to participants and retirees. While the Pension Fund is taking steps to address this backlog, we encourage sustained attention to this issue as benefit payment delays can have a significant financial impact on retired staff and their families. As recommended by the ACABQ, we request the Pension Fund to provide further information on the implications of implementing the provisional payment of benefits. Relatedly, we look forward to the results of the OIOS audit on this issue and the outcome of the end-to-end review of the processes by the Fund and participating organizations. We further trust that the Fund will incorporate the recommendations and lessons learned from these reviews, and in the future will take steps to anticipate any substantial increase in the number of separations and associated claims, and enact measures to prepare for, and process, these claims in a timely manner, an issue highlighted by the ACABQ.
. . . My delegation welcomes the Board of Auditors Report on the Pension Fund, and is encouraged by the Fund's actions to implement the Board's recommendations. We echo the Board of Auditor's call for the Fund to formalize a system for regular monitoring of investment risk management and to create a mechanism for more frequent review of underperfomiing securities. We further urge the Fund to establish the client query and complaint redressal system structures as recommended by the Board, and ensure that the quality of the customer service provided is monitored and adjusted as needed.”
LINKS TO THE STATEMENTS:
Director of Board of Auditors' statement:
Thailand (on behalf of the Group of 77 and China):
Representative of the EU:
LINK TO REPORT OF THE BOARD OF AUDITORS: