The Chair of the Pension Board (Annick Van Houtte, FAO) is incensed
about transparency. In her view, there’s too much of it. She’s so determined to
silence the UN Participant Representatives that she’s requested the UN
Administration to deny the UN Staff Associations access to the UN IT system. (See her letters of 26 July, 10 August and 13 September
2017, below. All correspondence mentioned in this article are contained here or
are available on the pension blog).
Transparency – a clear and present danger. In the
Chair’s view, by informing the owners of the Fund, participants and
beneficiaries of what’s going on with our Fund, UN Participant Representatives
are a clear and present danger. In her 13 September 2017 letter, she dismisses
their letter to the SG (28 August 2017) as partial, incorrect, misleading, flawed, deceptive, irresponsible,
unbalanced, damaging to the reputation of the UN and the Pension Board,
jeopardizing the effectiveness, efficiency and credibility of the Fund, and
weakening the governance mechanism. She further challenges the UN Participant
Representatives concerning allegations of managerial deficiencies on the part
of the CEO to “prove it (“he who asserts must prove.”)
Allegations borne out by UN governing bodies: The
Board Chair ignores a salient fact, which is that one by one, allegations about
managerial deficiencies at the Fund have been borne out over time in the
reports of UN governing bodies, including GA resolution (71/265), ACABQ report
(A/71/621), Board of Auditors report (A/72/5.Add.16), and OIOS audit (2017/02).
Management accountability: Following the recent Board session in Vienna
(24 to 28 July 2017) which recommended a final reduced three-year term for the
Fund’s Chief Executive Officer, the UN Participant Representatives note in in a
28 August 2017 letter to the Secretary-General that under paragraph F.1 of the
Fund’s regulations, the decision to reappoint the CEO is his alone. They draw
his attention to documented managerial deficiencies and ask that in making his
decision on reappointment, he set a strong example of is new policy on
management accountability.
The Board Chair’s various grievances as stated in her
13 September 2017 letter, can be summed up as follow: UN Participant Representatives
as members of the Board are accountable solely to the Board; no group or
faction of a group is allowed to issue its own statements (para. 4); they were
part of the decision-making and consensus on the CEO’s reappointment and must
not discredit it (para. 6); the Secretary-General has no “discretionary
authority” over reappointment of the CEO – he merely performs administrative
actions related to the Board’s recommendation (para. 7); the case of the
elected UN Participant Representatives barred from the Board is ongoing in the
Tribunal and cannot be discussed (para.9); there’s no proof of poor performance
by the CEO. (para. 10); UN Participant Representatives don’t represent retirees
as confirmed by the FAFICS president (para. 10; see email from FAFICS president
to the Chef de Cabinet); and the Board’s work and its documentation are private
(para. 5).
Misguided and plain wrong. The Board Chair is
misguided, and plain wrong, on several counts. As the UN Participant
representatives point out in their response (15 September 2017), she has no locus
in commenting on their letter to the SG, which is an internal UN
communication. While she suggests that
the interest of the Fund and that of the Board are equivalent, as Participant Representative,
they are accountable to the staff who elect them and “see the interest of the
pension fund from that perspective”. As
for representing the interests of retires, may retirees have indeed reached out
to the UN Staff Associations “after failing to obtain satisfactory support from
other avenues”. Finally, the UN Participant Representatives
note, given that two of their members have been excluded from the Board “it is
technically incorrect to assert that members of the UN SPC should be
individually bound by consensus”.
In addition, one may add to the UN Participant Representatives’
refutations, that as far as no group being allowed to issue its own statement,
FAFICS circulated by email on 9 August 2017 a lengthy statement about the Board
meeting to its members. As the lawyer for the two elected UN participants stated
to the Board Chair in his letter dated 17
August 2017, the statement she made about the status of the case in her letter
to the UN Administration of 10 August was incorrect. The FAFICS president has consistently dismissed the concerns of retirees and tried to block the OIOS audit of payment delays and many retirees have turned to the UN Staff Associations to protect our interests. Further, much of the proof the Board Chair demands concerning poor performance of the CEO
is detailed in the 40-page report of the OIOS audit (OIOS/02), if she would
only read it.
The current situation
Push to reappoint the CEO. The Board Chair, FAFICS and other CEO supporters, remain determined to shove
through a three-year term for the CEO (albeit a final term with special oversight
measures), to feather his nest, and in
the process shut down dissenting voices while thousands of suffering orphans,
widows, and retirees, remain unpaid.
Representative of the Secretary-General (RSG): The RSG
has overseen chronic investment underperformance since she came on board in
2014 which places the long-term sustainability of the Fund at risk. Managerial
deficiencies on her watch are documented in the above-mentioned reports of UN
governing bodies. The Board engaged Deloitte Touche to conduct an
independent third-party review of investments, and her post was advertised in
July. Her contract, due to end this month, is now reported to have been extended
to the end of December and she’s announced all along that despite her
post being advertised, she’s “going nowhere”.
Concerns about changing the current pension model? The
CEO’s rambling discourse at the AFICS/NY annual assembly on 27 June 2017 on the
number of major companies and organizations, including the World Bank that have
changed their pension systems from defined benefit (where the employers bears all
risks) to defined contribution (where the employee bears all risks) continues
to cause concern among participants and beneficiaries of the Fund. Why, many
wondered, would he spend a significant portion of his presentation on this
topic without a motive?
Shortly thereafter, the UN Participant Representatives raised the issue in a 10 July 2017 Broadcast to all Staff which was swiftly
met with a rejoinder from the former Board Chair in a letter dated 12 July
2017, (quote): “. . . the UNJSPF has been
established by the United Nations General Assembly (UN GA) as a
defined-benefit pension plan and this question is not discussable. This is also
very clear from the UNJSPF Regulations and Rules. There is no threat or
challenge to this status and to raise the possibility of a change in this
status with staff is to cause unnecessary concern.”
UN leadership considering the issue? So what is
behind the current accounts from reliable sources in the Secretariat that the
issue is receiving strong support from the Fund management and some of the UN
leadership? It’s conceivable the Fund's leadership may be
seeking allies among certain Member States as a way to save their jobs.
Consider, as one possible example, Nikki Haley’s South Carolina hasn’t done so
well on pensions – see link below.
Who can we trust? It’s a common tactic to accuse
dissenting voices of subversion, as the Board Chair does in her letters to the
UN Administration and the UN Participant Representatives. She fails to grasp that the UN Staff
Association representatives, and current elected UN Participant Representatives, have proved their reliability and trustworthiness to participants and
beneficiaries. That is not the case with the Fund Management, the FAFICS President, or in some cases the
Board leadership, for that matter.
At the same AFICS/NY assembly where the CEO engaged in his
rambling discourse, the Chef de Cabinet demonstrated by her statement that she
understood the extent of the problems facing the Fund. At a Town Hall meeting
shortly therefore, the Secretary-General stated publicly his determination to protect
the pension benefits of UN staff.
The General Assembly in its resolution and its Advisory
Committee on Administrative and Budgetary Questions (ACABQ) in its report have demonstrated
that the eyes and ears of their representatives are open and that they are responsive
to the problems besetting our Fund. There’s reason to believe that this is still
the case.
Along with the valiant efforts of the UN Staff Associations,
and for the sake of our Fund’s continued health, we’re placing our hopes on
action by those committed to protecting our Fund for past, current and future generations of
UN staff.
List of communications contained below:
1. Communication to the Pension Board
Chair from UN Participant Representatives regarding the Pension Fund, 15
September 2017
2. Memorandum to UN Participant
Representatives from the Pension Board Chair, 13 September 2017
3. Email to the Chef de Cabinet from the
AFICS President, 29 August 2017
4. Letter to the Secretary-General from
UN Participant Representatives, 28 August 2017
5. Letter from George Irving, Esq. to the
Pension Board Chair, 17 August 2017
6. Letter to the UN Administration from
Pension Board Chair, 10 August 2017
7. UN HQ Broadcast from UN Participant
Representatives, 2 August 2017
8. Communication to the UN Administration
from Pension Board Chair, 26 July 2017
9. UN HQ Broadcast: Staff Union
Information Session on the UN Pension Fund, 27 July 2017
10. UN HQ Broadcast: Message from UN participant representatives to the Pension Fund, 10 July 2017
1. Communication to
the Pension Board Chair from UN Participant Representatives regarding the
Pension Fund, copy to Board Members
15 September 2017
Dear Annick,
Receipt is hereby
acknowledged of your letter.
It is to be noted that this is the second time that you have
chosen to comment about an internal communication within our organization (the
UN). I trust that you will encourage other board members to share the internal
communications in their respective agencies so that we can comment on those.
You appear to suggest that as board members we are accountable
to the board and that the interest of the pension fund and that of the board
are equivalent. However, as participant representatives, we are accountable to
staff who elect us, and we see the interest of the pension fund from that
perspective.
As to our drawing the attention of the executive head of our
organization to various provisions in the fund's statutes and audit findings,
to which his office is already privy via the organization representatives,
there seems to be nothing incorrect.
You also question our claim that we have been representing the
interests of retirees. I think you will find from our statements that this is
indeed true. Many have reached out to us after failing to obtain satisfactory
support from other avenues, and we have worked closely with the fund
secretariat on individual cases of late payments.
Finally you will understand that with two members of the UN SPC
excluded from the board, it is technically incorrect to assert that members of
the UN SPC should be individually bound by consensus.
Kind regards,
Ian
Ian Richards
United Nations
Geneva
2. Memorandum to UN Participant
Representatives from the Pension Board Chair
13 September 2017
Subject: Communications from UN participant representatives
regarding the Pension Board
1.
I refer to our recent communications concerning
the 64th the United Nations Joint Staff Pension Board (Pension Board
or Board) session (Vienna, 24-28 July 2017), the first dated 3 August 2017, a
message concerning the 07 Pension Board session sent to all UN staff members,
and the second, your recent letter to the United Nations Secretary-General of
28 August 2017 concerning the Chief Executive Officer’s (CEO) re-appointment.
Unfortunately, most of the information contained in these communications is
incorrect, partial and/or misleading. I am concerned about the impact of such
communications, as they do not correctly reflect the deliberations of the 64th
session of the Pension Board, of which you are members (emphasis added).
Indeed, such actions undermine the work and role of the Board, weaken the
Fund’s governance mechanism and jeopardize its operational efficiency. I
further noted that your communications were also published on social networks
like Facebook.
2.
At the outset, I wish to recall that the Pension
Board, which has a tri-partite membership (33 members), is a subsidiary organ
of the United Nations General Assembly. Under article 4 of the Fund’s
Regulations, the Board has the sole authority to administer the Fund. The
United Nations Joint Staff Pension Fund (UNJSPF or the Pension Fund) is
separate and independent from the United Nations Secretariat. As an inter-agency
body, the Pension Board consists of members of the Staff Pension Committees
(SPCs) of the 23 member organizations participating in the Fund. Any matters
before the Board are normally discussed and agreed to in the respective SPCs or
in the relevant constituent groups, prior to the deliberations in the plenary
session of the Board.
3.
Indeed, it is the fiduciary duty of all Board
members to participate actively and constructively in this process and to
consult, discuss and cooperate with the other constituent groups of the Board,
namely with the elected Participants’ representatives (11 members), the
representatives of the Governing Bodies (11 members) and the Executive Heads
nominated by the member organizations of the Fund (11 members), as well as with
the four non-voting representatives of retirees. The Pension Board acts normally
by consensus and its deliberations and decisions are included in its annual
report to the UN General Assembly. That document is a public document.
4.
In accordance with article 14 of the UNJSPF
Regulations and with the established practice, the Secretary of the Board/CEO, informs
each member organization and – through his Annual Letter – participants ad
beneficiaries of actions taken by the General Assembly regarding the report of
the Pension Board.
Individual
groups, or some factions of groups, do not issue their own statements.
5.
As was already communicated to you by Mr.
Vladimir Yossifov, Chairman of the 63rd session of the Pension
Board, in his email of 12 July 2017, as members of the United Nations Staff
Pension Committee (UNSPC) and the Pension Board, you are part of the governance
of the Pension Fund, the operations of which are governed exclusively by its
self-contained Regulations promulgated by the General Assembly. The Rules of
Procedure (C.11) provide that the meetings of the Board are held in private and
the documentation is also kept private.
6.
You attended and participated in 64
th
Board session as elected representatives of the participants who are staff
members of the United Nations. Along with the seven other participants’
representatives, you were part of the decision-making process with respect to
all matters before the 64
th session of the Board. Therefore, it is
highly questionable and indeed inappropriate that you now try to disqualify and
discredit the work and decisions of the Board, which were reached by consensus.
7.
In particular, you were part of the consensus
that decided on the extension of the term of reappointment of the CEO for 3
years; therefore, there is no basis for you to take now a different position in
your communications. Keeping in mind that the Pension Board is the primary
governing body of the Fund, has the sole authority to administer the Fund and
reports to the United Nations General Assembly, the Board retains a specific
authority over the appointment of the CEO, the Deputy CEO and the Consulting
Actuary. In forwarding its recommendations to the Secretary-General it is
merely requesting the latter to initiate the necessary administrative actions
in order to implement its recommendation. In other words, the Pension Board is
not requesting the Secretary-General to exercise discretionary authority on these
matters. You may read more on the subject-matter in the ACABQ report to the
General Assembly (A/65/567). Clearly, by forwarding its recommendation on the
renewal of the appointment of the CEO of the Fund, the Board is communicating
its decision on the subject-matter and it is not relinquishing its authority to
administer and manage the Fund.
8.
Should you have any issues regarding the
operation of the Board or its decisions, the proper forum for addressing them
is a Board session. And in general, and with respect to the latest Board
session operational or other aspects, you may use the United Nations Staff
Pension Committee, which will next meet on 8 November 2017.
9.
As regards your public statement on the issue of
the participation of the two staff members of the Fund’s secretariat in the 64th
Board session, as you know, their participation was addressed by the Board’s
Standing Committee (not by the CEO, as you allege) which concluded that, since
there was a conflict of interest between their official function (as staff
members of the UNJSPF secretariat) and them serving as members of the Pension
Board (the Governing body of the Fund), they could not attend the Pension Board
session or serve on the UNSPC (and hence on the Pension Board) until the
conflict of interest has been resolved. By its orders 284 and 288 the UN
Appeals Tribunal (UNAT) also rejected the respective requests from Mr. Faye and
from Ms. Rockcliffe for interim measures to allow them to attend the Board’s 64th
session. The matter remains under consideration by the Tribunal.
10.
Finally I noted in your communications a series
of serious allegations of poor performance/unsatisfactory conduct on the part
of the CEO which you have not supported with evidence. I am sure you are
familiar with the principle that “he who asserts must prove”. In same vein, I
wish to bring to your attention the email from the Chair of FAFICS dated 29
August 2017 asserting that “FAFICS is the
sole entity recognized by the United Nations system to represent retirees in
the Pension Board and other fora and must strongly reject the irresponsible and
misleading statements made by the authors of the letter [to the
Secretary-General dated 28 August 2017 […]”. (Email attached).
11.
To conclude, I wish to remind you of the
Declaration of the Board members, which you have all signed. It states, inter
alia, the following:
“While performing these functions I shall exercise in all loyalty,
discretion and conscience the functions entrusted to me and to discharge these
functions and regulate my conduct with the interests of the Fund only in view.”
“I
acknowledge and agree that, as a Pension Board member, I must maintain the
confidentiality of all non-public information entrusted to me or otherwise
obtained by me by reason of the
discharge of my responsibilities as a Board member.”
12.
I thank you for your attention to this matter
and trust that as participant representatives you will heed your obligation to
act in the best interests of the Fund, refrain from issuing incorrect, partial
and/or misleading information regarding the Pension Board 64th
session deliberations or the operations of the Fund, and to adhere to the
principles of confidentiality, professionalism and ethics which characterize
the Pension Board sessions.
c.c. Bureau of
the 64h Pension Board, Chair of the 201st Standing Committee and
Fund Secretariat: Mr. B. Fitzgerald, Ms. P. Poroli, Ms. L. Saputelli, Mr. V.
Yossifov, Mr. S. Arvizu, Mr. P. Dooley, Ms. J. Sareva, Ms. D. Mapondera, Mr. L.
Woodyear
3. Email to the Chef de Cabinet from the
President of FAFICS, copy Board Chair and FAFICS
From: Linda Saputelli
Sent: Tuesday, August 29, 2017 10:22 PM
To: Maria Luiza Viotti
Subject: Letter dated 28 August to Secretary-General from UN
Staff Representatives
Dear Maria Luiza,
A recent letter to the Secretary-General dated 28 August 2017
from six United Nations staff representatives, four of whom serve on the
Pension Board, has come to our attention.
I am writing on behalf of the FAFICS representatives to the
Pension Board and its 60 AFICS member associations world-wide. FAFICS finds
this letter, replete as it is with the repetition of unproved past allegations
and misrepresentation, most surprising as the four representatives were part of
the consensus in the Pension Board which agreed to a three-year extension of
the CEO.
Since the letter also asserts “widespread criticism” of the
CEO by “retirees”, we wish to recall and stress in particular that any retirees
referred to in the letter have no standing whatsoever within the United Nations,
its funds and programmes, and specialized agencies. FAFICS is the sole entity
recognized by the United Nations system to represent retirees in the Pension
Board and other fora and must strongly
reject the irresponsible and misleading statements made by
the authors of the letter who are now attempting after the fact to disassociate
themselves from a consensus in which they fully participated.
We feel confident that the Secretary-General will support
the recommendation of the Pension Board for a three-year extension of the CEO
in this critical matter and would request that you kindly bring this message to
his attention.
Warren Sach and I would like to meet with you in the latter
half of September and would ask that you indicate a time and date that would be
convenient.
With many thanks for your cooperation.
Warm regards,
Linda
Linda Saputelli
President
FAFICS
4. Letter to the Secretary-General from UN
Participant Representatives, copy Members of the Board
28 August 2017
Dear Secretary-General,
Since coming to office you have
affirmed to staff on a number of occasions your belief in enforcing a system of
management accountability in the United Nations and in the senior level
appointments that you make.
You will shortly be asked to
reappoint the current CEO of the pension fund, Sergio Arvizu, for three years.
To this end we would like to draw
your attention to paragraph F.1 of the Fund’s regulations, which states:
“The Chief
Executive Officer (CEO) and the Deputy Chief Executive Officer (DCEO) shall be
appointed by the Secretary-General on the recommendation by the Board for a
maximum term of five years each and may be reappointed once.”
It is therefore important to
emphasize that the decision to reappoint the CEO will be yours alone.
In
considering what decision to take, we would like to draw your attention to the
following facts:
The Board was heavily divided on what recommendation
to make to you. The recommendation of three years with no possibility of
reappointment was a last-minute compromise to avoid a divisive vote.
The CEO’s performance has
attracted widespread criticism: from the Department of Management’s leadership,
from UN staff unions and the three staff federations (CCISUA, FICSA and
UNISERV), and from retirees.
Criticism has included: a poorly
implemented new IT system with no contingency planning, leaving retirees
without income, many for more than nine months; attempts, since blocked by the
General Assembly, to remove OIOS as the Fund’s auditor; attempts to remove the
Fund from the UN’s administrative oversight by creating new staff and financial
rules; attempts to circumvent rules on procurement and receiving gifts. It
should be noted that the current payment backlog to widows, orphans and
retirees still numbers in the thousands.
For almost three years the CEO has
refused to meet with staff representatives at the Fund despite multiple
attempts by staff.
The CEO has misrepresented good faith
and constructive efforts made by the UN’s Department of Management to resolve
the situation involving two staff of the Fund’s Secretariat elected to the
Board.
The CEO’s performance has been
criticized in a spate of recent audits which raised among other things:
non-cooperation by the Fund’s management with auditors; incorrect figures
supplied to the actuaries resulting in an important actuarial report having to
be dropped; and false information provided to iSeek on the size of the payment
backlog.
In light of the above facts, the
UN’s management and participant representatives, representing two-thirds of the
Fund’s members, were against recommending any reappointment of the CEO. We were
also guided by the knowledge that Fund has enough qualified staff to assume
interim leadership.
We hope that in view of your
support for management accountability and in order to set a strong example of
this new policy early in your term, that you will decide to take a similar
position.
Thank you for your consideration of
this matter.
5. Letter to the Pension Board Chair from
George Irving, Esq. (subject her letter to the UN Administration dated 10
August 2017 posted on FCUNS)
From: George Irving
Sent: Thursday, 17 August, 2017 11:35 AM
To: Annick VanHoutte
Cc: ROCKCLIFFE Michelle
Subject: Your letter to the UN Administration
Dear Ms, Van Houtte,
I have recently read you letter of 10 August 2017 in connection
with the meeting of the Pension Board. In it you make reference to the recent
UN Tribunal case brought by Ms. Rockliffe. I am her legal counsel and wish to
advise you that your characterization of the outcome of her request for interim
measures is inaccurate.
The Appeals Tribunal did reject the motion but did so on the
grounds that the Tribunal's Statute did not provide for interim measures in the
case of appeals from decisions of the Standing Committee of the UN Pension
Board. It made no findings on the merits of the appeal, which has not yet been
adjudicated.
Your statement that the Appeals Tribunal upheld the decision of
the Standing Committee is therefore inaccurate and misleading. I would
appreciate if you could therefore correct this information and advise those who
have been copied on your letter.
Sincerely,
George G. Irving
6. Letter to the UN Administration from Annick Van Houtte,
Chair of the 64th UNJS Pension Board regarding UN Broadcast message
from the UN Staff Associations of 2 August 2017
“What happened at this year's meeting of the Pension Fund Board”
10 August 2017
To: United Nations Administration
Further to my email to Mr. Victor Kisob dated 26 July 2017,
copied below for easy reference, I wish to express my serious concern with the
irresponsible communication below from UN Staff Associations concerning Pension
Board matters, "A Message from the UN Staff Associations: What happened at
this year's meeting of the Pension Fund Board - Ce qui s'est déroulé à la réunion
annuelle du Conseil d'Administration de la Caisse des Pensions",
disseminated using UN IT infrastructure and systems. After its wide broadcast
within the UN, this communication has now also already been propagated through
social media. It clearly damages the reputation of the United Nations, the
Pension Board and the Fund; it jeopardizes the operational effectiveness of the
Fund; and weakens the Fund's long-standing governance mechanism.
Regarding the operational aspects of the Fund, for example,
under the heading "negative audit reports", the broadcast presents
misleading, partial and incorrect information. Indeed, the Audit Committee in
its report to the Pension Board (JSPB/64/R.25 attached for ease of reference) acknowledged
the Fund's progress in many areas within its purview, and presented an
objective,
balanced and fair assessment of progress made as well as
opportunities for improvement. Progress was noted in respect of the filling of
senior level vacancies, the important reduction in the inventory of actionable
cases, the measures taken to improve client services; and greater clarity in
developing the IMD ICT strategy. Additionally, the Committee (and accordingly
the Board members) was pleased to note that the long-standing goal of having
the final report of the Board of Auditors (BOA) presented to the Pension Board
has been fulfilled at the recent Board Session in Vienna. It was also pleased
to learn that the BOA expected to issue an unqualified
audit opinion on the Fund's Financial Statements for the year
ended 31 December 2016, and that the Fund's Statement of Internal Control for
2016 was supported by independent assessment and testing of the internal
controls over financial reporting. On the other hand, the Audit Committee expressed
concerns about the deteriorating working relationship between the Fund's
management (both secretariat and IMD) and the internal audit service, the need
for improvement with respect to the IMD's strategy for ICT, and concerning
reporting on the universe of its actual workflows and potential caseload.
You will appreciate, that it is misleading and incorrect to
portray the audit results as "negative audit reports" and as
"damming" when important progress has been acknowledged by the Pension
Board and its Audit Committee and when considering that the Fund is receiving
an unqualified "clean" audit opinion.
Under the same heading, there is also an unsubstantiated
allegation of "false information" being provided by the Fund, which
needlessly may alarm the Fund's participants and beneficiaries who will flood
the Fund's client services with queries related to the misleading broadcast,
preventing the Fund from opportunely answering "true" queries or
service needs.
The UN Staff Unions' communication contains also misleading,
inflammatory and incorrect information on the outcome of the recent Board
session which took place in Vienna, hence undermining its role and work.
To illustrate the foregoing, under the heading
"budget", the broadcast advances a flawed and deceptive notion that
the increase in the budget requested by the Fund secretariat and supported by
the Board "will eat into the fund's future financial position". This
is not only technically incorrect but also inflammatory. The total increase
requested for the biennium represents only 0.0002 of the market value of assets
as of 28 July 2017. The increase is immaterial for the Fund's
future financial position. As you know, the most critical
economic variable for the Fund's future financial position is the investment
return. To portray the requested increase as "eating into the fund's
future financial position" is technically incorrect.
The broadcast labels the budget increase recommended by the
Pension Board as "irresponsible". This allegation has no foundation.
As you may know, in accordance with the decision made by the Board at its
sixty-third session (A/71/9<http://undocs.org/A/69/9>, para. 465), the
Board established a Budget Working Group with representation of the Governing
Bodies, Executive
Heads, Participants and FAFICS representatives. The Working
Group carefully and thoroughly reviewed the budget request from IMD and the
Fund secretariat. The Working Group met with the Fund's Chief Executive Officer
and the Representative of the Secretary-General for the investment of the
assets of the Fund, and with their staff to discuss and clarify the budget proposal
in detail. Additionally, in its deliberations, the Working Group also took into
account relevant comments made by the Audit Committee, the external and
internal auditors, the
Investments Committee and the Assets and Liabilities Monitoring
Committee.
After careful, thorough and objective analysis of the facts and
needs, the Working Group reviewed the development of participants and
beneficiaries in recent years in comparison to the resources in the Fund
secretariat over the previous 5 biennia. It was concluded that the growth in workload
of the Fund secretariat represented by the number of participants and
beneficiaries, and
the number of benefits processed has grown substantially faster
than the increase of Fund secretariat staff. This is a long-standing
development. The maturing of the Fund has resulted in significant workload
increase, as the effort required to process of pension benefits and ensuring the
payroll for the beneficiaries is significantly higher than the administration
of participants. The Working Group's aim in its recommendation was to maintain
the capacity of the Fund secretariat to cope with this increasing workload in
the short and medium term.
Also, as you know, the process involves extensive consultations,
exchange of views and discussion within the different Groups and during the
Board. The result of this extensive, detailed and diligent process is the
decision by Pension Board to recommend a certain level of resources for a set
of agreed objectives and benchmarks. It is the fiduciary duty of all Board members to participate actively and
constructively during this process. It is questionable for the Board members
who also participated in the discussions and decision-making process of the Board
to attempt to disqualify its work and decisions which were reached by consensus.
Another sample of misleading information can be found under the
heading entitled "Attempts by the CEO to prevent elected board members
from attending [the Board session]". The facts are as follows: On 8 June
2017 the UNJSPF Standing Committee decided to disallow two UNJSPF staff members
to attend the 64th UNJSPF Board session because of conflicts of interest that
arise in the course of carrying out their duties as UNJSPF staff members. This
decision was based on a legal opinion prepared by the UN Office of the Legal
Affairs, in November 1992 The existence of such a conflict of interest was
addressed in the memorandum dated 6 November 1992 from the then Fund CEO, Mr.
Raymond Gieri, to the then United Nations Legal Counsel, Mr. Carl August Fleischhauer,
regarding a UNJSPF staff member who was standing for election to the UNSPC as a
Participants' Representative. The then Legal Counsel confirmed that the
situation as described by Mr. Gieri in his memorandum constituted a conflict of
interest. Subsequent to the decision of the Standing Committee, both Mr. Faye
and Ms. Rockcliffe, the elected Fund's staff members, filed separate appeals
against the Standing Committee's decision to the United Nations Appeals
Tribunal. In addition to the appeals, they filed requests for interim measures
to allow them to be given access to documents and to attend the 64th Board
session. Ms. Rockcliffe also filed a motion for her request for interim
measures to be considered by a three-judge panel, which was granted under Order
No. 287. By Order Nos. 284 and 288, respectively, the Tribunal dismissed both
motions for interim measures rejecting their request to attend the Board
session.
The Tribunal decided to uphold the decision of the Standing
Committee specifying that its decision is without prejudice to any further
consideration it may have in respect of the appeals.
The statement under the heading "Monitoring and
follow-up" concerning the membership of the Audit Committee and the
election of a Vice-Chair of the Standing Committee suggest a
"victory"of the Participants Group. However, it should be noted that
that Group, was entitled and, thus, expected to nominate a member of the Audit
Committee and the Vice-Chair of the Standing Committee in accordance with the
Terms of Reference of the Audit Committee and "Section B" of the
Rules of Procedure of the UNJSPF. Such nominations are in line with the Pension
Fund
rules and practice.
Finally, in the last paragraph, the signatories of the broadcast
question the ability of the Board "to properly oversee [emphasis added]
the ongoing operations of the complex fund..." because it only meets once
a year for five days. Disqualifying the Board and its ability to properly
carry-out its mandate of overseeing the Fund is inappropriate, if not highly
irresponsible, and damages the reputation of the Board, weakening its role and
responsibility. The statement also highlights either a lack of understanding of
the complex governance structure of the Fund or a malicious intent, or possibly
both.
As you know, the governance mechanism of the Fund is complex and
multitiered. It has evolved over the years to adequately meet the Fund's needs
and to properly oversee and guide the Fund. The UNJSPF is only one of a few
defined benefit pension funds with a very solid financial position. The Fund
also adequately operates on a truly global scale achieving high efficacy in disbursements
(with levels of 99.2%).
The governance mechanism of the Fund includes the Board as the
key governance body, but it is assisted in its work by the Audit Committee, the
Committee of Actuaries, the Assets and Liabilities Monitoring (ALM) Committee,
the Consulting Actuary, the Medical Consultant and other working groups that
are created as required; for example, the Working Group on Sustainability that
was created in 2012 to assist the Board with exploring possible measures to strengthen
its long-term solvency. The recommendations of this Working Group, approved by
the Board and General Assembly, led to the adoption of important
measures and the
strengthening of the Fund's actuarial position and governance
mechanism.
Additionally, the Investment Committee also provides information
and support to the Pension Board. All of these Committees have specific terms
of reference and mandates and meet periodically and throughout the year to
carry out their work. Many of these Committees also exchange information or
hold joint sessions. Some of the Committee are composed by expert members only,
such as the Committee of Actuaries and Investment Committee, and others are also
assisted by expert, independent members, such as the Audit Committee and ALM Committee.
In addition, as per Article 4 (a) of the Fund's Regulations, the Fund is
administered
by the Board and a staff pension committee for each member
organization, and a secretariat to the Board and to each such committee.
Therefore, the oversight and management of the Fund is much more
complex and involved process than just a five-day meeting of the Pension Board.
It is a thorough, multifaceted exercise carried out by many Committees with the
support of independent experts, as well as the periodic work of 23 Staff
Pension Committees and their secretariats. The results of a well-managed and overseen
fund are evident as it has achieved an excellent financial and operational
situation. To
disqualify and disseminate distrust in the Board's ability to
properly oversee the operations of the Fund because of a lack of adequate
understanding of its complex and professional governance process is harmful and
irresponsible.
The foregoing samples show how unbalanced, incorrect and partial
the communication of the UN Staff Association is. It is further unclear to me
and concerning why the UN Administration decided to disseminate such a
broadcast without prior consultation of the rapporteur of the 64th UNJSPF
Board Session or myself. You will appreciate that disseminating incorrect and inflammatory
information is not only unethical but also goes against the UN Staff Rules and
the
Code of Conduct for International Civil Servants. They are
"responsible for safeguarding the resources of United Nations
organizations which are to be used for the purpose of delivering an organization's
mandate and to advance the best interests of the organization." (paragraph
25)
Because disclosure of incorrect and misleading information may
seriously jeopardize the efficiency and credibility of the Pension Fund and its
Board, I should be grateful for your direct and prompt intervention to prevent
the use of the UN IT infrastructure and systems in the future with a view to
disseminating incorrect and misleading information about the Board 64th session
or the operation of the Fund.
In light of the foregoing facts and considerations, I
respectfully ask you to address this serious matter as soon as possible and
request the issuance of a broadcast correcting the misinformation regarding the
deliberations and decisions taken by the Board at its recent session. I am
available to contribute to the text of
the broadcast and would, accordingly, very much appreciate you sharing the
content of this broadcast with me before sending it out.
Thank you and kind regards,
Annick Van Houtte
Chair 64th Pension Board
7. Communication to the UN Administration from the Annick Van
Houtte, Chair of the Pension Board, on 26 July 2017
Dear Mr. Kisob,
I am highly concerned with the irresponsible communication below
concerning an information session on pension matters, moderated by the
President of the UN Staff Union, New York, and held in the UN premises.
As a Board member you know that any possible change to the
Fund's plan design needs to be approved by the Pension Board and ratified by
the General Assembly. As you also know there are NO items on the Board's Agenda
that refer to any change in the plan design or move to a defined contribution
scheme. Quite the contrary, the CEO in his presentation on the status of the
Fund outlined all the measures taken over the past 10 years to strengthen the
Fund. Both the CEO and the Committee of Actuaries also informed the Board of
the healthy financial situation of the Fund.
As an HR manager you are fully aware that disseminating
incorrect and malicious information is not only unethical but also goes against
the Staff Rules. Therefore, I ask your direct and urgent intervention in order
that the premises of the UN are not utilized to disseminate lies about the Pension
Board or the Fund. Additionally, the infrastructure or other facilities of the
Organization should not be used to disseminate incorrect information or
outright lies.
Finally, I request that a broadcast be sent to correct the
misinformation regarding of what is being discussed and decided by the Board.
Thank you and best regards,
Annick Van Houtte
Chair 64th Pension Board
8. Broadcast UN HQ message from UN Participant Representatives
From: BROADCAST-UNHQ /UNHQ
Sent: Wednesday, August 2, 2017 11:25 PM
To: OAH; DPKO; HQ_NY_Secretariat;
UN_Funds_Programs_&_Tribunals
Subject: A Message from the UN Staff Associations: What happened
at this year's meeting of
the Pension Fund Board - Ce qui s'est déroulé à la réunion
annuelle du Conseil d'Administration
de la Caisse des Pensions
A Message from the UN Staff Associations
Dear Colleagues,
The annual meeting of the UN Pension Board has just concluded
and we would like to inform you of the outcome. It is important to know that UN
staff representatives numbered 4 of the 33 board members. In addition, a
statement by the staff federations is attached.
Negative audit reports: The Board considered a number of audit
reports from OIOS and the Board of Auditors. Some were quite damning, raising
among other things non-cooperation by the Fund’s management with auditors,
incorrect figures supplied to the actuaries resulting in the actuarial report
having to be dropped, and false information provided to UN staff on the size of
the payment backlog.
Extension of the CEO: In view of the above, and taking into
account the serious payment backlog, lack of contingency planning and poor
staff-management relations at the fund, we worked with others on the Board for
the non-renewal of CEO Sergio Arvizu for another five years. The reduction to
three years of the second term, with no possibility of renewal, installation of
special oversight measures, a search committee to find a successor and a limit
on the CEO’s ability to start new projects without Board approval, is the
result of a long and difficult session. It
nevertheless sends a strong signal. However, the Board’s
decision on renewal is only a recommendation to the Secretary-General who alone
must make the final decision.
Budget: The Board approved a large increase in the budget of the
Fund’s secretariat, with new posts mainly at the top levels. We made clear our
reservations about a budget increase we found to be irresponsible, especially
as these posts are paid for by you and will eat into the fund’s future
financial position. This will now be decided by the General Assembly in the
fall.
Long-term sustainability: the Fund faces an environment in which
lower investment returns and a growing budget are paired with an increasing
ratio of beneficiaries to contributors and an increasing ratio of non-staff to
staff. This fundamental issue was not discussed even though we consider it the
most important challenge for the fund right now. We hope to get this on next year's
agenda.
Attempts by the CEO to prevent elected board members from
attending: Two staff
representatives from the UN were prevented from attending the
Board despite 4,600 of you signing a petition. The CEO cited conflict of interest.
We are not convinced. Nor did the Secretary-General appear to be in last week’s
town hall meeting. The matter is currently at the UN Appeals Tribunal.
Monitoring and follow-up: In order to contribute to the
monitoring and follow-up of the Fund between Board meetings we were pleased
that one of us was elected to the Audit Committee and another as second
Vice-Chair of the Standing Committee.
In conclusion: this was our first year at the board meeting
during which we worked closely with other board members.
However, we do feel that in the future, Board members must pay
more attention to issues of sustainability, governance and management of
liabilities. Further, there is an important lack of expertise in areas of
finance and management that needs to be corrected.
We also question the ability of a board composed of 33 members
and an almost equal number of alternates, all meeting only once a year for five
days, to properly oversee the ongoing operations of a complex fund with $60
billion in assets and obligations to 200,000 beneficiaries and contributors.
This isn’t without risk and we have suggested more frequent Standing Committee meetings
which would place the Board in a better position to exercise its
responsibilities on a more regular and sustained basis. We have much to work
on.
We will continue to keep you updated and thank you for your
trust and support. We will continue to advocate on your behalf.
Mary Abu Rakabeh
Ibrahima Faye
Aissatou Ndeye Ndiaye
Bernadette Nyiratunga
Ian Richards
Michelle Rockcliffe
UN participant representatives
Chères et chers collègues
La réunion annuelle du Conseil d'Administration de la Caisse des
Pensions de l'ONU vient de se terminer et nous souhaitons vous faire part des
résultats à l’issue de ces rencontres. Les représentants du personnel de l'ONU
étaient au nombre de 4 parmi les 33 membres du Conseil d'administration. Vous
trouverez aussi en pièce jointe, la déclaration des fédérations du
personnel.
Rapports d'Audit négatifs : le Conseil a examiné un certain nombre
de rapports d'audit du Bureau des services de contrôle interne (OIOS) et du
Comité des commissaires aux comptes (BOA). Certains ont été très négatifs,
révélant entre autres un manque de collaboration de la part de la direction du
Fonds avec les auditeurs ; des données incorrectes fournies aux actuaires ayant
causé l’abandon et la non-publication du rapport actuariel ; ainsi que des
informations inexactes
fournies au personnel de l'ONU quant au volume des arriérés de
paiements des pensions.
Extension du mandat du Directeur général : Compte tenu de ce qui
précède, et compte tenu des nombreux arriérés de paiements aux nouveaux
retraités ; du manque de plan de contingence et des mauvaises relations de
gestion du personnel au sein du Fonds de la Pension, nous avons par ailleurs
collaboré étroitement avec autres représentants du Conseil et fait le plaidoyer
pour le non-renouvellement du Directeur général, Mr Sergio Arvizu pour un autre
mandat de cinq ans.
La réduction à trois ans de ce deuxième mandat non renouvelable
couplée de mesures de suivi spéciales avec la mise en place d’un comité de
recherche pour trouver un successeur et aussi l’impossibilité de démarrer de
nouveaux projets sans l'approbation du Conseil d'administration, sont le
résultat d'une longue et difficile session. Ceci constitue un signal fort.
Par ailleurs, la décision du Conseil concernant le
renouvellement du mandat du Directeur general de la Pension n'est qu'une
recommandation faite au Secrétaire Général des Nations Unies, qui seul devra
prendre la décision finale.
Budget : Le Conseil a approuvé une forte augmentation du budget
du secrétariat du Fonds, qui comprenait la création de nouveaux postes,
notamment à des grades élevés. Nous avons clairement indiqué nos réserves quant
à cette hausse budgétaire que nous avons qualifiée d’irresponsable, d'autant
plus que ces postes seront payés par vous avec toutes les incidences négatives
que cela aura sur la situation financière à venir du Fonds. L'Assemblée
Générale devra en décider durant l’Automne.
Durabilité dans le long terme : le Fonds se trouve actuellement
dans une situation de faibles rendements de ses investissements avec un budget
croissant. Parallèlement, il connait un ratio élevé entre le nombre de ses
bénéficiaires et celui de ses contributeurs et un ratio tout aussi élevé entre
le nombre de personnel temporaire et celui du personnel régulier. Ce problème fundamental
n'a pas été discuté bien que nous considérons qu’il est un des défis majeurs
auquel le Fonds fait
face en ce moment. Nous espérons que cela sera à l'ordre du jour
l'année prochaine.
Les tentatives du Directeur général d’empêcher les membres élus
du Conseil
d'administration de participer aux rencontres : Deux
représentants du personnel de l'ONU ont été empêchés d'assister au Conseil
malgré que le fait que 4 600 d'entre vous aient signé une pétition. Le
Directeur général a avancé la notion de conflits d'intérêts. Nous n’en sommes
pas convaincus. Le Secrétaire Général, lors de son allocution et entretien avec
tout le Personnel la semaine passée, ne semblait non plus en être convaincu. Ce
problème est actuellement traité au Tribunal d'Appel des Nations Unies.
Monitoring et suivi : Afin de contribuer au monitoring et au
suivi dans la gestion du Fonds durant les périodes entre les réunions du
Conseil, nous avons été ravis d'avoir obtenu l'appui des membres du Conseil
d'administration qui ont bien voulu élire un de nos représentants comme membre
du Comité d'Audit et un autre membre comme Vice-Président du Comité Permanent.
En conclusion : Cette rencontre a été notre première année au
Conseil où nous avons pu travailler en étroite collaboration avec les autres
membres du Conseil d'Administration. Cependant, nous pensons qu’à l'avenir, le
Conseil devrait accorder plus d'attention aux questions de durabilité, de
gouvernance et de gestion. En outre, il existe un manque criant d'expertise
dans les domaines de la finance et de la gestion qui doit être corrigé. Nous
remettons également en question la
capacité de gestion d'un Conseil composé de 33 membres et d'un nombre quasi
équivalent de suppléants, qui ne se réunit qu’une seule fois par
année pendant cinq jours, pour superviser correctement les opérations en cours
d'un Fonds aussi complexe avec plus 60 milliards de dollars d'actifs et d’obligations
pour les 200 000 bénéficiaires et contributeurs que nous sommes.
Ce n'est certes pas sans risque, et nous croyons que le Conseil
doit trouver un moyen d'assumer ses fonctions de manière plus responsable, plus
régulière et consistante. Nous avons donc beaucoup à faire!
Nous continuerons à vous tenir au courant et vous remercions
pour votre confiance et votre soutien. Nous continuerons à plaider en votre nom
et en votre faveur.
Mary Abu Rakabeh
Ibrahima Faye
Aissatou Ndeye Ndiaye
Bernadette Nyiratunga
Ian Richards
Michelle Rockcliffe
Représentants des participants de l'ONU
(See attached file: PBFederationStatement (1).pdf)
9. Broadcast
UN HQ: Staff Union info session on the Pension Fund
HQ NY
Secretariat
From: BROADCAST-UNHQ/NY/UNO
Date: 07/27/2017 06:37AM
Subject: REMINDER: Staff Union Info Session on
the Pension Fund (UNJSPF); TODAY 27 July 2017 11:30 am in CR3
A MESSAGE FROM THE UNITED NATIONS STAFF
UNION
REMINDER: The United Nations Staff Union is
holding an information session today for all current staff members and retirees
of the United Nations Joint Staff Pension Fund (UNJSPF).
WHEN: Thursday, 27 July 2017
WHERE: Conference Room 3
TIME: 11:30 am to 1:00 pm
This meeting is intended to better
educate staff members about different types of pension plans, particularly the
difference between a "defined benefit" and a "defined
contribution" pension. Currently, UN staff who are participants of the
UNJSPF contribute to a plan that has a defined benefit. Changing the
design of the UNJSPF plan is not being considered in the Pension Board meeting
currently taking place in Vienna and as far as we are aware is not planned to
be considered in the future. It should be noted that it would not be possible
for any changes to be made to the UN Pension Fund plan without first having a
recommendation from the Pension Board and then approval of the United Nations
General Assembly.
Your Staff Union is pleased to bring you a panel of highly qualified
specialists in the field to educate us on the pros and cons of each plan and to
answer your questions.
Panel Members:
Ms. Bailey Childers, Executive Director, National Public Pension Coalition
Mr. John Abraham, Research and Strategic Initiatives Department, AFT
Mr. Sugiyama Iutaka, Former Chief, Pension Entitlements Section, UNJSPF;
Retiree
Moderator: Ms. Bibi Khan, President UNSU-New York
Warm regards,
The UN Staff Union
10. BROADCAST UNHQ
Date: 10 July 2017 at 10:21:18 PM
Subject: Message from UN participant representatives to the Pension Fund / Message des représentants des participants de l'ONU au Fonds de Pension
Dear UN Colleagues,
As representatives of UN staff to the pension fund, elected by you in April, we would like to update you on preparations for the forthcoming annual board meeting, which takes place 24 to 28 July in Vienna.
Issues to which we are devoting particular attention are: the large backlog of payment delays to retirees; proposals to increase the top-heavy nature of the pension fund administrative budget; the need for proposals to speed up the first payment upon retirement; investment underperformance; and in the context of the above, the proposals to renew the current leadership.
However, our work has been severely hampered by the fact that important documents, some running to over 200 pages, have been shared very late and well past the six-week deadline. And some have yet to be shared.
We are also concerned by a statement made by the fund CEO, Sergio Arvizu, to a meeting of New York-based retirees, in which he heavily emphasized the trend of pension funds ceasing to provide a pension linked to length of service and final salary, without closing the possibility of this happening at the UN. We are worried about this development and believe the closing of our unique defined benefit scheme would signal a major abrogation of responsibility by the employer and a significant cut to the UN’s social security provision. We will be seeking further clarification on this matter very shortly.
Finally we are contesting the decision of the CEO to block the presence of two UN participant representatives among us at the board’s meeting. We continue to believe that excluding elected members from the board violates due process, results in the disenfranchisement of over 86,000 participants and removes the ability of staff to scrutinize and have a say in their own pension fund as was the intention of the General Assembly when it established the tripartite board.
We will continue to keep you updated as we approach the board. In the meantime we encourage you to read this informative open letter below (English only) written to the Chair of the board.
Thank you,
Mary Abu Rakabeh
Ibrahima Faye
Aissatou Ndeye Ndiaye
Bernadette Nyiratunga
Ian Richards
Michelle Rockcliffe
-----------------------------------------------------------------------------------
Chères et chers collègues à l'ONU,
En notre qualité de Représentants des participants de l'ONU au Fonds de Pension, élus par vous en Avril dernier, nous souhaitons vous informer sur les préparatifs de la prochaine réunion annuelle du conseil d'administration qui aura lieu du 24 au 28 juillet à Vienne.
Les problèmes auxquels nous accordons une attention particulière sont les suivants: l'arriéré important des retards de paiement aux retraités; Propositions visant à accroître le budget administratif du Fonds de Pension; La nécessité de mise en place de propositions visant à accélérer le premier versement de pension à la retraite; Sous-performance de l'investissement; et des propositions pour renouveler le leadership actuel.
Cependant, notre travail a été gravement entravé par le fait que des documents importants, dont certains comptent plus de 200 pages, ont été partagés très tardivement et bien après le délai de six semaines requis. Et certains document n’ont meme pas encore été partagés jusqu’à ce jour.
Nous sommes également préoccupés par une déclaration faite par le chef de la direction du fonds, Sergio Arvizu, à une réunion des retraités à New York, dans laquelle il a fortement souligné que le fonds de pension cesserait de fournir une pension liée à votre durée de service et au salaire final, tout en n'excluant pas la possibilité que cela se produise également à l'ONU. Nous sommes préoccupés par ce développement et nous croyons que la fermeture de notre régime unique de prestations définies signifierait une abrogation majeure de la responsabilité de l'employeur et une réduction importante de la provision pour la sécurité sociale de l'ONU. Nous essayerons d’obtenir d'autres précisions sur cette question très prochainement.
Enfin, nous contestons la décision du chef de la direction d’interdire la présence de deux de nos représentants des Participants des Nations Unies lors de la réunion du conseil d'administration. Nous continuons de croire que l'exclusion des membres élus du conseil constitue une violation grave de la procédure régulière qui entraîne la privation de droits de plus de 86 000 participants et supprime la capacité du personnel à examiner et à avoir son mot à dire dans sa propre caisse de retraite, comme l'avait prévu l’Assemblée Générale lors de la création du conseil d'administration tripartite.
Nous continuerons de vous tenir au courant de l'approche du conseil d'administration. En attendant, nous vous encourageons à lire cette lettre ouverte informative ci-dessous (en anglais seulement) écrite au président du conseil d'administration.
Merci,
Mary Abu Rakabeh
Ibrahima Faye
Aissatou Ndeye Ndiaye
Bernadette Nyiratunga
Ian Richards
Michelle Rockcliffe
------------------------------------------------------------------------
Open letter to Mr. Vladimir Yossifov
Chairman of the United Nations Joint Staff Pension Board
7 July 2017
Dear Mr. Yossifov,
Subject: Matters of concern before the upcoming Pension Board meeting, 24-28 July 2017, Vienna
With regard to the annual Pension Board meeting, which will take place in Vienna from 24 to 28 July 2017, while we are not privy to the Board’s agenda, we understand that several important topics will be before the Board for discussion.
Specifically, the issues of investment underperformance and the unprecedented backlog in benefit payments, as variously detailed in General Assembly resolution 71/265, Board of Auditors report A/71/5 Add 16, Advisory Committee on Administrative and Budgetary Questions (ACABQ) report A/71/621, Pension Board report A/71/9, and Office of Internal Oversight Services (OIOS) audit 2017/2, are among the issues requiring the Board’s attention.
In this connection, we are concerned about divergent messages in the statements of the Fund’s Chief Executive Officer, Sergio Arvizu, and the Representative of the Secretary-General for Investments, Carol Boykin, at the annual assembly of the Association of Former International Civil Servants/New York (AFICS/NY), held on 27 June 2017. A video of the meeting is available here for your ease of reference:
http://webtv.un.org/…/association-of-former-…/5485264583001…
Strangely, investment performance was one of the primary topics of Mr. Arvizu’s presentation, although it does not fall under his area of responsibility. The fund is increasingly dependent on investments to remain solvent, he noted. In this connection, he said, many large organizations, including the World Bank, have moved away from the defined benefit model (the UN pension fund model), where the employer takes all the risks, to the defined contribution model, where the employer transfers all the risks to the employee. Mr. Arvizu’s reference to this issue is curious, indeed.
Any such move in that direction would fundamentally change the purpose of the UN Pension Fund: the social security of United Nations employees worldwide. These provocative and troubling speculations by Mr. Arvizu undermine staff confidence and invoke longstanding concerns of the UN staff federations and others, about his past moves to consolidate and privatize the fund.
Regarding the backlog in pension payments, once again Mr. Arvizu’s focus was exclusively on “actionable” cases. He noted in this regard: “We’re addressing all of the straightforward cases within the same month, and the remaining balance is less than one week, or one week, and we follow the industry practice of 80-20”.
Absent from his presentation was any mention of the thousands of pending cases of other types, as detailed in the audit of the Office of Internal Oversight Services mentioned above. How can Mr. Arvizu be expected to address a problem he is unwilling to even acknowledge?
Ms. Boykin presented a Power Point array of investment charts, in dazzling detail, “in the spirit of continual improvement in transparency”, noting in this regard: “We have had a lot of questions about the performance of the fund, and we’ve heard people saying that we’re underperforming. We’re not underperforming.”
Ms. Boykin’s characterization of concerns about the fund’s investment underperformance as “people saying we’re underperforming” seems oblivious to the fact that these views were expressed by major UN bodies (the General Assembly, the Pension Board, the ACABQ, the Assets and Liabilities Monitoring Committee), not just “people saying.”
While Ms. Boykin acknowledged in her statement that the Fund underperformed in investments in 2016, it is documented in the reports of these major UN bodies that the Fund also underperformed in the 2014-2015 biennium.
Further, and contrary to Ms. Boykin’s statement that “in Q1 2017 we were right on top of our benchmark. . . So we’re right in line with the benchmark this year”, according to the Fund’s publicly available investment report for May 2017, the Fund returned 8.24 per cent while the policy benchmark returned 8.51 per cent, i.e, the Fund underperformed by 0.27 per cent. (See May 31, 2017 monthly report here):
http://imd.unjspf.org/monthlyreports/May-2017.pdf. How can Ms. Boykin be expected to address a problem she’s unwilling to even acknowledge?
On a more realistic note, we were gratified that the Chef de Cabinet, Ms. Maria Luiza Ribeiro Viotti, noted that the “Secretary-General is aware of your concerns” and that “The Pension Fund’s backlog of actionable cases and management issues has caused hardships for thousands of employees.” Further, she said, while progress had been made on actionable cases, “there are still other pending cases related to deferred pensions, special and recalculation cases, as well as non-actionable cases pending receipt of additional information.”
Ms. Ribeiro Viotti also provided a welcome reality check on investments, noting that the Secretary-General, who “has a fiduciary responsibility, is looking forward to the board’s consideration” of “a review of the fund’s investment practices, risk management and investment performance conducted by an independent third party.
In this regard, we were also gratified to hear from Warren Sach, chair of the AFICS/NY pension committee and Federation of Association of International Civil Servants (FAFICS) representative to the Board, that “pension delays are unacceptable” and that the Board will “spend considerable time” on the issues of the backlog in pension payments and the independent third-party review. Investment underperformance in 2016, he noted, “means that the value of assets of the fund as at year end 2016 were nearly $1 billion or $937 million below what they would have been if the Pension Fund portfolio performed as well as the market as measured by the policy benchmark.” (If one adds underperformance of $147 million up to May 2017, in less than eighteen months, the Fund has underperformed by $1.084 billion.)
Of particular significance was Mr. Sach’s statement (quote): “Do not be misled into thinking that mere growth in assets of the Fund to new highs in billions of dollars means that investments are performing optimally. It is performance relative to the market that matters.”
We are not misled on the topic of the Fund’s investment underperformance. We also do not believe that this underperformance is owed to the “market favoring indexation over active management” as Mr. Boykin contends.
Neither are we misled on the issue of the backlog in pension payments. While we note Mr. Arvizu’s claim, and Mr. Sach’s resolve to support his request for more resources, we do not believe that the backlog in pension benefits or issues with client services can be solved by additional resources alone. The OIOS audit points squarely to managerial deficiencies in the Fund Secretariat and there is no clear indication that these have been resolved.
Finally, we wish to state our concern about your active support of Mr. Arvizu in blocking two duly elected participant representatives to the UN Staff Pension Committee from participating in the Board, despite assurances that arrangements could be made to avoid potential conflicts of interest. This, unfortunately, echoes the Board’s reported muzzling of the UN staff federations at last year’s board meeting, and continues to cause us serious concern about the fairness and objectivity of the Board’s proceedings.
There are grave matters before the Board that will affect the future of our Fund, including decisions about changes to its leadership moving forward. We urge you to eschew partisanship for leadership on decisions that will ensure that our Fund continues on a healthy track for the benefit of both current and future beneficiaries.
Yours sincerely,
Lowell Flanders
Loraine Rickard-Martin
Beneficiaries/UNJSPF
c.c.
Maria Luiza Ribeiro Viotti
Jan Beagle
Sergio Arvizu
Carol Boykin
Ian Richards
Diab El-Tabari
Dimitri Samaras
Stephen Towler
UNJSPF Board representatives
FAFICS members
AFICS/NY Governing Board members
