Tuesday, January 3, 2017

UN Pension Fund: Now the truth is out, where does it go from here? 3 January 2017

Note: Click on the link (below) to Susan Manuel's Passblue article to see Lee Woodyear's comment (Senior Communications Officer, UN Pension Fund), and UN Pension Blog's response, both posted on 6 January 2017

Susan Manuel’s Passblue article, see link below, concerning the recently adopted General Assembly resolution, (S/Res/71/265, linked in the article) notes that the  resolution in "sharply rebuking the Pension Fund", reaffirms the Secretary-General’s control over the fund’s financial rules and regulations; requests the Secretary-General to “make all efforts to improve the Pension Fund’s performance”, including low investment performance and $3.4 billion foreign exchange losses over 2014-2015; provide a performance evaluation of the RSG for investments; and entrust the Office of Internal Oversight Services with conducting a comprehensive review of risk management, investment management, and other administrative processes at the Fund.

The Board of Auditors report (A/71/5/Add.16, paras. 86 and 88) noted that in 2011, the Fund decided to treat the selection of external investment managers as an investment decision rather than a procurement exercise. Yet, at the end of 2015, no guidelines for their evaluation or selection had been finalized, thus "the Fund may have to renew the contracts with the existing fund managers and therefore miss the opportunity to hire better external managers and negotiate more favourable terms and conditions.”

We understand from reliable sources that the Investment Management Division has never compared its brokerage commission fees with its peers, although such data is widely available through custodians. If this is correct, it seems negligent. One of the actions that must happen is the comprehensive OIOS audit called for by the GA resolution must include an audit of brokerage commissions paid for each region to ensure that IMD is paying reasonable commissions compared to industry peers. 

While they're at it, OIOS might wish to look into why the CEO insists on selecting (twice so far) an OIOS staff member for the D1 post of Chief, Information Management Systems Service, despite findings of unlawfulness (twice so far) by the UN Dispute Tribunal.

On a note of 'now the truth is out, where does it go from here?' recall that the Fund’s Chairman, Vladimir Yossifov, presided over a Pension Board meeting in July 2016, that gagged and threatened the UN staff unions, intimidated the media, obliged all Board members to sign a confidentiality agreement by which they were prohibited from sharing information with us, the stakeholders/owners of the Fund; gave the Fund CEO high marks for his performance and tried to push through renewal of his contract a year in advance. Recently, he tried to shut down a statement by a staff representative at the UN Geneva town hall on pension matters.

Mr. Yossifov continues to claim “misconceptions” (See the Fund's “Whistling in the Dark” Newsletter of December 2016 on the UNJSPF website) regarding CCISUA’s article on the resolution, and directs participants and beneficiaries to (among other sources) the Associations of Former International Civil Servants, for “accurate information about the Fund and its activities”. Recall that AFICS/NY and FAFICS (the Association of Former of International Civil Servants and its parent body, the Federation of Associations of Former International Civil Servants), which shared a president until recently, did not join CCISUA’s efforts and those of their dues-paying members to dig beneath denial and obfuscation to uncover and address incompetence at all levels in our Fund, and instead tried to thwart those efforts at every turn (see CCISUA's article on the GA resolution, below on the blog, where the CCISUA president states: "The Federation of Associations of Former International Civil Servants (FAFICS), representing retirees, did not support the campaign). 

it's clear that some Pension Board members and participants lack the knowledge and skills for the task. Elections for membership in the UN Staff Pension Committee (4 members and 2 alternates) are expected to take place in February. It’s imperative that the UN Administration ensures that accurate contact information is provided for all 86,000 eligible voters to ensure a fair and clear election process with maximum participation. Reportedly, this information may need to be wrested from the hands of the Fund CEO.

At this point, it’s clear that UN management, Fund management on both sides, and the Pension Board have failed in carrying out the duties entrusted to them to ensure a well-run and healthy Fund for current and future generations of UN retirees. Now the truth is out, with compelling reports of the Board of Auditors, the Advisory Committee on Administrative and Budgetary Questions (ACABQ), a leaked OIOS audit report on the payment backlog, culminating in this General Assembly resolution. 

So what happens now? So far the record on accountability has been far from encouraging. There's every reason to expect the Board Chair, the CEO and the RSG to continue chair-shuffling on deck. They've betrayed our trust. They must be replaced. The ball is in our new Secretary-General’s court to ensure that UN management, the Fund and the Board have the competent leadership that they require to address the Fund’s current deficiencies and ensure that it weathers whatever global financial and political challenges may arise. Time will tell how quickly he will move to address issues raised in the resolution and put things right at our Fund.

As for AFICS/NY and FAFICS, it’s up to us UN retirees and AFICS and FAFICS members to face the reality that our retiree representative organizations, in failing  to represent us have rendered themselves irrelevant, certainly in the important matter of our pension. For AFICS/NY, if all we require in return for payment of membership dues is that they organize an annual luncheon and river cruise, then they’re up to the task. If we require representation of our important interests, then we must rethink our approach and plan for action, particularly regarding FAFICS, which holds six seats on the Pension Board. 

We're faced with a situation where serving UN staff can be sure about who represents their interests (the UN staff federations), but UN retirees are unable to rely on their representative organization, FAFICS, to ensure the safety of our life savings. This isn't acceptable or viable. It has to change, and soon. 


Two questions for the CEO: 1) Where's the OIOS audit on the backlog in pension payments, sent to you by memorandum on 18 October 2016? 2) Do you intend to select, for a third time,  your favorite OIOS auditor for the vacant post of D1 Chief, Information Management Systems Service, despite the finding (twice)  of unlawfulness by the UN Dispute Tribunal? 

LINK DO THE DRAFT GA RESOLUTION:http://www.un.org/ga/search/view_doc.asp?symbol=A/C.5/71/L.6

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