Wednesday, February 22, 2017

UN Pension Fund - third party review of investments, 22 February 2017

It’s encouraging that the Assets and Liabilities Monitoring Committee’s recommendation made at last year’s Pension Board meeting for an independent third-party review of the Fund’s investments is being implemented. This is a crucial step given the Fund’s investment underperformance, which puts its solvency at risk. (See link at end of article to 'Information note by Warren Sach FAFICS member of the ALM Committee and Project Team member for the Review').

General Assembly resolution A/RES/71/265 adopted at the end of last year, took the Fund to task for not meeting, in the 2014-2015 biennium, its 3.5 per cent target annual real rate of return and for incurring foreign exchange losses of $3.4 billion without a mitigating system in place (paras. 24 and 25) .

In addition, “investment income fell by $5.26 billion (76 per cent) in 2014 compared with 2013 and by a further $2.12 billion (127.63 per cent) in 2015 compared with 2014” (para. 6 (b) Board of Auditors report, A/71/5/Add. 16.) For 2016, return on investment was 2.93 per cent for the Fund compared with its 3.5 per cent target, in a year reported as exceptionally good for US based and global funds.

It is also interesting to note from the statement of the Federation of Associations of Former International (FAFICS), ‘non-participation’ of the RSG and her team for the meeting on 15 February and their ‘non-availability’ on 17 February. If this turns out to be  foot-dragging, and we're not saying it is, hopefully it won't continue and in any case, won’t prevent the team’s conduct of its important work. If it is foot-dragging, or worse -- obstruction -- and it should clarify soon enough, it's shameful dereliction of duty and there should be consequences. 

There's much to be done to get our Fund back on track. On the investments side at least, this is a good start. Now if we can also have GA resolution A/RES/71/265 implemented in its entirety without delay. Incidentally, there's been no substantive information conveyed from AFICS/NY to its members, including about the GA resolution, since the President's 14 November 2016 note, until today. There's also no sign of the resolution among pension-related items on the AFICS/NY website.

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