Letter to the Members of the Board of the UN Joint Staff Pension Fund -- the Chief Executive Officer Must Go
22 July
2017
Dear
Board Members of the UNJSPF,
Subject:
Consideration of extension of the CEO’s contract
The
Pension Board is expected, at its sixty-fourth session (24 to 28 July 2017 in
Vienna) to take up the issue of the extension of CEO Sergio Arvizu’s five-year
contract which expires in December 2017.
According
to last year’s report of the Board (A/71/9) an Evaluation Panel consisting of
the bureau of the sixty-third session presented to the Board a positive
assessment of Arvizu’s performance for the 2014-2015 cycle. The Board took note
of the Panel’s evaluation and approved its conclusions and recommendations.
Following an effort to recommend renewal of Arvizu’s contract a year in
advance, the Board agreed to defer the matter to this year’s meeting.
Since
the conclusion of last year’s meeting, reports of the Board of Auditors, ACABQ,
an OIOS audit, and a General Assembly resolution, contain details of managerial
deficiencies in the Fund Secretariat under Arvizu’s watch. These reports must
be included in any objective and thorough assessment of his performance.
Highlights of these reports are presented below and excerpted in the attached
annex to this letter for ease of reference.
Board
members may recall that the Board of Auditors’ report (A/71/5/Add.16,
paragraphs 9, 11, and 12) found functional deficiencies in the implementation
of IPAS and in client servicing, delayed entitlement and benefit payments, and
a related lack of a system to follow up on missing documentation.
ACABQ
report (A/71/621, paragraphs 5, 8, and 10) found that remedial measures to
address the backlog in the payment of pension benefits, including the
end-to-end review and establishment of a focal points network, should have been
carried out earlier. In also notes the high number of vacant posts, and
observes that the increase in the number of separation and associated claims
could have been anticipated.
The
OIOS audit (2017/02, see Executive Summary and selected paragraphs in the
annex) cites managerial deficiencies related to the backlog in the payment of
pension benefits, such as a failure to assess and act in a timely manner to
mitigate risks (18), including risks arising from missing or erroneous
functions in IPAS (19); failure to address a sharp drop in benefit-processing
performance from 2013 to 2016 (39); failure to include all types of outstanding
cases in reporting the backlog (49); failure to fill longstanding vacant
positions (24); and a poor client servicing record (e.g., only 3, 7, and
4 per cent of phone calls answered by the Fund in February of 2014, 2015 and
2016) (33).
In
addition, the audit found no significant or consistent surge in the numbers of
new pension cases or beneficiaries as cited by the Fund as a primary cause of
the backlog (21). Paragraph
48 of the report states that “The OIOS review of the cases reported by the Fund
as ‘backlog’ which formed the basis for its performance indicators ‘Q-gates’”
showed that almost 6000 cases of varying types had not been reported (deferment
of payment or choice of benefit; recalculation or revision of benefits;
survivors benefits; disability benefits etc). Further, more than 11,000 cases
were claimed by the Fund to lack complete documentation of which a significant
proportion were found by the audit to be complete and ready for processing
(para.44).
In one
of several outstanding cases highlighted by the audit, a staff member in a
field mission died in 2006 leaving a 16-year–old child. The audit observes that
“the child was a designated beneficiary and was yet to receive benefits as of
31 August 2016” (56a).
OIOS
notes that whereas the Fund claims that it does not have responsibility for
following up on missing documentation, this is a function of the UN Staff
Pension Committee of which the CEO is Secretary (para.45), and “The Fund
received approximately $21 million for the biennium 2014-2015 from the United
Nations for the SPC secretariat services of United Nations family
organizations.”(43).
Significantly,
there is no indication that recommendation 8 of the OIOS audit report has been
implemented: “The Department of Management should: (i) request the UNJSPF Secretariat
to provide complete information on all types of outstanding cases; and (ii)
establish new “Q-Gates” in consultation with the UNJSPF Secretariat for all
outstanding cases, as well as standard templates for consistent monitoring and
reporting.”
Board
members may wish to note that the OIOS audit report states in its executive
summary that while the Fund had requested that it close eight of its eleven
recommendations “on the grounds that the recommendations were ‘overtaken by
events’, the ‘risk has been eliminated’, ‘there are no delays’ or ‘there is no
backlog’”. . . OIOS is of the view that these recommendations cannot be
closed because the Fund’s definition of ‘backlog’ did not include all types of
outstanding cases.”
The
attention of Board members is drawn to paragraphs 8 and 50 of the OIOS audit
stating that “As of 12 June 2016, there were approximately 4,709 outstanding
initial separation cases and 4,870 outstanding recalculation and revision
benefits.” Yet, as recently as 27 June 2017 at the AFICS/NY annual assembly the
CEO announced from the podium that “at the end of the month . . . You see the
number for May 2017 . . . of 225 cases . . . we’re processing 80 per cent of
the actionable cases during the same month that we receive them”. Absent
from Arvizu’s presentation was any mention of the thousands of cases of other
types detailed in the OIOS audit as outstanding. Mr. Arvizu cannot be expected
to address problems that he does not even acknowledge.
In
stark contrast, Chef de Cabinet Maria Luiza Ribiero Viotti provided in her
statement to the AFICS/NY annual assembly a welcome reality check as follows:
“The Pension Fund’s backlog of actionable cases and management issues has
caused hardships for thousands of employees. There has been progress. There are
now fewer than 300 actionable cases related to initial separations that are
still pending processing by the Pension Fund. That said, 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.”
General
Assembly resolution 71/265 in paragraph 14, expresses serious concern at the
continued delays in the payment of pension benefits, stresses the need for the
Pension Board to address the causes of the delays, and requests an update in
the Board’s next report.
Further,
the GA, in paragraph 30 of its resolution, "Requests the Secretary-General to entrust the
Office of Internal Oversight Services with conducting a comprehensive audit of
the Fund's policies on, inter alia, risk management, investment management and
other administrative processes and to report to the General Assembly at its
seventy-second session on key findings in the context of the annual report on
the activities of the Office."
Board
members may wish to note that the ACABQ makes a statement of fact, not an
endorsement, in paragraph 19 of its report, when it states that the Pension
Board at its sixty-third session took note of the evaluation of the CEO,
"that the term of the current Chief Executive Officer expires at the end
of 2017" and that the Board "Is expected to make a recommendation to
the Secretary-General on this matter."
Similarly,
Board members may also wish to note that the General Assembly in paragraph 3 of
its resolution "Endorses the conclusions and recommendations of the
Advisory Committee on Administrative and Budgetary Questions, subject
to the provisions of the present resolution." Those provisions stress the
need for the Pension Board to address the causes of the delays in pension
payments, requests an update in the Board's next report, and requests a
comprehensive audit of the Fund's policies, including on administrative
processes, and that its key findings be reported to the GA at its
seventy-second session.
One
trusts that Board members will consider all relevant information before
arriving at a conclusion on this important matter. By taking account of
Arvizu’s performance since the evaluation period (2014-2015) and the need for
accountability as called for by the Fund’s governing bodies, Board members
would thus give objective consideration to the matter of leadership for the
Fund Secretariat that will address current managerial deficiencies as detailed
in the above reports and ensure the Fund’s continued health.
Yours
sincerely,
Loraine
Rickard-Martin
Beneficiary,
UNJSPF
c.c.
Chef de Cabinet,
USG,
Department of Management
______________________________
ANNEX - Excerpts from relevant reports
related to the Pension Board’s consideration at its sixty-fourth session of
renewal of the CEO’s contract
Board of Auditors report
(A/71/5. Add. 16)
Benefits payment management
Implementation of the Integrated
Pension Administration System
8. The Board observed various issues in
the implementation of the Integrated Pension Administration System (IPAS), such
as the non-removal of inconsistencies in existing data, issues in the migration
of data from the legacy system and the absence of key performance indicators.
Client services
9.
There were several deficiencies in
the client query/complaint redressal system of the Fund.
Delays in processing payments
10. Only 14 per cent of
death-in-service cases could be processed within the target benchmark of 15
days, and 85 per cent of cases were processed with delays ranging from 16 days
to more than one year. Only around 8 per cent of retirement and withdrawal
cases could be processed within the benchmark of 15 days, whereas 91 per cent of
cases were processed with delays ranging from 16 days to more than one year.
11. In 423 cases,
more than six months elapsed between the separation of the participant and the
receipt of the separation notification from the reporting entity, and in 2,616
cases, the entitlements could not be processed because payment instructions had
not been provided by the participants.
Main recommendations
2.
The Board recommends that the United Nations Joint Staff Pension Fund:
(e) Address all the issues of data
migration and frame key performance indicators in accordance with functional
requirements for assessing the accuracy and timeliness of IPAS outcomes;
f)
Devise
a suitable client query/complaint redressal system by means of proper
acknowledgement, segregation, monitoring and reporting of queries/ complaints
and proper communication with clients;
g) Prescribe a time frame and
reporting framework for each type of entitlement and benefit on the basis of
their urgency and priority;
h) Impress upon the participating
organization that it must ensure that cases that are due for separation in the
normal course of business are identified and submitted sufficiently in advance;
and, in collaboration with the participating organization, devise a mechanism
to resolve the issues relating to incomplete or missing documentation.
------------------------------
Report of the Advisory Committee on
Administrative and Budgetary Questions
(A/71/621)
5.
The Advisory Committee notes that in its previous report the Board of Auditors
had already identified delays in processing claims and had recommended that the
Fund ensure adherence to the stipulated benchmark for the processing of
benefits through improvements in efficiencies and the use of information
technology (A/70/325, annex VI, para. 53). The cumulative
delays in both phases affect the beneficiaries, whether they are families of
deceased staff members or former staff members and their families. The Board of
Auditors underlined, in its previous report, that the primary function of the
Fund is to ensure that benefits are paid to participants on time (ibid.).
8. . . .In the view of the Advisory
Committee, both the end-to-end review and the establishment of a focal points
network should have been undertaken earlier.
10. . . . In the view of the Advisory
Committee, given that a review of the downsizing and closing of previous
missions would have provided an indication of the time required to complete the
processes, the increase in the number of separations and associated claims
could have been anticipated, and the Secretariat and the Fund could have taken
measures to prepare for and process the claims in a more timely manner.
-----------------------------
General Assembly
resolution A/Res/71/265
3. Endorses the conclusions and recommendations of
the Advisory Committee on Administrative and Budgetary Questions,5 subject to the provisions of the
present resolution;
14. Expresses serious concern at the continued delays in the receipt
of payments by some new beneficiaries and retirees of the Fund, once again
stresses the need for the Pension Board to take appropriate steps to ensure
that the Fund addresses the causes of such delays, and in this regard requests
an update in the context of the next report of the Pension Board;
17.
Notes with concern the high number of vacant posts in the
Pension Fund, and in this regard requests the Pension Board to ensure that the
Fund takes appropriate measures to fill all the vacant posts in the Fund
secretariat in full compliance with relevant provisions governing recruitment;
29. Emphasizes the need for the Pension Board to
ensure that the Fund takes appropriate measures to use existing internal
capacities and avoid the use of consultants in its operations, as appropriate;
30. Requests the Secretary-General to entrust the
Office of Internal Oversight Services with conducting a comprehensive audit of
the Fund’s policies on, inter alia, risk management, investment management and
other administrative processes and to report to the General Assembly at its
seventy-second session on key findings in the context of the annual report on
the activities of the Office.
-----------------------------
OIOS audit (2017/02):
Audit of management delays in processing of pension benefits in the United
Nations Joint Staff Pension Fund
Excerpt of executive summary
The Department of Management (DM)
needed to: (i) request the UNJSPF Secretariat to provide complete information
on all types of outstanding cases; and (i) establish new “Q-Gates” in
consultation with the UNJSPF Secretariat for all outstanding cases, as well as
standard templates for consistent monitoring and reporting. DM accepted the
recommendation.
The UNJSPF Secretariat accepted all 11
recommendations and requested the closure of three recommendations since those
issues would be covered in the end-to-end review being conducted. The Fund
requested closure of five other recommendations (including the two critical
recommendations) on the grounds that the recommendations were “overtaken by
events”, the “risk has been eliminated”, “there are no delays”, or “there is no
backlog”. The Fund stated that as of end of December 2016, there were only “367
presumed actionable cases (cases for which the Fund has received the three
separation documents to process the case)”.
OIOS is of the view that these
recommendations cannot be closed because the Fund’s definition of “backlog” did
not include all types of outstanding cases.
Strategic planning and risk assessment
18. . . .The first action to mitigate
the accumulation of outstanding cases, which was the establishment of a
taskforce, was initiated in February 2016, which was six months after the
blackouts had caused the accumulation of cases. The delay in taking mitigating
actions in turn contributed to delays in processing/payment of benefits to
beneficiaries.
19. . . . Some of the missing or
erroneous functionalities in IPAS that were causing delays in processing of
pension benefits have been explained in Section C of the present report.
20. . . . In the absence of a
mitigation plan, the 2016 year-end reconciliation process, which did not
function as expected and required manual intervention and correction of data
inconsistency, also contributed to delays in processing of pension benefits.
21. . . . In January 2016, the Fund
attributed the causes of accumulated delays in processing benefits to: (a)
increase in new pension benefit cases due to downsizing of the several
missions; (b) increase in the number of beneficiaries; (c) delays in
transmission of the required documents from the member organizations; and (d)
expected ramp up activities of IPAS. . . . The
analysis showed no significant or consistent surge during the period. Table 2
indicates the number of separations and periodic benefits, and the time taken
by member organizations to transmit to the Fund all the required documents for
2013, 2014 and 2015.
33. . . . Further review of calls that
were recorded through the hotline of the New York office in February 2014, 2015
and 2016 indicated that the percentage of answered calls to all calls received
during working hours was 2.5, 5.7 and 3.3 per cent respectively, as shown in
Table 6 below.
24. . . . in the United Nations
Secretariat, due to limitations on the use of temporary appointments to fill
regular posts, hiring managers were required to fill posts on a regular basis
to assure effective programme delivery, rather than recruit temporary staff. There
were no such limitations in UNJSPF, which allowed the Fund’s hiring managers to
keep vacancies unfilled for long periods and/or resort to thuse of temporary
appointments for regular functions.
39. As
evident from Table 7, there was a sharp decline in the actual percentage of
cases completed within 15 business days, from 70 per cent in 2014 to 39 per
cent in 2015, and 24 per cent in 2016 (up to 17 June 2016).
43. The
Fund received approximately $21 million for the biennium 2014-2015 from the
United Nations for the SPC secretariat services of United Nations family
organizations. However, no metrics were defined in the Fund’s strategic
framework to measure and monitor the performance of the Fund in its role as the
secretariat of the United Nations SPC.
44.
According to the Fund’s communication dated 7 July 2016, there were 11,128
cases with incomplete documentation. Of these, 2,889 related to former staff
members (i.e. inactive participants). OIOS review of cases relating to former
staff of United Nations family organizations showed that whereas 61 per cent of
open cases were ready for processing with a complete set of the required
documents, 39 per cent of open cases required follow-up by the Fund with United
Nations family organizations to obtain missing documents. In the case of other
member organizations, 87 per cent of their open cases were ready for processing
and 13 per cent required follow-up by the secretariat of their respective SPCs
to obtain the missing documents.
45. The
Fund stated that it does not have the responsibility to follow-up on missing
documentation/data. However, OIOS notes that according to the TOR of SPCs and
their secretariats, SPC secretaries are responsible for the administration of
several pension matters starting from the staff member’s entry into the Fund,
up to his/her separation from service.
48. OIOS review of the
cases reported by the Fund as “backlog”, which formed the basis for its
performance indicators “Q-Gates”, showed that:
b. . . . There were 305 Article 32
cases7 as of 1 March 2016 which were not included in the “backlog”.
c. There were approximately 852 cases8
that were opened before 1 January 2014 and ready to be processed as of 1 March
2016 were not included in the “backlog”.
d. Cases that were already assigned to
the Pension Entitlement Section before 1 March 2016 and being processed were
not included in the “backlog” and their status was not monitored through
“Q-Gates”. There were 554 such cases.
e. Recalculation and revision benefits
(i.e. survivors’ benefits due to death after service, child’s benefit coming
into payment, correction of the initial calculations and others) were not
included in the “backlog”. UNJSPF Standard Operations Procedures9 required that
top priority be given to the processing of survivors’ benefit, disability
benefits and reinstatements of benefits that were suspended upon re-entry into
the Fund and for surviving spouse benefits in order to minimize any
interruption or delay in the payment of a benefit. There were 4,091 outstanding
recalculation and revision benefits that were not included in the “backlog”. Of
these, 1,409 cases10 were assigned high priority in IPAS, including at least
883 cases relating to death after service.
49. On 6
June 2016, another iSeek announcement reported that the Fund Secretariat had
cleared 97 per cent of the backlog of 3,436 cases, leaving only 95 cases (3 per
cent) to be processed/paid in June 2016. However, OIOS review indicated that
1,368 of these 3,436 cases were yet to be processed/paid as of 31 May 2016. The
breakdown of 1,368 unprocessed/unpaid cases is shown in Table 8. The Fund
counted only the cases that had not been assigned to the Pension Entitlement
Section as “not processed” (i.e., the 95 cases falling under arrow D in
Illustration 2). All other cases including those before processing, in process,
or other unprocessed cases were considered “processed”.
50.
. . . As of 12 June 2016 there were still approximately 4,709
outstanding initial separation cases for which a complete set of the required
documents had been received and were either ready for processing or required
additional communication. . . . In addition to these, there were 4,870
outstanding recalculation and revision benefit cases.
Recommendation (8) The Department
of Management should: (i) request the UNJSPF Secretariat to provide complete
information on all types of outstanding cases; and (ii) establish new “Q-Gates”
in consultation with the UNJSPF Secretariat for all outstanding cases, as well
as standard templates for consistent monitoring and reporting.
56 (a). In one of the
five death-during-service cases, a former staff member had died in 2006. The
separation notification form was received in December 2007, followed by the
separation personnel action form in September 2008 and the payment instruction
in April 2013. Client Services contacted the surviving spouse through the
MONUSCO human resources office in May 2016 to request the documents that were
marked as “received” in IPAS. The former staff member had a surviving child who
was 16 years old at the time of her death. The child was a designated
beneficiary and was yet to receive benefits as of 31 August 2016.
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