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.
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.
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.
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
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.