Note that UN participant representatives represent active UN staff on the Pension Board. UN retirees have had no such briefing from FAFICS, our purported representatives to the Board, on policy positions they intend to take at the upcoming 65th session of the Pension Board in Rome (starting on 26 July)
Highlights from today’s pension briefing by the New York-based UN participant representatives to the Pension Board, 1.15 pm, ECOSOC Chamber
Highlights from today’s pension briefing by the New York-based UN participant representatives to the Pension Board, 1.15 pm, ECOSOC Chamber
18 July 2018
Ibrahim Fay gave a summary of activities and outreach
undertaken by the UN participant representatives in the past year, in keeping
with their fiduciary responsibility to keep participants informed.
He noted that, in addition, several meetings had been held
with the Deputy CEO of the Fund Secretariat to discuss the backlog, including
sustainable means of addressing the increased number of separations; and with
the Representative of the Secretary-General for Investments to discuss the
Fund’s ESG (Environment, Social and Governance) policy, and other matters.
UN participant representatives had participated in the Staff
Pension Committee’s meetings on disability benefits and had requested that
regular additional meetings be held to focus on governance matters. There are
conflicting interests between UN family members and other members of the SPC and
most of the backlog affected UN family members.
The issue of conflict of interest pertaining to two Fund
staff members (himself and Ms. Rockcliffe) who had won their UN Administrative
Tribunal cases was reopened, in order to have a more streamlined policy to
manage the issue. The need to align Pension Board rules with GA-adopted
regulations was also discussed.
The UN participant representatives had tried to have a
meeting to discuss feedback to the draft OIOS audit report (requested by para.
8 of GA resolution 72/262), owing to OIOS’ tight deadline. This was not
achieved because of the lack of a quorum. UN participant representatives
provided their input on behalf of participants and beneficiaries of the Fund.
Michelle Rockcliffe noted that the Secretary-General’s
representatives on the Board had worked with the UN participant representatives
to provide additional funding from the UNSPC budget to facilitate a meeting in
Rome between the two groups to finalize preparations for the upcoming 65th
session of the Board. She hoped it would become established practice for the UN
representatives to meet twice a year outside the Board.
In preparation for the Pension Board's 65th session in Rome, the UN participant representatives have tabled five major
papers on the following topics:
-
mitigating the backlog
-
requesting a review of Board composition
-
re-establishing the use of the Standing
Committee
-
election of retiree representatives
-
reviewing the rule to exclude Fund staff and
other pension secretariat staff from
election to the Board
-
Backlog: There’s a position paper suggesting that 80
per cent of entitlements due should be paid regardless of the receipt of all
official documents, if they are not received within three months after
separation. A few thousands of former staff stood to benefit.
Review of Board composition: the UN family represents
68 per cent of participants but only 12 (36 per cent) of 33 seats on the Board.
Specialized Agencies with only 32 per cent of participants have 21 members (64
per cent). Because of this imbalance, the Fund’s priorities have not been
geared towards procedures that benefit the UN family.
Standing Committee: the Standing Committee should
meet when the Board is not in session. The fact that it does not meet regularly
contributed to the backlog and other serious issues raised by the Board of
Auditors and OIOS. The UN participant representatives have proposed the holding
of bimonthly meetings of the Standing Committee.
Election of retiree representatives: FAFICS represents
18, 500 of some 52,000 plus retirees. The UN participant representatives have
seen the call from retirees for direct election of their representatives, as is
the case for participants and governing bodies. FAFICS should be given observer
status. The UN participant representatives have asked that a working group be
established to work toward election of retiree representatives in time for the
66th session in 2019.
Reviewing the rule to exclude Fund staff from the Board :
The Board decided in 2017 on the advice of the CEO to prevent staff from the Fund
Secretariat and pension secretariats of specialized agencies from election to
the Board. This decision was made before the UNAT ruling and the UN participant
representatives hoped that the Board will take this opportunity to correct this
error once and for all.
Other issues would
come out of the OIOS governance audit on which the Board is expected to spend a
lot of time. However, there are 61 items on the Board’s agenda including
actuarial matters, investment matters, and (controversial) proposals by the CEO
to change regulations, as well as Committee reports, and it is likely that some
of these items would be referred to the Standing Committee.
During the Q&A, a retiree commented that
resolution 72/262 is the first GA resolution calling for an audit based on
possible conflicts of interest between the Board and the Fund management in the
last ten years. He was aware that the audit was completed and that some
responses had been received including from FAFICS, which contended that nothing
was wrong with the current representation of retirees on the Board. FAFICS
claimed to be democratic, representative and open, which, he said, was a surprise
to him since FAFICS excluded participation in its policy-making. While in the
past it was possible to receive information on upcoming issues on the Board
from the AFICS office, FAFICS now claims that the documents are restricted,
despite the fact that there is no regulation stating that these documents are
confidential. In addition, FAFICS supported the Fund Secretariat when it said
that the backlog was 3000, and then 500. It had recently come out, he said,
that the actual backlog is 15,000. He requested to know the status of succession
planning in the Fund Secretariat, given that the CEO is on sick leave, and the
DCEO is expected to retire on 31 August 2018.
Another retiree (author of the highlights) asked the UN
participants to bear in mind that regarding the findings of Board of Auditors
and ACABQ reports about mismanagement on both sides of the Fund, and OIOS
audits on the backlog, problems with IPAS implementation, and procurement
irregularities, each and every action that represented progress had been taken
by the ACABQ or the Secretary-General.
On the investment side, the SG had replaced his
Representative for Investments. He had reappointed the CEO for three years
(instead of five years as originally requested by the Board) subject to
performance monitoring and a review this summer. Since the CEO was on sick
leave, there was likely not to be a review.
Much as she appreciated the efforts of the UN participant
representatives, it was important for them to recognize that no useful action
could be expected from the dysfunctional Board, which included the
dysfunctional retiree representatives, FAFICS, or from the Fund management.
She noted that as a result of several Board of Auditors,
OIOS and ACABQ reports over the past several years, there were numerous
recommendations to the Fund and to the Board that had been languishing
unimplemented. Given that the current OIOS governance audit had produced
recommendations on a wide range of issues, she wondered whether the UN
participant representatives had devised a strategy to ensure that these
recommendations were implemented.
Responding to comments and questions, Ibrahima Fay said that in conducting
the comprehensive governance audit, OIOS had done a commendable job of
uncovering conflicts of interest in the relationship between the Board and the
senior Fund management. Once the audit was finalized it would go the General
Assembly, as the body that requested it, and he hoped that it would provide a
timeline for implementing the recommendations.
He confirmed that the CEO was on extended sick leave, and
said that he wished him well. He also confirmed that the Deputy CEO will retire
on 31 August 2018 and that a search committee had been established to recruit
his replacement. There had been a discussion in the Board about following established
procedure by which the Standing Committee would act on behalf of the Board. The
Board Chair decided to initiate a process outside the established machinery.
The OIOS governance audit has made a recommendation on the way forward.
Regarding a strategy for implementing the recommendations of
governing bodies, and OIOS, he believed that governance audits should be a
permanent process, conducted every 10 to 15 years, as is the case for most
pension funds.
A majority of the Board had wanted to provide a response to
the governance audit in August, after the Board meeting. The UN participant
representatives disagreed and pushed to meet the OIOS timeline, in support of
OIOS’ mandate to submit the report to the next General Assembly. OIOS had met
with the Chairs of the Committees. The UN participant representatives provided
their input on the recommendations and others followed. Responses have been
provided by the Chef de Cabinet on behalf of the Secretary-General, as well as
FAFICS. The UN participant representatives intended to ensure that their views
are incorporated in the annual report to the GA.
The Member States are expected to take action. The Board is
not the ultimate manager of the Fund, but rather, a subsidiary body of the GA.
Ultimately, it would be up to the GA to initiate a working group, with the
participation of specialists outside the Board, on finance, governance and
audit. The UN participant representatives are certain that the GA will welcome
the audit with great interest.
Michelle Rockcliffe noted that items tabled for the
Board’s agenda, including changing its composition, would go a long way toward
better functioning of the Board. The GA had requested this change at least five
times in the past. The UN participants believed that with a more balanced
composition of the Board, UN participants would be better served by the Fund.
Another improvement would come from more frequent meetings of the Standing
Committee. Under the rules it should meet when the Board is not in session.
Instead, it has been meeting for half a day once per year when the Board is in
session.
In response to a comment from a retiree, Ibrahima Fay
stated that on the actuarial valuation, unlike last year’s figures which were
inaccurate, data provided must be accurate in order to defend and protect the
Fund. The UN participants intended to ensure that there is accountability in
providing data to the stakeholders.
He also noted that he and Michelle Rockcliffe had attended a
meeting of the American Federation of Teachers in Pittsburg. The take away was
that according to recent Calpers
studies, defined benefit plans that in the 1990s had represented 53 per cent of
public pension plans were in 2018 diminished to 17 per cent. The industry was
showing a strong shift away from defined benefit plans and vigilance was
required to ensure that this did not happen to the current UN pension plan.
There was also a question of the consideration of diversity (gender,
minorities) in how the Investment Management Division selected its investment
managers.
In response to a question from a retiree, the Chief of
Client Services (UNJSPF) present at the meeting noted that there was no
proposal or intention to change the pension scheme. Rather, the intention was
to protect the defined benefit plan. She explained that with defined benefit
the risk lies with the employer, whereas with defined contribution, the risk
lies with the employee.
Loraine Rickard-Martin
18 July 2018
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