UN PENSION FUND
SOME 5TH COMMITTEE HIGHLIGHTS (links to the statements are below. You're encourageed to read them in their entirety).
The Board Chair of our $67 billion dollar Fund states that "the Fund is in sound and solid footing, contrary to the propaganda mounted by its detractors over the past 4 to 5 years". Who are these "detractors"? Do they include, to his mind, UN oversight bodies that have uncovered serious deficiencies and pushed for essential reforms to ensure our Fund's sustainability? Are the findings of OIOS governance audit report A/73/341 and the related GA resolution A/RES/73/274 mere "propaganda"? Among the essential reforms, he bemoans as "complex and delicate" the key issue of the imbalance in Board composition (thus apparently unsolvable).
The Group of 77 apparently doesn't believe it's all mere "propaganda". It busts the Board for defying GA resolution directives (by including FAFICS representatives) on the composition of its Governance Working Group, and hopefully will reject their foot-dragging excuses about important reforms.
The 5th Committee is also not buying the “no backlog” mantra. Its members also want more information on the independence of the Board Secretary, staffing for the Fund, sustainable investing, and the Group of 77 flags the likely volatility of financial markets and rising geopolitical risks around the world and the imperative for investments to “meet the stated criteria of safety, profitability, liquidity and convertibility”. The US "encourage[s] the continued focus on strengthening the Office's operational risk control framework".
BACKLOG
On the Pension Board Chair’s claim of “no backlog” in benefit payments, often repeated by the Acting CEO in the past year, the Board of Auditors, the ACABQ, and the US are not buying it. The ACABQ wants to see high priority given to cases with missing documentation and paying instructions; the ACABQ Chair wants the “backlog” addressed through identifying the causes for processing delays; as does the US. The Group of 77 wants to know more about the application of the benchmark in arriving at the processing rates reported by the Fund (exceeding the benchmark of 75% in 15 days according to the Acting CEO in her statement, and “90 percent ….which is way above its benchmark” according to the Board Chair in his statement. ) (Question: Is it really so hard for them to synchronize their message?)
GOVERNANCE AUDIT (A/73/341, para. 14 of GA res A/RES/73/274):
According to the Board Chair, the crucial matter of the imbalance in Board composition is so “complex and delicate” as to be unsolvable; and Article 48, by which the Board seeks a change to limit the scope of topics that can be reviewed by the UN Administrative Tribunal – essentially to bar whistleblowers from the Board -- is really the Board’s prerogative to decide.
NOTE (BUSTED): The Group of 77 Chair states flatly that “the composition of the Governance Working Group violated paragraph 14 of General Assembly resolution 73/274. We will discuss this further during informal consultations”.
(THE Governance Working Group which is to review governance recommendations from the audit report, as contained in paragraph 14 of GA resolution A/RES/73/274, and report back to the GA, includes FAFICS [retiree representatives on the Pension Board] against the requirements of the GA resolution as follows: “Further notes that the Pension Board established a working group, which should adhere to the tripartite structure of the Board, to consider the issues of participation, rotation and equitable representation on the Board and to review the following elements organization)”. FAFICS is not a part of the Board’s tripartite structure. In addition, FAFICS representatives on the Board have been vociferously opposed to several of the key governance recommendations which the Working Group considered, and are no doubt partly responsible for the the foot-dragging and lack of actual progress, including on the issue of direct election of retiree representatives to the Board, that the Board is working hard to gloss over.
Recall that paragraph 27 of the comprehensive governance audit (A/73/341) states that FAFICS "questioned the General Assembly’s authority to undertake a governance review without prior discussion with the Board" and cites instances of conflicts of interest -- and the "appearance of collusion" -- between FAFICS and the Fund Secretariat management. No doubt the Assembly had these issues in mind when it stipulated that the Working Group adhere to the Board's tripartite structure. * (See paragraph at foot of article).
INDEPENDENCE OF THE BOARD SECRETARY
Group of 77 stresses that the Pension Board Secretary needs to be independent from the Pension Benefits Administrator, as per paragraph 13 of General Assembly resolution 73/274;
STAFFING
Group of 77 will be seeking needs assessment on staffing proposals;
INVESTMENTS:
Group of 77 “underscore(s) its cognizance of the likely volatility of financial markets over the near-term as the industry tries to gauge and adjust to the future direction of fiscal and monetary policy, as well as rising geopolitical risks around the world.”
The Board of Auditors states that despite indications from OIM that it is implementing sustainable investing, it wants to see established criteria on its website.
Russia noted “that the annual rate of return is meeting the planned 3.5 per cent benchmark with assets growing to $67 billion. Welcoming measures to increase transparency and diversity asset class, he noted the importance for investments to meet the criteria of safety, profitability, liquidity and convertibility. His delegation supports the Pension Board’s proposals on governance. While there is not adequate justification to change the composition of the Board, he has no objections to an adjustment and welcomes the introduction of the rotation scheme.”
____________________________________________________
PENSION BOARD CHAIR
PHILIP RICHARD OWADE, Chairman of the United Nations Joint Staff Pension Board
BOARD OF AUDITORS
https://www.un.org/en/ga/fifth/74/statements/135.%20PPB2020_Admin_UNJSPF/C5_74_2019_12_02_Item_135_Admin%20UNJSPF_Chair%20AOC%20BOA.pdf
ACTING CEO, FUND SECRETARIAT AND RSG FOR INVESTMENTS – JOINT STATEMENT
ACABQ CHAIR: Cihan Terzi, Chairman of the Advisory Committee on Administrative and Budgetary Questions
GROUP OF 77- Lynn Shami, observer for the State of Palestine, speaking on behalf of the “Group of 77”
Cherith Norman Chalet (United States)
*(In Russian, see link to press release below)
Dmitry S. Chumakov (Russian Federation) underscored the Fund’s effectiveness in dispensing its mandate, noting that the annual rate of return is meeting the planned 3.5 per cent benchmark with assets growing to $67 billion. Welcoming measures to increase transparency and diversity asset class, he noted the importance for investments to meet the criteria of safety, profitability, liquidity and convertibility. His delegation supports the Pension Board’s proposals on governance. While there is not adequate justification to change the composition of the Board, he has no objections to an adjustment and welcomes the introduction of the rotation scheme. His delegation stands ready to discuss the Board’s recommendations and observations by ACABQ.
*https://www.un.org/press/en/2019/gaab4342.doc.htm
*"27. In the same letter, FAFICS questioned the General Assembly’s authority to undertake a governance review without prior discussion with the Board. It also stated that the Board had the “sole authority” for the appointment and reappointment of the Chief Executive Officer and that the Secretary-General had only the “administrative function to issue the contract”. The Fund secretariat circulated that letter electronically to all registered beneficiaries, including the vast majority who were not members of FAFICS. The circulation of such a letter by the staff of the Chief Executive Officer gave the appearance of collusion between FAFICS and the Fund secretariat to challenge the authority of the Secretary-General and the General Assembly in governance matters of the Fund, even though the Chief Executive Officer was to be reappointed by the Secretary-General on the recommendation of the Board, and would ultimately be accountable to the Assembly. In a letter of February 2018, the outgoing president of a retiree association affiliated with FAFICS indicated to members of that association that the leadership of FAFICS “should be strongly reminded by its members that its task is to protect, defend and advance the rights of all United Nations retirees, not those of the Chief Executive Officer …”. That statement is consistent with complaints from other retirees that FAFICS was protecting the interests of the Chief Executive Officer instead of those of retirees."
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