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TWELVE YEARS AFTER DERIVATIVES BROUGHT DOWN MAJOR FINANCIAL INSTITUTIONS THE UN PENSION FUND WANTS TO INVEST IN THEM.
In 2008 poorly judged derivative trades brought down Lehman Brothers, Merrill Lynch, AIG, Northern Rock and many others. The world economy took a huge hit and millions lost their savings.
Now the UN Pension Fund, whose investment policy comes under the responsibility of Secretary-General Antonio Guterres, has asked permission from the General Assembly to start trading derivatives.
It is not clear that Pension Fund staff have the necessary expertise nor that such trading meets the four criteria of safety, profitability, convertibility and liquidity used by the Fund, particularly in today's unpredictable environment.
UN staff expect the Pension Fund to act in a conservative manner. For many the Fund is their only source of retirement income.
The request was reported by the Advisory Committee on Administrative and Budgetary Questions (https://undocs.org/A/75/7/add.18 paragraph 11). With typical understatement, it expressed caution and trusted "that detailed information on the proposed use of derivative instruments and the authority required to engage in margin trading will be provided to the General Assembly at the time of its consideration of the present report."
The UN participant representatives, who represent UN staff on the Pension Board have been made aware of the request and will be following up to ensure staff money remains safe.
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