UN Pension Fund: Fact sheet on the petition to the Secretary-General on proposed outsourcing, 18 March 2022

 

PETITION

on the proposed outsourcing of the Fixed Income (FI) Portfolio

FACT SHEET

 

1. Recently the Representative of the Secretary-General (RSG), who runs the Office of Investment Management at the pension fund, proposed passive external management of an initial 65% of the Fixed Income (FI) portfolio, rising to up to 75% over three years (around $16 billion) stating that the portfolio has underperformed over the last 15 years. The proposal, which created concerns within the pension fund, was not going to be shared with the Pension Board until the CCSIUA staff union federation intervened and called for the proposals, developed in secret, to be made public. 

 

2. The RSG was then required to present is proposal to the federations and the board. Based on an analysis of the presentation, there will be 3 external managers (Wall Street firms) who will each manage in excess of $5 billion each.

 

3. This sudden move towards outsourcing contradicts the RSG’s earlier statement to the Pension Board in July 2021 that emphasized internal management as part of measures to correct the issues with the fixed income portfolio. The RSG stated that “the proposed budget for 2022 and the new asset allocation and benchmarks would help correct that situation”. (Ref:  paragraph 18 A/76/297). The budget included new investment officer posts to strengthen internal management and the understanding made to the board was that external management would be avoided. 

 

4. Later the RSG wrote the General Assembly providing further reassurances that management of funds would remain inhouse. In answer to an ACABQ recommendation the RSG wrote  “As is evident, managing each portfolio internally makes the Fund more efficient than its peers that manage externally”  [Ref:  A/76/297-Annex V- page 323.]

 

1. The CEM Benchmarking Study referred to in the ACABQ response confirmed that UNJSPF’s “internalinvestment costs were lower than peers in every asset class”

 

2. There was no mention of external management or outsourcing of FI in the July 2021 Pension Board report nor in the following ACABQ report.

 

3. The General Assembly approved 31 additional posts for the OIM  2022 budget. There was no mention of the need for external management of Fixed Income.

 

New Investment Policy

 

5. CCISUA notes the new Investment Policy (IPS)/Asset Allocation (SAA) will be implemented on 1 July 2022 in line with the SAA study completed in April 2021: 
1. Reduce volatile Emerging Market Debt to one-fifth of the 2019 SAA which was responsible for  half FI under performance.
2. Reduce securitized investments  to two-thirds  2019 IPS which was responsible for  half FI underperformance.

 

CCISUA therefore believes these actions, as earlier stated by the RSG, will fix the problems with the FI portfolio so it performs close to the benchmark as stated by the RSG last July - See paragraph 18 A/76/297.

 

In the absence of a comprehensive analysis of the fixed income underperformance or cost/benefit analysis CCISUA has been presented with the following:

 

Costs

 

6. The cost schedule shared with federations and the Board shows that the original cost will be .018 percent and not .01 percent as stated in the UNJSPF statement of 25 February this is almost twice the amount held out. ($3 million to $4 million per year);

 

7. The “glide path” never returns all our funds to internal management after the “transition period” years; and

 

8.  If 3 external managers are maintained, when funds are gradually returned to internal management, the costs can actually rise in accordance with the cost schedule provided.

 

Benefit  

 

9. $60 million dollars less $3-$4 million per year . See Message from the RSG dated 11 March 2022

  

Based on this and other information provided and review of ACABQ/BOA/ and OIOS recommendations CCISUA believes that OIM staff can have the same or better results for such a large investment of $16 billion. Instead, the Secretary-General can authorize OIM to do the (easier) passive management of  fixed income funds proposed to be outsourced, using the same tools which are already in use in OIM; and save us at least $3-$4 million per year.

 

 

 

Don’t Risk our Multi-Billion Dollar Pension Fund in Wall Street, Warn UN Staffers, 18 March 2022

 

"Don’t Risk our Multi-Billion Dollar Pension Fund in Wall Street, Warn UN Staffers

By Thalif Deen
UNITED NATIONS, Mar 18 2022 (IPS) - The United Nations Joint Staff Pension Fund (UNJSPF), which is expected to provide retirement, death, disability and related benefits for staff, upon cessation of their services– has a staggering portfolio amounting to over $81.5 billion ranking far, far ahead of the UN’s annual budget of $3.1 billion and its average peacekeeping budget of over $6.4 billion.

The thousands of UN retirees and their beneficiaries, numbering over 71,000 at last count, who depend on their pensions for economic survival, are relentlessly protective of the Fund—while protesting all attempts at risky investments.

The Coordinating Committee for International Staff Unions and Associations of the UN system (CCISUA), which represents over 60,000 staffers worldwide, is protesting a new proposed plan to “outsource a large part of the pension fund’s investments to Wall Street”....

The Secretary-General is proceeding with the outsourcing despite strong concerns expressed at the February meeting of the pension board, despite a letter of protest from CCISUA (https://www.staffcoordinatingcouncil.org/wp-content/uploads/2022/03/PF-protest-letter.pdf) and despite the UN’s own Board of Auditors noting that the fund is not able to effectively evaluate its external managers.

In 2007, one year before the global financial crisis and the collapse of many financial institutions, former Secretary-General Kofi Annan considered outsourcing to Wall Street. But he wisely changed course following staff protests and kept our fund safe, says the petition.

“By handing our pension fund to Wall Street in these financially turbulent times, it risks becoming the victim of a short-term, greed-is-good bonus culture that has little regard for the welfare of our staff and retirees around the world and little regard for the ethical values of the UN”, says the petition titled “Secretary-General Antonio Guterres: Don’t hand our UN pension fund to Wall Street.”

“By signing this petition, you call on the Secretary-General, to once again stop the outsourcing of our pension fund and keep its management in-house. Please share this with your colleagues across the UN and specialized agencies”..."

READ THE FULL ARTICLE HERE:

https://www.ipsnews.net/2022/03/dont-risk-multi-billion-dollar-pension-fund-wall-street-warn-un-staffers/

UN Pension Fund – Outsourcing investments. Virtual global townhall. Informal/unofficial summary, 2 March 2022

UN Pension Fund – Outsourcing investments. Virtual global townhall.

Informal/unofficial summary 

 

 

The virtual global townhall on outsourcing investments in the UN Pension Fund, hosted by CCISUA, held on Monday, 28 February 2022, may have raised more questions than it answered.

 

The following  is a brief summary (not endorsed by CCISUA), with an ‘overview’ and ‘discussion points’. Fund members are encouraged to view the video attached to obtain a full account of the briefing. A transcript is available  (not attached).

 

The meeting was chaired by CCISUA president, Prisca Chaoui (the Coordinating Committee for International Staff Unions and Associations) and the speakers were (in the following order):

 

Pedro Guazo, Representative of the Secretary-General for Investments (RSG), UNJSPF

Toru Shindo, Chief Investment Officer, UNJSPF

Michelle Rockcliffe, Former CCISUA Adviser on Pension

Ian Richards, Alternate Participant Representative to the Pension Board

Tomasz Wojciechowski, Head of Fixed Income, UNJSPF

 

Also present: Ms. Anastasia Rotheroe, Director for Public Equities,UNJSPF 

 

Discussion points

 

1.State of the fund’s health

2.Policy regarding the use of external managers and financial derivatives

3.How much of the fund’s assets are being  currently outsourced/managed by external managers? What additional percentage of the fund’s assets will be outsourced?

4.What is the reason for the decision to outsource more assets?

5.Who made the decision? Is the UN Secretary-General aware of it?

6.What is  the cost efficiency of internal vs external management?

7.Is the decision to outsource more assets temporary or permanent?

8.Was the pension board consulted on the decision?

9.Transparency in the fund’s investments

10.Terminology

11.Environment, social and governance issues (ESG)

 

Overview

 

Issues of concern

 

Ms. Chaoui opened the meeting by stating the importance of the fund’s investments for its 210,000 beneficiaries, who, she said, were concerned about how the fund’s assets are being managed; the environmental, social and governance (ESG) impact of investments; the use of financial derivatives;  and the recent decision of the OIM to outsource an additional 18 per cent of the fund’s asset, “which would bring external management to more than 36 per cent.”

 

Some discrepancies

 

While the fund’s representatives, led by the RSG, labored to reassure participants, obvious discrepancies among the various statements serve to raise more questions than answers. Some of the issues of contention focused on whether the decision to double the percentage of the fund’s assets that will be managed externally (18 to 36 percent) is indeed a temporary measure until the fund builds its own resources or indicative of a longer-term trend toward outsourcing; what was the actual additional percentage being outsourced; how the decision was made; whether it was already approved or still in the process;  whether or not the UN Secretary-General, the fund’s fiduciary, was aware;  that the pension board has a consultative, not decision-making function on investments; whether there was a misinterpretation of the pension board’s agreement about when external managers could be used; the meaning of terminology, i.e, “outsourcing” vs “the use of external managers”;  and the need for more transparency in investments overall and in ESG in particular. 

 

Bottom-up decision?

 

Although the RSG insisted that the decision had been made from the bottom up, i.e, by the Fixed Income team, a CCISUA adviser said that knowing the fund staff involved, she had her doubts. There was even less clarity on the topic following the statement of the head of the Fixed Term portfolio.  

 

Mr. Guazo’s response to a question as to whether the Secretary-General was aware of the decision to increase the use of external managers seemed to indicate that he was not. 

Note: I've just been informed since posting this summary that the Secretary-General indicated at a staff townhall on or around 17 February that he is aware of the decison.

 

Word play

 

The RSG glided over whether or not “outsourcing” and “external management” had the same meaning and the  fact that the issue had been taken to the pension board only recently, and at the request of the staff unions. He insisted that the external managers were not on Wall Street.  He was also reminded that the board has no decision-making role on investments. 

 

Transparency

 

Mr. Richards noted that fund’s summary of the board meeting available on its website made it appear that the discussion in the board was “an easy one” while in fact, many questions and concerns were raised.

 

In response to statements about the need for more transparency on investments, as well as ESG, the RSG stated that providing more information could sacrifice returns and would perhaps be minimally useful to most stakeholders; but he would consider the use of benchmarks for this purpose.

 

Mr. Richards called for an open debate on the fund’s intentions on outsourcing, as well as on ESG matters.

 

Past attempts to outsource the Fund’s assets

 

Ms. Rockcliffe recalled past attempts to outsource the fund’s assets, noting that “In 2007 it was the New York staff union which stopped the attempt to outsource 25% of our fund by the RSG. In 2014, the New York and Geneva unions stepped up when the CEO tried to externalize the pension Secretariat.” She thanked CCISUA for taking the initiative this time, and  ended her statement with the  "hope that the Secretary-General as fiduciary of the fund would be prudent in assessing performance in terms of investment policy constraints of the past 5-15 years” given that the reason being stated for additional outsourcing was that the Fixed Income portfolio had underperformed. She urged the Secretary-General to  “listen to the voices of beneficiaries of the fund and prevent the unnecessary and expensive outsourcing of our investments to external managers on Wall Street.”

 

Closing

 

In closing, Ms. Chaoui noted that the meeting was recorded. She would send unanswered questions to the RSG and circulate the answers in a communication to all staff. In her view, some of the answers to questions asked at the meeting were clear, others were not. She believed that the more than 340 persons who had attended the meeting now had a better idea of the issues. CCISUA would follow up with its constituency about the next steps. She ended by reminding the RSG that he, not the pension board, represented and reported to the Secretary-General on the fund’s investments.

 

Note: unanswered questions are included at the end of some sections.

 READ MORE BELOW

UN Secretary-General: Don't outsource the UN Pension Fund's assets to Wall Street, 18 February 2022

 A large number of UN staff unions have written to the UN Secretary-General, António Guterres,  asking him not to outsource the UN pension fund’s investments. 

This appears to be a repeat of a previous attempt in 2008, which staff back then successfully stopped. 

 

UN Pension Fund: End-of-year happy talk, 1 January 2022.

The joint New Year’s message from the Fund management, Rosemarie McClean, Chief of Pension Administration, and Pedro Guazo, the UN Secretary-General’s Representative for Investments, (dated 30 December 2021, posted on the UNJSPF website, link below) is a clear celebration of the status quo reflected in perhaps the most “lowest common denominator” General Assembly resolution in years (see provisional version below). 

 

The Fund management’s annual message is traditionally a cut and paste job of self-congratulation and this one is of the same variety, only with more superlatives.

 

That the duo believe they have reason to celebrate is not entirely unwarranted. Forces in the Fund management, the Pension Board, and the UN administration, have conspired for years to spin reality in their favor and silence dissent, and this year, they've clearly made some gains.

 

They’ve used intimidation or suspension of UN participant representatives (of 85,000 active UN staff) on the Pension Board, blocking the ability to broadcast messages to constituents, and colluding on “ethical” and “confidentiality” Board guidelines designed to thwart whistleblowers and quash dissent. Their effort reportedly gained from the election of allies of non-transparency in the most recent election of UN participant representatives to the Board, one of whom, a rank newcomer, reportedly scrambled, and failed, to be elected as the Board's Chair. 

 

That the General Assembly “recognized and supported” the Pension Board’s governance reform that boils down to nothing more than cutting levels of attendance of hangers-ons (counted as high as 100 for a 33-member board) at meetings and instituting ethics mainly aimed at silencing dissent, constitutes the duo’s definition of governance success.

 

Their message makes no mention of the independent governance report requested by the GA last year and prepared by Mosaic that revealed a multitude of governance deficiencies (politely called “variances”) compared to other pension funds, including that Board members fail to understand the meaning of their “fiduciary responsibility” and require training.

 

Nor do they admit, in boasting that "90% of pension cases have been processed within 15 business days" over the past two years, that the Fund is so committed to “efficiency” that it instituted stopping and resuming the clock on benefits processing as an artificial strategy to achieve benchmarks. The Fund management never acknowledged any practical, or ethical, shortcomings in this strategy,  and there’s no mention of the Board of Auditors' call  for the practice to be stopped. 

 

Still on this topic, one wouldn’t know from the sanitized message that the Fund reported to the ACABQ recently (paragraph 4 of ACABQ report A/76/7.Add 14) that an enhancement to IPAS (the benefits processing system) had been set up to address the longstanding and long-ignored concern and that “Under the new calculation methodology, the pausing (while awaiting external actions) and resetting of the benchmark was eliminated.”

 

We only hear that, somehow, they’re still managing to achieve this amazing result.

And where else but in spin-doctor universe would "Nearly 18% of the eligible population ... enrolled in the DCE [digital certificate of entitlement] in the last few months" be touted as a "real success"? 

 

On investment, according to the message, investment returns are simply “spectacular” and there’s no hint that “The Advisory Committee notes that the investment performance of the Fund in 2020 is higher than the objective but lower than the benchmark in terms of annual rate of return and lower than the peers’ performance in terms of annualized rate of return over 10 years. “

In fact, “The Committee encourages the Fund to renew its efforts to improve the performance of the investments and explore the possibility of increasing its objective.”  (Paragraph 9 of the above ACABQ report, A/76/7. Add 14 )

 

Why spoil the celebration by mentioning last year’s investment governance audit (A/75/215, 21 July 2020) that found serious management failures or that the more recent human resources audit of the Office of Investment Management (OIM) (2021/038 dated 24 August 2021) raises continued concerns? 

 

Similarly, there’s no trace of the GA resolution (75/246) last year having authorized the Secretary-General, as fiduciary of the Fund, at his request, to conduct margin trading (financial derivatives) on a two-year trial basis, or that at the time of the OIM’s human resources audit (August 2021), working groups set up by OIM to study the human resources requirements of expertise to conduct such trading were yet to conclude their work  (paragraph 13c, page 2, of OIOS report 2021/038). 

 

The joint message doesn’t mention the Pension Board’s "win" in, at last, having the GA approve changing of the Fund's Rules and Regulations to prohibit staff members of the Fund and its staff pension committees from running for election to the Pension Board. 

 

Years of attempts to silence dissent have paid off. That’s a victory for the Fund management,   Board members, and UN administration members, who want to safeguard their autocracy and control the level of oversight of the Fund.

 

Perhaps the management team also prefers to hold that blow to democracy, effective oversight, and sustainability of the Fund close to their vest while they continue to spin the narrative that “trust and confidence in the Fund are reconfirmed with this resolution …”.

.

What are Fund members to take away from this end of year happy dance?

 

For one, the forces against transparency and democracy are riding high. 

Still, the past several years have shown that despite the convergence of forces determined to limit democracy and transparency in the operations of the Fund, significant positive change has been wrought through the perseverance and courage of staff representatives and the dedication and integrity of UN internal auditors.

 

So much so, that for some time a level of desperation in countervailing actions has been apparent, including with the attempt last year by the ASG/Human Resources to bring the hammer down on former UN participant representatives to the Board for consulting with members of the General Assembly, the Fund’s ultimate oversight body.

https://www.passblue.com/2020/12/23/the-un-pension-funds-latest-flareups-and-hazards-to-whistleblowers/

. 

While the balance of power might seem to currently favor those who would wish to cloak the Fund in secrecy and undemocratic practices, that their goals are far removed from the principles, values, and standards of the pre-eminent international organization it serves should be a matter of serious concern to the Secretary-General, the General Assembly, and all stakeholders.

 

https://www.unjspf.org/message-from-rosemarie-mcclean-and-pedro-guazo-on-the-un-pension-fun

Loraine Rickard-Martin

1 January 2022

----------------------------------------------------------------------------

United Nations A/C.5/76/L.17

General Assembly Distr.: Limited

23 December 2021

Original: English

 

PROVISIONAL

 

Seventy-sixth session

Fifth Committee

Agenda item 138

Proposed programme budget for 2022

 

XIII

Administrative expenses of the United Nations Joint Staff Pension Fund

 

Recalling its resolution 70/238 A of 23 December 2015, section VIII of its

resolution 74/263 of 27 December 2019 and its resolution 75/246 of 31 December

2020,

 

Having considered the reports of the United Nations Joint Staff Pension

Board on the work of its sixty-eighth special session and of its sixty-ninth session and

administrative expenses of the United Nations Joint Staff Pension Fund,24 the report

of the Secretary-General on the administrative and financial implications arising from

the report of the United Nations Joint Staff Pension Board,25 the financial report and

audited financial statements for the year ended 31 December 2020 and the report of

the Board of Auditors on the Fund26 and the recommendations contained therein, the

report of the Chief Executive of Pension Administration and the Representative of the

Secretary General for the investment of the assets of the Fund on the implementation

of the recommendations of the Board of Auditors contained in its report for the year

ended 31 December 2020 on the United Nations Joint Staff Pension Fund 27 and the

related reports of the Advisory Committee on Administrative and Budgetary

Questions,28

 

1. Takes note of the reports of the United Nations Joint Staff Pension

Board27 and the report of the Secretary-General;28

2. Takes note of the report of the Chief Executive of Pension Administration

and the Representative of the Secretary General for the investment of the assets of the

Fund on the implementation of the recommendations of the Board of Auditors

contained in its report for the year ended 31 December 2020 on the United Nations

Joint Staff Pension Fund;27

3. Endorses the conclusions and recommendations contained in the reports

of the Advisory Committee,28 subject to the provisions of the present resolution;

4. Emphasizes the existing prerogative of the General Assembly on matters

pertaining to the Fund;

 

Financial statements of the United Nations Joint Staff Pension Fund and

report of the Board of Auditors

5. Reiterates the importance of the implementation of all the

recommendations of the Board of Auditors by the secretariat of the Fund, the Pension

 

__________________

24 A/75/9/Add.1 and A/76/297.

25 A/C.5/76/2.

26 A/76/5/Add.16.

27 A/76/294.

28 A/75/814 and A/76/7/Add.14 .

 

Board and the Representative of the Secretary-General, in full and in a timely manner,

and of reporting thereon in the next report to the General Assembly;

 

Actuarial matters

6. Stresses the importance of continuing to achieve the necessary 3.5 per

cent annual real rate of return on a long-term basis for the future solvency of the Fund;

 

Governance matters

7. Notes with appreciation the work of the Board on governance matters

carried out to approve the governance reform plan, taking into account best practices

as recommended by the Governance Working Group while respecting the unique

nature of the Fund, and looks forward to further information thereon in the next report

of the Board;

8. Recognizes the efforts of the Board to reduce the physical attendance and

its attempts to improve efficient and effective decision making and notes the decision

of the Board regarding the physical attendance at Board sessions as stated in paragraph

2 of Section VI. A in the report of the Board;

9. Further requests the Board to ensure that in the year 2022 the 18

representatives from the member organizations that have 1 or 2 voting Board members

do not attend the Board meetings in-person, and requests the Board to keep this

arrangement under review and provide its observations to the General Assembly at

the 77th session;

10. Decides that the Ethics adviser will be recruited under the modalities

applicable for general temporary positions;

11. Emphasizes that the Office of Internal Oversight Services shall remain

the sole internal oversight body of the secretariat of the Fund and its investments, in

line with the mandate of the Office, as set out by the General Assembly its resolution

48/218 B of 29 July 1994, and stresses that any change to the mandate in this regard

remains the sole prerogative of the Assembly;

12. Emphasizes that the budget of the Pension Fund should be accountable

to all stakeholders, including beneficiaries and the member organizations, and

encourages the Pension Board to strengthen the functions of the Budget Committee

with the aim to ensure proper oversight of the resource requirements in the light of

the operational needs and budget accuracy of the Pension Fund;

13. Recalls Annex III Section G of the report of the Board, and requests the

Board, in consultation with the Ethics Adviser, to revise and adjust it and to provide

further analysis of and clarification on it in the context of its next report;

 

Pension Board

14. Recalls paragraph 7 of its resolution 75/246, and reiterates its request

that the Secretary-General and the Pension Board ensure that the staff composition of

the Office of Investment Management and of the Pension Administration is based on

as wide a geographical basis as possible, bearing in mind Article 101, paragraph 3, of

the Charter of the United Nations, and to make every effort to provide an update on

progress achieved in the context of their next reports;

15. Encourages the Secretary of the Pension Board to continue to restructure

and streamline the report of the Board with the aim of making it more concise and to

the point and presenting the rationale of financial and administrative proposals in a

more comprehensive manner;

16. Highlights the importance attached by the General Assembly to

continuing to ensure accountability by the Pension Board, and requests the Board to

provide follow-up on all aspects of the implementation of the present resolution in the

context of its report to be submitted to the Assembly at its seventy-seventh session;

 

Pension Administration

17. Requests the Fund to continue to ensure cost-effectiveness and

appropriate geographical coverage of the call centre service operations;

 

Office of Investments Management

18. Reaffirms that the Secretary-General serves as fiduciary for the

investment of the assets of the Fund;

19. Reaffirms that the investment of the assets of the Fund shall be decided

upon by the Secretary-General after consultation with an Investments Committee and

in the light of observations and suggestions made from time to time by the Board on

the investments policy;

20. Notes that the annual real rate of return of the Fund for the 10-year and

15-year periods remained markedly above the long-term objective of 3.5 per cent, and

encourages the Fund to continue its efforts to improve the performance of its

investments and identify suitable comparators with peers from various countries and

provide a comparison thereof in the context of its next report;

21. Recalls the four main criteria for investment utilized by the Fund,

and requests the Secretary-General to explore, in consultation with the Investments

Committee and taking into account the observations and suggestions by the Board,

impact investing for part of the portfolio, including in developing and emerging

markets, such as Africa, bearing in mind the real rate of return target, and to report

thereon to the General Assembly in its next report;

22. Requests the Secretary-General, as fiduciary for the investment of the

assets of the Fund, to continue to diversify its investments among developed,

developing and emerging markets, wherever this serves the interests of the

participants and the beneficiaries of the Fund, and also requests the Secretary-General

to ensure that decisions concerning the investments of the Fund in any market are

implemented prudently, taking fully into account the four main criteria for investment,

namely, safety, profitability, liquidity and convertibility;

 

Other matters

23. Concurs, in accordance with article 13 of the Regulations of the Fund

and with a view to securing continuity of pension rights, with the new transfer

agreements of the Fund with the European Investment Bank and the European

Investment Fund, as approved by the Board and set out in annex VIII to its report;

24. Decides to approve the proposed amendments to articles 4 (c), 6, 7, 33

(g) of the Regulations of the Fund, as well as to paragraph 19 of the Pension

Adjustment System of the Fund, as set out in annex V to the report of the Board;

 

Budget estimates for the year 2022

25. Emphasizes that to review all the general temporary assistance positions

of the Fund is not to aim at necessarily converting positions into posts, but rather at

increasing efficiency through the elimination of duplication of functions;

26. Decides to reduce the proposed resources for travel of staff and

representatives by 25 per cent for the Secretariat of the Board, the Pension

administration and the Office of investment management;

27. Approves the changes to the staffing table as set out in the table below:

 

A. Secretariat of the Pension Board (PBS)

Action Title of post Category Number

Reclassification Senior Programme Management Officer P-4 to P-5 1

B. Pension Administration (PA)

Action Title of post Category Number

New post Accounting Assistant GS-OL 5

New post Benefits Assistant GS-OL 1

Total new posts 6

Conversion Benefits Officer P-3 1

Conversion Benefits Assistant GS-OL 14

Conversion Information/Documents Management Assistant GS-OL 6

Conversion Programme Management Officer P-4 1

Conversion Information Systems Officer P-4 1

Conversion Information Systems Officer P-3 3

Conversion * Accounting Assistant GS-OL 1

Total conversions 27

Total net changes 33

Reassignment Chief D-1 1

 

Reassignment Human Resources Officer P-4 1

Reassignment Benefits Officer P-3 2

Reassignment Benefits Assistant GS-OL 3

Redeployment (from EDM to POW) Chief of Business Transformation and

 

Accountability Unit

 

P-5 1

Redeployment (from EDM to POW) Risk Management Officer P-4 1

Redeployment (from EDM to POW) Programme Management Officer (Risk) P-3 1

Redeployment (from EDM to POW) Legal Officer (Compliance) P-3 1

Redeployment (from EDM to PS) Human Resources Officer P-3 1

Redeployment (from POW to PS) Administrative Assistant GS-OL 1

*From extrabudgetary

 

C. Office of Investment Management (OIM)

Action Title of post Category Number

New post Associate Legal Officer P-2/P-1 1

New post Legal Officer P-3 1

New post Deputy Director D-1 1

New post Investment Officer P-3 2

New post Investment Officer P-4 2

New post Senior Accounting Assistant GS-PL 1

New post Associate Risk Officer P-2/P-1 1

New post Compliance Officer P-3 1

New post Risk Officer P-4 1

New post Investment Officer P-3 3

New post Information Systems Officer P-3 2

Total new posts 16

Conversion Associate Investment Officer P-2/P-1 1

Conversion Investment Officer P-3 1

Conversion Investment Officer P-4 1

Conversion Accountant P-4 2

Conversion Associate Risk Officer P-2/P-1 1

Conversion Associate Compliance Officer P-2/P-1 1

Conversion Risk Officer P-3 1

Conversion Associate Information Systems Officer P-2/P-1 2

Conversion Information Systems Officer P-3 2

Conversion Senior Administrative Assistant GS-PL 1

Total conversions 13

Total net changes 29

Reclassification Senior Information Systems Officer P-4 to P-5 1

 

Reclassification Senior Information Technology Assistant GS-OL to GS-

PL

 

1

 

Reclassification Senior Accounting Assistant GS-OL to GS-

PL

 

2

 

Reclassification Senior Administrative Assistant GS-OL to GS-

PL

 

1

Redeployment (from EDM to POW) Director D-2 1

Redeployment (from EDM to POW) Investment Officer P-4 1

Redeployment (from EDM to POW) Staff Assistant GS-OL 1

Reassignment Senior Administrative Assistant GS-PL 1

 

19/28

 

D. Office of Internal Oversight Services (OIOS)

Action Title of post Category Number

Conversion Chief of section, Audit P-5 1

Conversion Auditor P-4 3

Conversion Auditor P-3 1

Conversion Audit Assistant GS-OL 1

Total net changes 6

 

28. Approves the estimates of 121,819,100 United States dollars for the

administration of the Fund for 2022;

29. Also approves expenses, chargeable directly to the Fund, totalling

113,514,900 dollars net for 2022;

30. Further approves the amount of 8,304,200 dollars as the cost of the

services provided by the United Nations Joint Staff Pension Fund to the secretariat of

the United Nations Staff Pension Committee for 2022, of which 5,065,600 dollars

would represent the share of the regular budget and the balance of 3,238,600 dollars

would represent the share of the funds and programmes;

31. Approves the increase of 82,900 dollars in the cost for the services

provided by the United Nations Joint Staff Pension Fund to the secretariat of the

United Nations Staff Pension Committee under section 1, Overall policymaking,

direction and coordination, of the proposed programme budget for 2022;

32. Authorizes the Board to supplement the voluntary contributions to the

Emergency Fund for 2022 by an amount not to exceed 112,500 dollars;

Open letter about our UNJSPF investments: What’s happening in our Pension Fund? By Michelle Rockcliffe, 16 December 2021

Open letter about our UNJSPF investments 

16 December 2021

Dear current and future beneficiaries, 

What’s happening in our Pension Fund? 

While there was no mention of any discussion of the matter in the UNJSPF Board Report (A/76/297), the Secretary-General and his representative in the Office of Investments Management (OIM) are preparing to outsource an additional 28% (twenty-eight percent) of our portfolio to passive external managers. 

This is the second year in a row that the SG has come up with a surprise plan without first sharing his intentions with the Board and beneficiaries. 

Since OIM’s response to ACABQ’s 2020 recommendations in the Board Report, cites proof that “managing each portfolio internally makes the Fund more efficient than its peers that manage externally”,1 the question is, what changed between July and October? 

This is substantial, unprecedented, risky and costly! 

If the entire fixed income (FI) portfolio were to be outsourced, this means that we lose control of our assets and allow big Wall Street firms to manage over 46.8 percent, or more than $41 billion of our $88 billion dollar fund. 

The internally managed fixed income portfolio is more than 26% of our fund which has historically maintained a mix of approximately 85% internally managed and 15% externally managed portfolios. On 30 September 20212 the mix was 82 percent internal/ 18% external – none of the fixed income is currently outsourced. 

Our Fund has minimized costs while controlling our assets and risks, and adhering to the principles of safety, profitability, liquidity and convertibility, in line with requirements of the General Assembly. 

It was fortunate that the attempt to outsource 25% (then $9B) of the Fund by a previous RSG back in 2007 failed, due to action by the NY Staff Union, as we were then able to mitigate losses during the crash of 2008 and our fund rebounded with active internal management of our portfolio, increasing by 32% of its value in 2009. 

UNJSPF Performance 

While the RSG has been emphasizing the OIM underperformance of the benchmarks at 1-3-5-7 and 10 years, the fund appears to be thriving and management boasts of the asset 

value of $88 billion+, has met its long term 3.5 percent objective, is fully funded and has an actuarial surplus. 

So, has a study been performed to see what the results would have been, were it not for the Fund’s “risk avoidance strategy”3 which prevented investments in certain bonds, weapons and tobacco and which made up a large portion of the market benchmarks to which OIM performance is compared? 

Were it not for the 2016 decision which prohibited portfolio managers from investing in sovereign negative-yield securities whose currencies then later appreciated against the US Dollar, would the FI portfolio still have underperformed? Possibly not. 

Conversely, we know that in 2019 a customized benchmark excluding weapons and tobacco and including a new universe of riskier assets was implemented. Even then the Fixed Income manager underperformed the market. 

OIOS in (A/75/215) highlighted several deficiencies in the management of the benchmarks4 and a toxic work environment. Did these factors have a negative effect on the current performance even though the 2019 Investment Policy had been amended to account for the pre-2013 and 2016 and other issues? 

In the end it seems the SG is assuming a “manager accountability avoidance” strategy and will instead outsource the entire $26 billion portfolio, costing us shareholders millions in transition costs and external management fees, and some staff their jobs. 

The Board of Auditors observed serious deficiencies in UNJSPF’s oversight of its external managers5. The ACABQ stressed the importance of the BOA recommendation that “the Fund finalize and publish its selection and evaluation criteria for external funds and discretionary investment managers” [emphasis added] 

Just more of the same. 

The continued lack of transparency and rush to implement new policies as observed by OIOS6 has persisted under this RSG since April 2020. The matter of derivatives was neither discussed with the Pension Board nor the Investments Committee prior to a request to the Fifth Committee in 2020 for approval to implement these new risky securities. 

Once again in 2021, just two months after the Board meeting, OIM advertised an opening7, for about 6 days - for a “Fixed Income Transition Strategy Consultant”. Just three (3) weeks later we hear of a plan to outsource the entire Fixed Income portfolio, even though OIM asked for additional posts in the 2022 budget, and asserted that our internal management is more efficient, only months ago. 

Coupled with the Board of Auditors observations for the last 4 years, regarding the deficiencies in OIM’s oversight of external managers, this rush to transition seems unwarranted and risky. 

Can the lack of transparency be justified in a public pension fund such as ours? 

When are we going to be informed - after the fact? Why is there such a rush to outsource our fund, again? If it’s such a great idea why the secrecy? How does this affect OIM’s Environmental Social and Governance policy? Is this another way to implement the controversial derivative investments? 

Will Unions have to rise to the challenge as they did in 2007 and 2014 to save us from the Wolves of Wall Street? 

 

Sincerely, 

Michelle Rockcliffe 

UNJSPF Beneficiary 

1 https://undocs.org/A/76/297 pg. 323- Annex V paragraph b) Actions taken to implement the [ACABQ] recommendations 

2 OIM Website https://oim.unjspf.org/investments-at-glance/internally-managed-assets/t

3 https://undocs.org/A/67/9 para 88
4OIM Governance Audit https://undocs.org/A/75/215 paragraphs 14, 65
5 https://undocs.org/A/74/7/Add.14 para 16,17 and http://undocs.org/A/72/7/Add.23 paras 43, 44 and 45 

6 OIM Governance Audit https://undocs.org/A/75/215 Recommendation 7 – page 24 

7 https://untalent.org/jobs/fixed-income-transition-strategy-consultant