The UN Pension Fund can’t say how many retirees are waiting to be paid
Fifteen percent of the Fund is outsourced to Wall Street
Fund’s Board pursues moves to gradually move it out of UN
The Board of our Pension Fund recently concluded its annual meeting in Vienna.
Ahead of this meeting, almost 15,000 of you signed a petition calling on the Board to:
- refuse the new financial rules that pave the way to remove the fund from the UN and allow further outsourcing of investments;
- protect the independence of fund staff by rescinding a new human resources policy that would remove oversight of promotions and use of retired staff;
- pay new retirees on time.
The petition generated considerable discussion at the Board. However, having been made aware of your petition, it then unanimously decided the following:
- to approve the new financial rules (although we were able to remove certain provisions that would have allowed decisions on the awarding of large contracts to go around the established competitive procedures);
- to not reverse the new human resources policy; and
- to provide a positive evaluation of the fund’s CEO, despite new retirees not being paid on time over the last year.
However, at our initiative, the Board accepted a proposal that newly retiring staff not paid on time would receive provisional payments. This is a step in the right direction but does not go far enough (it does not introduce an obligation to make such payments, contrary to what we proposed, and the delay stretches to three months instead of 30 days). At the same time, it is the closest the Board has come to acknowledging the problems with its new IT system called IPAS.
So there were some small improvements, which would never have happened without your support, but we still have a long way to go.
Against this, the Board for the first time:
- refused to allow the staff federations (CCISUA and FICSA) to make a statement during its meeting on the suffering of new retirees who are waiting to be paid;
- made its members and observers sign a confidentiality agreement, forbidding them from discussing the contents of the meeting or its documents with outside parties, which includes you, the owners of the Fund; and
- attacked a blog (http://unpension.blogspot.ch) and online news service (http://www.ipsnews.net/2016/07/un-staffers-protest-plans-to-privatise-53-billion-pension-fund/) that had reported on governance problems and investment under-performance at the Fund. Despite the Board’s attacks on press scrutiny, Bloomberg went ahead with its own coverage of the Fund (http://www.bloomberg.com/news/articles/2016-08-15/un-s-54-billion-pension-fund-in-power-struggle-over-new-rules).
The strength of feeling behind the petition also led to a town hall for staff in Vienna. At the packed meeting:
- A number of staff called into question the trustworthiness of the Fund’s leadership.
- The CEO claimed the backlog for payments had been cut to 700. The Fund’s own website puts the figure at between 1,700 and 5,800 (depending on the methodology used). At the same time the CEO admitted that payments would not return to normal until 2017.
- The CEO blamed the backlog in part on additional workload due to a “surge” in the downsizing of peacekeeping missions. He failed to mention the offer of assistance made by UN administration at the start of 2016 to help process these claims.
- The CEO told staff that there were “no plans” to outsource investments to Wall Street. In actual fact, the Fund outsources 14.75 percent of its investments, a figure later confirmed by the head of investments. This figure is an increase from previous years. A separate document shows these outsourced investments to include positions in arms and tobacco (https://www.ccisua.org/2016/07/18/concerned-un-pension-fund-invests-money/).
- The previous Chair of the Fund assured staff that the Fund owed its healthy position in part to contributions made by participants being twice the current payments to retirees. In reality, as confirmed by the annual report, contributions are around the same level as payments. In time, as retirees exceed contributors, payments may exceed contributions. It is not a time to be complacent.
Looking ahead, it is clear that the Fund is facing a number of challenges in terms of leadership, governance, investment performance and its ability to pay retirees. In addition, further evidence has come to light regarding:
- the UN’s reduced oversight of the Fund’s investments; and
- the inability of the Fund’s auditors, more used to auditing governments and international organizations, to understand the unique challenges of a pension fund.
There is some good news. Thanks to the advocacy efforts of staff unions to increase the retirement age to 65, despite opposition by many organizations, the Fund now has an actuarial surplus of 0.16 percent, where previously it was in deficit. Unfortunately, the Fund’s current investment underperformance may tip this back into negative territory.
We will be taking these concerns to the General Assembly in the fall, as the GA has to approve any of the decisions made by the Board. At the GA we will also make clear our and your concerns on the mismanagement of the fund and the gradual steps being taken by the Board to remove the Fund from the UN. It is only by having a Fund that is firmly within the UN, with staff that share our same long-term interests, that we can ensure the security of our retirement.
We also take this opportunity to thank the operational staff of the Fund, who have been working hard in difficult and stressful circumstances over the last year.
Thank you for your support and we will keep you updated.