UNITED NATIONS JOINT STAFF PENSION FUND: Report by the Director-General SUMMARY

Transcription

1 23 C 23 C/57 30 August 1985 Original: French Item 10.5 of the provisional agenda UNITED NATIONS JOINT STAFF PENSION FUND: Report by the Director-General SUMMARY This report, which is submitted to the General Conference in accordance with Article 14 (a) of the Regulations of the United Nations Joint Staff Pension Fund, describes the developments which have occurred concerning pensions since the Director-General's previous report was made to the General Conference at its twenty-second session (22 C/58). In particular it sets out the decisions taken by the United Nations General Assembly at its 39th session (December 1984). first with a view to restoring the actuarial balance of the Fund and secondly with regard to pensionable remuneration. This report dl60 describes recent developments in the situation before the 34th session of the Joint Staff Pension Board (Montreal, 29 July - 9 August 1985) and the annual report which it will submit to the General Assembly at its 40th session. This report is submitted to the General Conference for information.

2 23 C/57 I. INTRODUCTION 1. The United Nations Joint Staff Pension Fund was established by the United Nations General Assembly in 1949, under Regulations adopted for that purpose, to provide retirement, death, disability and related benefits for the staff of the United Nations and the other organizations of the United Nations system participating in the Fund. Unesco concluded a participation agreement with the Fund which took effect from 1 January Fifteen organizations, including the United Nations, now belong to the Fund. 2. The member organizations jointly administer the Fund through the United Nations Joint Staff Pension Board which, under the Fund's Regulations, consists of 21 members, of whom one-third are elected representatives of the General Assembly and the corresponding legislative bodies of the other organizations, one-third are nominated by the executive heads and one-third are the elected representatives of the participants. Unesco has two seats on the Pension Board which are shared in rotation between the three groups composing the Unesco Staff Pension Committee, which is the administrative organ of the Fund at the Organization level (1). Legislative authority to amend the Fund's Regulations on behalf of all the member organizations is vested in the General Assembly of the United Nations on the recommendation of the Joint Board. 3. Article 14 (a) of the Regulations of the Pension Fund provides that: 'The Board shall present annually to the General Assembly and to the member organizations a report, including a balance sheet, on the operation of the Fund, and shall inform each member organization of any action taken by the General Assembly upon the report'. 4. Since the Director-General's report to the twenty-second session of the General Conference in 1983 (document 22 C/58), the Pension Board has submitted two annual reports (2) to the United Nations General Assembly, at its 38th (1983) and 39th (1984) sessions respectively. The present report by the Director-General contains a summary of the decisions taken by the General Assembly on these two reports by the Pension Board (sections I1 and 111) and information available on recent developments in the situation (section IV). 11. DECISIONS TAKEN BY THE GENERAL ASSEMBLY AT ITS 38TH SESSION (1983) ON THE ANNUAL REPORT OF THE PENSION BOARD Preliminary remarks 5. In his report to the General Conference at its twenty-second session, the Director-General mentioned the existence of a long-term financial imbalance in the Fund, a fact which had been brought out by the sixteenth actuarial valuation as at 31 December The Director-General also outlined the efforts which had already been made to improve the position. 6. Thus, on the recommendation of the Pension Board of the Fund, the United Nations General Assembly, at its 37th session (1982). adopted a series of economy measures which mainly affected the benefits system and the pension adjustment system, with effect from 1 January These measures may be summed up as follows: - reduction of the annual rate of accumulation for staff members recruited after 1 January 1983 (1.5 per cent of salary concerned for the first five years and 1.75 per cent for the following five years, the standard accumulation rate maintained being 2 per cent); - increase from 4 per cent to 4.5 per cent of the interest rate used in commuting part of the pension (up to one-third) into a lump-sum payment in respect of service after 1 January 1983; - alteration of the frequency of adjustments in pensions for cost-of-living changes: every six months instead of quarterly, with a change in the triggerpoint variation from 3 per cent to 5 per cent; (1) See paragraph 10.8 of document 23 C/58, regarding the election of the representatives of the General Conference to the Unesco Staff Pension Committee. (2) Copies of these reports (Supplements 9/A/38/9 and A/39/9) will be made available to any delegations who wish to study them.

3 23 C/57 - page 2 - Suppression of the adjustment to deferred pensions until the beneficiary reaches the age of 50; - suppression, in the majority of cases, of the right enjoyed by former participants who were re-employed by an organization to request restoration of prior service; - suppression of the system of refund to organizations of half of the contributions they had paid on behalf of participants separating after less than 5 years' service. Annual report submitted to the General Assembly at its 38th session (Supplement no 9/A/38/9) 1. The seventeenth actuarial valuation of the Fund as at 31 December 1982 was made in 1983 and its results were submitted to the 31st session of the Joint Staff Pension Board which was held in London (4-14 July 1983). 8. As a rule, actuarial valuations are carried out every two years by the Consulting Actuary for the purpose of determining whether the present and future assets of the Fund will be adequat-e to meet its obligations. On the basis of a homogeneous set of demographic and economic assumptions (evolution in the number of active participants and pensioners, total number of staff and contributions paid, life expectation, rate of inflation and rate of return on the Fund's investments), this evaluation, as compared with that made as at 31 December 1980, brought out the following points: - had it not been for the economy measures introduced as of 1 January 1983, the actuarial imbalance of the Fund would have worsened markedly. It would have become necessary, to absorb the actuarial deficit, to raise the rate of contributions from 21 per cent to per cent of pensionable remuneration (instead of the 24 per cent required following the actuarial valuation as at 31 December 1980); - with the economy measures which came into effect on 1 January 1983, the contribution rate required to ensure the financial balance of the Fund, without further reductions in the system of benefits, amounted to per cent of pensionable remuneration. 9. In view of the Fund's persistent actuarial deficit, the principal measure envisaged by the Pension Board was an increase in contributions from 21 per cent to 24 per cent, to be implemented in four successive two-year stages (1 January 1984, 1 January 1986, 1 January 1988 and 1 January 1990). 10. At its thirty-eighth session (1983). the General Assembly decided to raise the contribution rate, but only for the first stage, namely from 21 per cent to per cent, as from 1 January At the same time the Pension Board was invited to study supplementary measures likely to improve the actuarial balance of the Fund, in the form of further reductions in benefits. 11. In addition, the General Assembly requested the International Civil Service Commission (ICSC), in co-operation with the Pension Board, to submit to it at its next session ( 1983) 'recommendations on the appropriate level of pensionable remuneration for the Professional and higher categories', comparing 'the levels of pension entitlements... as part of the total remuneration comparisons to be carried out within the framework of the Noblemaire principle'.* 111. ANNUAL REPORT SUBMITTED TO THE GENERAL ASSEMBLY AT ITS THIRTY-NINTH SESSION ( 1984 ) 12. The annual report of the Joint Staff Pension Board to the United Nations General Assembly at its 1984 session contains - as is customary - a summary of the operation of the Fund during the financial period ended 31 December of the previous year and a description of the matters considered by the Pension Board, including the recommendations it submitted to the General Assembly for decision. * Ref. A/RES/38/233 (111)

4 23 C/57 - page 3 Summary of the operation of the Fund during the year ended 31 December The following information was brought out in the report submitted by the Pension Board to the 39th session of the General Assembly: - from 1982 to 1983, the number of participants in the Fund rose from 50,966 to 52,432; - during the same period, the principal of the Fund increased from US$2,763,412,267 to US$3,129, ; - income from the Fund's investments (interest, dividends, fixed property and profits from the sale of investments) amounted to US$276,262,053 in 1983; - at 31 December 1983, the Fund was paying retirement pensions, 7,065 early and deferred retirement pensions, 2,402 widows' and widowers' pensions, children's pensions, 454 disability pensions and 40 secondary dependants' pensions. In the course of the year it also paid 3,565 lump-sum withdrawal and other settlements. Matters considered by the Pension Board and decisions taken by the General Assembly in December The report of the Pension Board dwells mainly on two series of measures, aimed at improving the actuarial balance of the Fund on the one hand, and concerning pensionable remuneration for the Professional and higher categories on the other. The recommendations of the Pension Board and the decisions made are set out below in paragraphs 15 to 19. With regard to the other questions calling for a decision on its part, the General Assembly: (i) authorized an appropriation of US$lOO,OOO to supplement the voluntary contributions to the Emergency Fund; (ii) approved administrative expenses chargeable directly to the Fund for 1985, including the expenses for administration of the portfolio, for a total amount of US$7,440,800; (iii) (iv) decided that the estimates of administrative expenses of the Fund should be prepared on a biennial - and no longer an annual - basis, beginning with the biennium; decided to exclude, without retroactive effect, as of 1 January 1985, the non-resident's allowance from the definition of the pensionable remuneration of general service staff and other categories of locally-recruited staff; invited the Pension Board to review its composition and submit recommendations on the matter to the General Assembly at its fortieth session. Measures to improve the actuarial balance of the Fund 15. The recommendations submitted by the Pension Board to the thirty-ninth session (1984) of the United Nations General Assembly consisted of a set of measures aimed at: (1) introducing new reductions into the system of benefits, including the system of pension adjustments (actuarial savings: 1.33 per cent of total pensionable remuneration); (ii) increasing the contribution rate from per cent to 24 per cent (0.25 per cent of total pensionable remuneration); and (iii) raising the statutory age of separation from 60 to 62 (0.4 per cent of total pensionable remuneration). In its report, the Pension Board noted that if all these three series of measures were adopted, they would 'virtually eliminate the actuarial imbalance... as at 31 December 1982' (document: Supplement no 9 (A/39/9) and correction modifying the demographic hypotheses, para. 59 ) ; this deficit - taking into account the economy measures already introduced on 1 January was estimated at 4.79 per cent of total contributions from pensionable remuneration.

5 23 C/57 - page In its Resolution 39/246, the General Assembly approved only the measures recommended by the Pension Board to reduce benefits, including those concerning the adjustment of benefits. The most important of these measures which were adopted to take effect on 1 January 1985 were the following: - raising of the reduction factor applicable to early retirement benefits for beneficiaries having 25 years contributory service which was increased from 2 per cent to 3 per cent for every year below age 60; the reduction factors of 6 per cent per annum for service of less than 25 years and of 1 per cent for service equal to or higher than 30 years remain unchanged; - raising from 4.5' per cent to 6.5 per cent of the interest rate used for the lump-sum commutation of the pension (up to one-third) into a capital payment for service carried out since 1 January 1985; - reduction of the periodicity of adjustment of benefits to once a year from twice a year, subject however to a lowering of the trigger-point from 6 per cent to 3 per cent of the reference index: - uniform 1.5 per cent reduction in the first increase due as an adjustment for inflation for all current and future beneficiaries, except however for those holding low pens ions ; - in the case of pensioners to whom the two-track adjustment system is applicable (pension in dollars or pension calculated initially in the currency of the country of residence, the higher of the two amounts being adopted), the limitation to 20 per cent of the increase in dollars compared with the pension originally expressed in local currency: this measure carries transitional provisions for beneficiaries entitled to a pension before 1 January The General Assembly deferred consideration of the other recommendations of the Pension Board (raising of the statutory age of separation to 62 years and increase in the contribution rate). It invited the Pension Board to carry out a series of studies and to submit recommendations to it at its fortieth session (1985), especially on the following matters: - review of the method of calculating the lump-sum commutation of benefits (use of a uniform discount rate and calculation of capital on the basis of its net equivalent ) ; - imposition of a ceiling on the highest levels of pensions and on the lump-sum capital payment; - re-examination of the two-track pension adjustment system (dollars and local currency) with a view to further limiting the costs resulting for the Fund; - preparation of additional measures with a view to avoiding, if possible, further increases in the rate of contribution (organizations and participants) and to ensuring equality of treatment among participants. Pens ionable remunerat ion (Professional and higher categories) 18. On the joint recommendation of the International Civil Service Commission (ICSC) and the United Nations Joint Staff Pension Board. the General Assembly adopted a new scale of pensionable remuneration for Professional and higher categories with effect from 1 January The application of this new scale involves a decrease in the amount of pensionable remuneration for all staff members (varying between a maximum of 17.4 per cent (Deputy Director-General) and a minimum of 0.7 per cent (P-3). with the exception of staff members in grades P-1 and P-2 who benefit from an increase of 4.4 per cent and 1.2 per cent respectively. The General Assembly did not adopt a recommendation from the International Civil Service Commission approved by the Pension Board to the effect that, for staff members participating in the Fund before 1 January 1985, pensionable remuneration be maintained at its December 1984 level until such time as the amount envisaged by the new scale later adjusted had reached that level. 19. The General Assembly did, however, request the Pension Board to submit recommendations to it at its fortieth session concerning any compensatory or interim measures which might be applicable as from 1 January 1985 regarding participants whose pensionable remuneration had been higher before that date. In addition, the General Assembly suspended operation of the adjustment procedure set out in Article 54 (b) of the Regulations of the United Nations Joint Staff Pension Fund pending the new proposals which the International Civil Service Commission and the Pension Board had

6 23 C/57 - page 5 been called upon to submit to it on the subject at its fortieth session. The International Civil Service Commission and the Pension Board were also invited to carry out a study on pensionable remuneration for Professional and higher categories in two stages: (a) to submit a report to the fortieth session on the methodology applied and, for the determination of this remuneration, (b) to propose, if necessary, a new scale of pensionable remuneration to the forty-first session (1986). IV. RECENT DEVELOPMENTS - ANNUAL REPORT OF THE PENSION BOARD TO THE FORTHCOMING SESSION OF THE GENERAL ASSEMBLY (40th SESSION ) 20. The 34th session of the Joint Staff Pension Board will be held in Montreal from 29 July - 9 August. On that occasion the Pension Board will examine all the questions mentioned above which were dealt with in Resolution 39/246 adopted by the General Assembly at its 39th session (1984). The Pension Board will formulate the recommendations which it considers appropriate on those matters in its annual report to the 40th session of the General Assembly. 21. After the 34th session of the Pension Board, the Director-General will draw up an addendum to this document setting out the main points contained in the Pension Board's recommendations and the conclusions he draws from recent developments in the field of pensions. In that addendum the Director-General will also describe the conservatory measures which he has been led to take in 1985, pending the possible adoption by the United Nations General Assembly of supplementary compensatory measures concerning the scale of pensionable remuneration.

7 General Conference? - Twenty-third Session, Sofia C 23 C/57 Add.1 4 September 1985 Original: French Item 10.5 of the provisional agenda UNITED NATIONS JOINT STAFF PENSION FUND: REPORT BY THE DIRECTOR-GENERAL ADDENDUM 1 1. The 34th session of the United Nations Joint Staff Pension Board was held, as announced, in Montreal, from 29 July to 9 August 1985, after document 23 C/57 had been prepared. In anticipation of the annual report which the Joint Staff Fension Board will submit to the General Assembly at its fortieth session, before the end of the present year, the Director-General wishes to inform the General Conference1 of the main conclusions which the Joint Board reached following the discussions at its most recent session. -- Current state of the Fund's investments 2. The Joint Board was informed by the representative of the Secretary-General, who is entrusted under the terms of Article 19 of the Regulations of the Joint Staff Pension Fund, with the power to decide how the Fund's assets are to be invested, that during the financial year 1 April 1984/31 March 1985 the market value of the portfolio held by the Fund had attained the sum of $3,925,000,000. This was the combined result of contributions paid in, dividends and interest received (including that on reinvested income) and the appreciation of the value of the portfolio. Despite the unfavourable effects of the almost continuous rise in the rate of exchange of the dollar on the value of investments in currencies other than the currency of accounting of the Fund (approximately 40 per cent of the portfolio), the total return on investments exceeded 8 per cent (as compared with per cent for the preceding financial period from 1 April 1983 to 31 March 1984). In real terms, i.e. taking inflation into account, the rate of return was 4.4 per cent for the period ended 31 March 1985, whereas it had been 11.8 per cent a year for the past three years and 6.7 per cent a year for the past five years. However, if these satisfactory results are combined with the real, often negative rates of return obtained between lygg and 1980 (a period of galloping inflation), it emerges that the real rate cf return (corrected so as to take account of inflation) is only 1.6 per cent.'r year for the past 25 years. Actuarial balance In order to carry out the eighteenth actuarial valuation of the Fund on the basis of the results obtained as at 31 December 1984, the Committee of Actuaries of the Fund chose, from among several possible hypotheses, the regular actuarial hypothesis of 6.5:9:6 (respectively, in annual terms: the rate of increase of 1. Decision required: FaracJraph 24.

8 23 C/57 Add.1 - page 2 the total remuneration paid to staff, the rate of return on investments and the rate of increase in prices). The main feature of this actuarial hypothesis is that it assumes in the very long term a real rate of return net of inflation of 3 per cent. It emerges from the valuation made on this basis that the contribution rate needed to achieve the actuarial balance of the Fund would henceforth be per cent of the total pensionable remuneration. In view of the fact that the contribution rate required at present is per cent (14.50 per cent for member organizations and 7.25 per cent for participants), the actuarial deficit thus amounts to 3.01 per cent of the total remuneration paid to staff. Measures advocated to restore the balance - 4. It was against this background that, at its 34th session, the Joint Staff Pension Board examined the measures which would be likely to redress the actuarial balance of the Fund and to comply with the requests expressed by the United Nations General Assembly concerning the studies to be undertaken with a view to formulating recommendations to the fortieth session of the General Assembly regarding the system of benefits and the two-track pension adjustment system (see paragraph 16 of the basic document, 23 C/57). 5. In this connection, the Joint Staff Pension Board bore in mind the following two considerations: (a) the fact that a relative improvement had taken place in the actuarial balance of the Fund, in that the deficit had been considerably reduced; and (b) the need for further measures to reduce or eliminate the remaining imbalance. The Pension Board noted that since the actuarial valuation of 31 December 1980, which had revealed that the Fund was in deficit, the burden of economy measures adopted had been borne for the most part by participants (present and future) and pensioners, i.e per cent of the total pensionable remuneration, as against only 1.02 per cent of the total pensionable remuneration borne by the budgets of the affiliated organizations. Accordingly, the members of the Pension Board, including those representing the legislative bodies (in particular the United Nations General Assembly), came to the unanimous conclusion that the principal move towards achieving the long-term financial viability of the Fund would be to increase the contribution rate from per cent to 24 per cent (a maximum of 8 per cent of which would be shared among the participants). This objective should be attained in three successive stages, with an increase of 0.75 per cent at each stage, to take effect on 1 January 1986, 1 January 1988 and 1 January 1990 respectively. Statutory age of separation 6. Referring to another measure, which it had been recommending for several years, but whose examination had been deferred by the General Assembly at its preceding sessions, the Joint Staff Pension Board reiterated the desirability of achieving its long-term objective of raising the statutory age of separation from 60 to 62, while at the same time maintaining unchanged the present right to retire before that age. In reiterating its recommendation to that effect, the Pension Board was aware of the opinion expressed by most of the chief executive officers of the organizations. While taking due note of the legitimate concerns of staff members, they considered, however, that in the organizations' interests the chief executive officers must continue to have discretionary powers to continue to employ staff members over the age of 60. Other questions concerning the pension scheme 7. The studies that the Pension Board was asked to carry out with a view to making recommendations to the General Assembly at its fortieth session (see paragraph 17 of the basic document, 23 C/57) primarily concerned the lump sum obtained by commuting up to one-third of the pension (one-third as a lump sum capital payment). In this connection, two questions were asked: (a) whether the present composite discount rate (3.23 per cent, 4 per cent and 6.5 per cent according to length of service) should be replaced by a uniform discount rate; and (b) whether a ceiling should be imposed on the lump sum. The question of the imposition of a ceiling was also raised with regard to the highest levels of pension payable to senior officials holding the grades of Assistant Secretaries-General (ASG) and Under-Secretaries-General (USG) or grades of the same level in other organizations.

9 23 C/57 Add.1 - page 3 8. In accordance with the opinion expressed by the Committee of Actuaries of the Fund, the Pension Board considered that a composite discount rate should continue to be applied as a constant practice of the Fund. By using modern computerized methocls, it was just as easy to employ a composite rate as an average rate. The use of a higher discount rate would have the effect of decreasing the corresponding lump sum for the previous period of affiliation, which would raise questions as to whether the interests of participants were being properly safeguarded. Likewise, it was noted that the imposition of a ceiling on the lump sum made it more difficult to achieve an actuarial balance, s ince&h-ated-- portion, unlike periodic benefits, was not subject to the pension adjustment. system and represented an additional burden for the Fund. However, the imposition of a ceiling on the highest pensions, given their extremely limited number, would have no actuarial consequences. The general opinion, concurring with that of the Committee of Actuaries, was that the studies requested on the imposition of a ceiling on the lump sum and on the pensions of senior officials of the organizations were motivated by political considerations. The members of the Pension Board were almost unanimous in advising against all those measures for which studies had been requested. However, there was a majority in favour of a subsidiary proposal regarding the pensions payable to ASGs and USGs and equivalent grades. Under the terms of the Regulations of the Pension Fund, the maximum pension payable amounted to 65 per cent of the final average remuneration, whereas the recommendation formulated, on a subsidiary basis, envisaged that, while interests must be safeguarded, the pensions of officials in those two categories should in future be limited to no more than 60 per cent of their final average remuneration. - Pensionable remuneration (Professional and higher categories) Temporary and interim measures - _- 9. As stated in the basic document, 23 C/57 (cf. paragraphs 18 and 19), the United Nations General Assembly, at its thirty-ninth session (1984), adopted with effect from 1 January 1985 a new scale of pensionable remuneration whose tendency was to decrease the latter, but did not endorse the interim measure recommended by the International Civil Service Commission with the approval of the Fension Board. 10. The situation thus created has proved detrimental to the interests and legitimate expectations of the participants in service before 1 January In fact, as the Pension Board pointed out at its last session, the practice followed by that Board and the member organizations has always been to protect the rights of staff members in the event of unfavourable changes affecting pensions, salaries and indemnities by means of appropriate temporary measures. In anticipation of interin? or compensatory measures which the General Assembly may take at its next session and which would apply to officials in service on 31 December 1984 (as envisaged in resolution 39/246 requesting the Pension Board to to make proposals on this subject) a number of organizations have thought it necessary to take measures to safeguard interests in this field. For example, apart from the United Nations and its agencies (UNDP, UNICEF, UNIDO, UNITAR, etc.) which are automatically and immediately subject to the General Assembly's decisions, most of the Specialized Agencies have taken the initiative of establishing a suspense account containing the excess contributions resulting frorr, the difference between the level of pensionable remuneration on 31 Oecember 1984 and the level of the new scale which came into force on 1 January The establishment of this suspense account, which, of course, does not exclude the possibility of interim measures being adopted at a later date, was intended in particular to avoid the levying of a global sum should such measures, applied retroactively, require supplementary contributions to be paid for At its 34th session, the Pension Board decided to repeat its recommendation to the United Nations General Assembly on the lines previously formulated in agreement with the International Civil Service Commission, namely, that for this category of participants in service on 31 December 1984, the pensionable remuneration on 1 January 1985 should not be lower than the level attained by such

10 23 C/57 Add.1 - page 4 remuneration on 31 December Three of the 21 members of the Pension Board were, nevertheless, not in favour of that proposal. 13. However, a majority of the members of the Joint Staff Pension Board raised the question whether they should not at least envisage the possibility that the United Nations General Assembly might refuse to reverse its previous decision by approving the above recommendation formulated jointly in 1984 by the International Civil Service Commission and the Pension Board. With that possibility in mind, and so as not to deprive the participants concerned of compensatory measures, a proposal of a subsidiary nature was adopted by the majority of the members of the Pension Board. Briefly, that proposal would entail the application of the following measures: the final average remuneration ('FAR'), (i.e. the 36 highest monthly rates of pensionable remuneration during the last five years of participation), which provides the reference point for determining the amount of participants' annual pension, would be calculated as usual according to the old scale for periods of participation prior to 1 January 1985, and according to the new scale for periods subsequent to that date. By the combination of the two scales, the final average remuneration would continue to increase for a time, and would reach its highest level before decreasing. This threshold would provide the basis for establishing pension rights and would remain in force until superseded by any future adjustments to the new scale. According to this formula, these thresholds would be attained on 30 September 1987 for participants in grade P-3, on 30 September 1985 or those in grades P-4, P-5 and D-1, and on 31 December 1984 for those in grades D-2, ASG and USG. 14. In addition, the Pension Board emphasized the need for close co-operation, through channels to be established for that purpose by its Standing Committee, with a view to re-examining the methods used to define pensionable remuneration. The view was widely expressed that the new methodology, to be prepared by 1986, should be designed to satisfy the specific requirements of international civil servants. With regard to the procedure or adjusting the pensionable remuneration so as to take account of changes in the cost of living, the Pension Board agreed with the International Civil Service Commission that such a procedure must be compatible with the methodology to be chosen for defining final average remuneration. However, the Pension Board emphasized that, as in the case o the methodology, the adjustment procedure must be worked out no later than Compositon - of the Joint Staff Pension Board 15. The question of the composition of the Joint Staff Pension Board1 and of a possible increase in the number of its members (at present 21, divided equally between the three groups representino respectively the legislative bodies, the chief executive officers and the participants) was discussed by the Pension Board in response to the request made to that effect in resolution 39/246 of the United Nations General Assembly. The present composition of the Pension Board, in which the United Nations Staff Pension Committee occupies six of the 21 seats, dates back to the beginning of the operation of the Fund, although it now includes 15 member organizations and, with the expected affiliation of UNIDO in 1986, will soon contain Continuation of its present tripartite composition was unanimously supported by the Pension Board. In the opinion of the great majority of members, if the number of members of the Pension Board were increased, the principle of equal representation of the three groups should be preserved. On that basis, two preliminary proposals were made, one emanating from Unesco and the other from the United Nations. The first proposed a Pension Board consisting of 33 members, on which the United Nations would have nine seats, while the second envisaged a membership of 36, 12 seats of which would be allocated to the United Nations. 1. With regard to Unesco, see item 10.6 (document 23 C/58) concerning the electicn of representatives of the General Conference to the Staff Pension Committee.

11 23 C/57 Add.1 - page 5 According to both these proposals, the largest Specialized Agencies (FAO, WHO, Unesco and ILO) would have three seats divided among the three groups making up their respective Pension Committees. The other seats would be divided among the other organizations, representing 10 per cent of all the participants. 17. Before formulating a recommendation on this matter to the United Nations General Assembly, the Pension Board considered that, on account of the importance of the question for all the member organizations, the opinions of their legislative bodies should first be sought. Conclusion 18. The Director-General considers it essential that the integrity of the pension scheme be maintained and preserved. This scheme, which has been built up gradually over the 40 years since the United Nations system came into being, is designed to provide adequate protection for staff members in the event of retirement, death or disability during service. It therefore merits special attention. 19. It is, of course, important to take fully into account the role played by income from investments when assessing the long-term financial situation of the Fund and its capacity for meeting its obligations not only to its present beneficiaries (approximately 20,000), but also to its future beneficiaries, whose number will very probably be greater. With the advantage of past experience and expertise, it is to be hoped that the Fund's investment situation may improve, but this will depend ultimately on future developments in the international economic and monetary situation. 20. The Director-General has described all the economy measures already taken to try to reduce the actuarial imbalance of the Fund, measures of which the main burden has been carried by participants (present and future) and by pensioners. The Director-General therefore fully endorses the recommendation unanimously put forward by the United Nations Joint Staff Pension Board to the General Assembly of the United Nations that, by successive stages between now and 1 January 1990, the rate of contributions be raised from the present figure of per cent to 24 per cent (16 per cent payable by the member organizations and 8 per cent by the participants). 21. With regard to the suspense account set up by the Organization to finance the cost of any interim measures that the General Assembly may take at its fortieth session on account of the introduction, with effect from 1 January 1985, of a new scale of pensionable remuneration which is on the whole lower than the scale in operation before that date, its fate will depend on the final decision taken by the General Assembly. If the measures adopted by the General Assembly, in accordance with established principles, do not entail the payment of supplementary contributions for participants in service before 1 January 1985, then the suspense account will be dissolved and the sums received, including interest, will be restored to the Organization and to the participants concerned. On the other hand, if those measures entail the payment of additional contributions for those same participants, then such contributions will be deductzd from the account. 22. As regards the possibility of increasing the membership of the Joint Staff Pension Board, the Director-General would like to have the view of the General Conference on the desirability of such a measure and on its conditions and methods of application. He considers that, in order to protect its interests, Unesco should have three seats on the Pension Board, allocated respectively to the representatives of the General Conference, of the Director-General and of the participants. 23. The Director-General will continue to draw the attention of the General Conference to any important new facts concerning the United Nations Joint Staff Pension Fund which may alter the situation described in this report. 24. In the light of the foregoing, the General Conference may wish to adopt a resolution, which could be worded as follows:

12 23 C/57 Add.1 - page 6 'The General Conference, Having taken cognizance of the report by the Director-General on the United Nations Joint Staff Pension Fund (document 23 C/57 and Addendum), - Noting that the General Assembly of the United Nations, at its thirty-ninth session, decided to apply to staff members in the Professional and higher categories, with effect from 1 January 1985, a new scale of pensionable remuneration having the effect of decreasing that remuneration for staff members in grades P-3 and above, -_- Noting that the General Assembly, at its fortieth session, is to examine the question of any compensatory or interim measures that might be applicable to participants in service on 31 December 1984 whose pensionable ref.uneration was reduced on 1 January 1985, and in doing so to take account of the proposals that will be submitted to it by the United Nations Joint Staff Pension Board, - Noting also that the General Assembly of the United Nations, at its thirtyninth session, invited the Pension Board to review its composition and submit recommendations on the matter to the General Assembly at its fortieth session, - Having taken cognizance of the discussions and proposals of the Pension Board on those points, Expresses the hope that the General Assembly of the United Nations will accept the main proposal contained in the report of the Pension Board, namely, to adopt the interim measures recommended in 1984 by the International Civil Service Commission: - Endorses the proposal submitted by the representatives of Unesco on the Pension Board to the effect that, in accordance with the principle of equal representation of the three groups of which the Board is composed, on a Joint Staff Pension Board composed of 33 members, the Organization should have three seats, allocated respectively to the General Conference, the chief administrative officer and the participants'.

13 E,:<: ixts e General Conference Twenty-third Session, Sofia C 23 C/57 Add.2 4 October 1985 Original: French Item 10.5 of the provisional agenda UNITED NATIONS JOINT STAFF PENSION FUND: REPORT BY THE DIRECTOR-GENERAL ADDENDUM 2 1. The Secretary-General of the International Telecommunication Union has communicated to the Director-General a resolution ( R No.937) approved by the Administrative Council of the ITU at its 40th session (Geneva, July 1985) on staff questions and entitled 'Conditions of service in the common system'. 2. This resolution deals in particular with the decisions adopted by the General Assembly at its 39th session (1984) affecting the salaries and pensions of the staff of organizations of the United Nations system and with the problems they raise in regard to staff policy and the smooth functioning of the machinery governing the international civil service. In view of the fact that the questions covered by this resolution of the ITU Administrative Council relate in particular to the measures concerning pensions and pensionable remuneration, which are set out in detail in document C/57 and Addendum 1," the Director-General feels it his duty to bring the text of this resolution to the attention of the General Conference for information, in the form of an annex to this second Addendum. * With regard to salaries and in particular the question of the suspension of the post adjustment machinery see, under item 10.2 of the provisional agenda, document 23 C/51 entitled 'Salaries, allowances and other benefits of staff: Professional category and above'.

14 23.C/57 Add.2 Annex A N N E X INTERN AT1 0 N AL T E LECO M M U N I CAT ION U N ION ADM IN ISTRATIVE COUNCIL Document E (CA40-161) JULY July th SESSION - GENEVA - RESOLUTION (approved at the 11th Plenary Meeting) R No.937 CONDITIONS OF SERVICE IN THE COHHON SYSTEM The Administrative Council, having heard the statement by the Chairman of the Staff Council to Committee 2; having noted the decisions adopted by the ICSC at its July session to increase the Nev York post adjustment; noting chat the United Nations General Assembly in its resolution 39/27 of 30 November 1984 then requested the ICSC to suspend application of the second stage of the adjuscment, with the result that the Geneva post adjustment vas frozen vich effect from 1 April 1985 ; noting also that the General Assembly decided to apply, with effect from '1 January 1985 a nev reduced scale of pensionable remuneration, vithout adopting the transitional measures proposed by the ICSC in order to safeguard staff members' acquired rights or accepting the method of adjusting that remuneration also proposed by the ICSC; noting further that the decisions of the General Assembly entail a systematic decerioration of salaries and pensions; having learned that serving and retired staff members have appealed against the abovementioned decisions before the competent tribunals of the common system; avare of the negative effects which this staff policy and the uncertainty thereby produced have had for the Union's staff members and hence also for the achievement of its object 1 ves ; anxious to promote a stable and equitable staff policy and recalling chat the ICSC and the Joint Staff Pension Board are the responsible common system bodies vhich vere established for this purpose; instructs the Secretary-General 1. to ensure that the Union's interests are not jeopardized by the current staff policy resulting from the decisions of the United Nations General Assembly; 2. to continue to take action in the competent bodies vich a view to ensuring the smooch functioning of the machinery governing the international civil service.