BUDGET COMMITTEE REVIEWS STAFF PENSION FUND, "STRESSING NEED TO ADDRESS WEAKNESSES IN FINANCIAL MANAGEMENT;" DIVERSIFYING INVESTMENTS;" "ENCOURAGES SECRETARY-GENERAL TO KEEP EXPLORING INVESTMENT PROSPECTS"

 

15 DECEMBER 2014

BUDGET COMMITTEE REVIEWS STAFF PENSION FUND, "STRESSING NEED TO ADDRESS WEAKNESSES IN FINANCIAL MANAGEMENT;" DIVERSIFYING INVESTMENTS;" "ENCOURAGES SECRETARY-GENERAL TO KEEP EXPLORING INVESTMENT PROSPECTS"

A draft resolution on the United Nations pension system by the Fifth Committee (Administrative and Budgetary) asked General Assembly "to stress the need for United Nations Joint Staff Pension Fund managers to address all the weaknesses in the system identified by the Board of Auditors." In a four-page resolution, those "weaknesses" related to "financial management and financial statement disclosure, investment management, information system management and other administrative processes."

The Committee's resolution also emphasized the importance of having the United Nations Joint Staff Pension Board issue financial rules to govern the Fund's financial management. It asked for more information on that issue in the Pension Board's next report.

The Assembly would also emphasize the importance of the Fund meeting its annual real rate of return of 3.5 per cent over the long term as it welcomed the Fund's improved actuarial position, which reversed the downward trend that began in 1999. The Secretary-General, as the Fund's fiduciary, would be asked to keep diversifying its investments among developed, developing and emerging markets. If approved by the Assembly, the resolution also would encourage the Secretary-General to keep exploring investment prospects in all markets, always using sound risk management techniques.

United Nations Pension System: Action on Draft Resolution

The Fifth Committee approved a draft resolution on the United Nations pension system (document A/C.5/69/L.6) without a vote, by which the Assembly would endorse the recommendations by the ACABQ set forth in document A/69/528.

Also by the text, the Assembly would emphasize the importance of the United Nations Joint Staff Pension Fund meeting its target annual real rate of return of 3.5 per cent over the long term, and welcome the improvement in the Fund's actuarial position, which represented a reversal of the downward trend observed since 1999.

Further, the Assembly would stress the need for the Fund to address all the weaknesses identified by the Board of Auditors in relation to financial management and financial statement disclosure, investment management, information system management and other administrative processes. Approving some amendments to the Fund's regulations and administrative rules and emphasizing the importance of the Board promulgating financial rules that would govern the financial management of the Fund, the Assembly would seek further information in the Board's next report. Taking note of Paragraph 36 of the Advisory Committee's report, the Assembly would decide not to approve the proposed amendment to Article 14 as set out in Annex XI to the Board's report on the Fund's financial statements.

The Assembly would also approve the amendment to reflect the 10 percent adjustment to small pension threshold amounts for separations on or after 1 April 2016. Also, it would concur with the Board's recommendation that the following assessments be discontinued: assessments of the costs of the April 1992 modification of the cost-of-living differential factors as applicable to the Professional and higher categories; of actual savings from the reduction of the 120 percent cap provision to 110 percent, effective for separations on 1 July 1995 or later; and of the costs and/or savings of the minimum guarantee at 80 percent of the United States dollar track amount.

Noting with concern the Board's observation regarding performance evaluations not having been completed for Fund staff for the cycle ended 31 March 2013, the Assembly would request the Secretary-General to continue his effort to ensure that the performance of all Fund staff members would be properly evaluated in a timely manner.

The Assembly would request the Secretary-General, as fiduciary for the Fund's investment, to continue to diversify its investments between developed, developing and emerging markets, and to ensure that investment decisions in any country are implemented prudently, taking fully into account the four main criteria: safety, profitability, liquidity and convertibility, under volatile market conditions. It would also encourage the Secretary-General to continue to explore prospects in all markets, taking into account risk-return profiles and always applying sound risk management techniques.