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67th UN Pension Board session concludes, confirming the UNJSPF’s good financial health

26 July 2020

Confirming the solid financial health of the UN Joint Staff Pension Fund (UNJSPF), the Pension Board discussed governance of the Fund, approved the Fund’s 2019 financial statements and 2021 administrative budget proposal. Here, in brief, are the highlights of the annual 67th session of the Pension Board, which ended on Friday. The Board will submit its report to the UN General Assembly in the coming weeks.

The newly elected Chair of the Pension Board, Ms. Martha Helena Lopez, Assistant Secretary-General for Human Resources in the Department of Management, Strategy, Policy and Compliance at the United Nations, said “it was a very productive session, and despite the challenge of a virtual meeting, the Board managed to successfully review and decide on substantive and regulatory matters.”

The Board welcomed the efforts of the pension administration team to maintain operations despite the challenges brought by the COVID-19 situation. “UNJSPF Staff has been working from home since mid-March, and despite this challenge, performance has been remarkable, our business continuity plans have worked well,” said Ms. McClean, the new Chief Executive of Pension Administration.

More than 90% of initial separation cases have been processed within 15 days since the beginning of the year, as was the case in 2019. Monthly pensions for nearly 80,000 beneficiaries have been processed on time including the challenging April payroll, which involved the cost of living adjustment. Progress has also been made with regard to IT initiatives and digitalization, including a successful testing of a digital certificate of entitlement launched with a number of WFP and FAO test users.

The Pension Board reviewed, for the final approval of the General Assembly, the Fund’s 2021 administrative budget, supporting the new 2021-2023 strategy of Pension Administration and the requirements of the Office of Investment Management.

As proposed, the budget “will allow the Fund to start implementing its new vision and strategy, namely simplify the client experience; modernize pension services and build a data-driven organization with strong, global partnerships,” Ms. McClean stated.

In addition, the Board requested the Pension Administration to pause the centralization of the finance functions from Geneva to New York, which had been initiated to improve client serving and operational capacity in Geneva and requested further analysis to be provided at the Board’s next session.

Every two years, an actuarial valuation for the Fund is completed by the Consulting Actuary and is reviewed by the Board. The valuation provides the present and future liabilities of the Fund compared to current and projected assets.

The valuation as of 31 December 2019 showed that the required contribution rate is sufficient to meet the Fund’s liabilities, with an actuarial surplus of 0.50 per cent of pensionable remuneration. Hence, the Fund remains close to actuarial balance. The funded ratio (which compares actuarial asset value with the accrued benefit entitlements at the valuation date, on a termination basis) was 107.1 per cent when taking into account pension adjustments. The Board welcomed this modest surplus and noted the importance of continuing to achieve the 3.5 per cent annual real rate of return on a long-term basis for the future solvency of the Fund.

Mr. Pedro Guazo, Acting Representative of the Secretary-General for the Investment of the Assets of the UNJSPF (the RSG), stated that “2019 was an exceptional year in global financial markets.” The asset value of the Fund had increased from $61 billion at the end of 2018 to $72 billion end of 2019. Despite the turbulent markets in the first months of 2020, “the objective of a 3.5% real return rate in USD over long-term has been met,” Mr. Guazo emphasized. More transparency is being implemented, Mr. Guazo added, with the investment performance being now published on a weekly and a monthly basis on the UNJSPF website (see here).

The Board approved the 2019 audited financial statements, after review of the report of the United Nations Board of Auditors (BoA). “The BoA issued an unqualified (clean) opinion on the Fund’s financial statements. Our participants, retirees and beneficiaries can have full confidence in the Fund’s accounts,” Ms. McClean said.

The United Nations General Assembly, which is the highest legislative body governing the Fund, requested a review of the Fund’s governance last year by an independent entity. The report was presented to the Pension Board with an objective to compare the UNJSPF governance against best practices and to highlight changes needed to align with these best practices.

The Board decided that its Governance Working Group will review the report’s detailed proposals and consult with all constituent groups through the Staff Pension Committees of the Fund’s member organizations. The Working Group will produce a progress report to a Special session of the Pension Board, planned to be convened in early 2021.

Finally, the Board recommended some amendments to its Regulations, mainly on governance matters, for the approval of the General Assembly at its 75th session. The Board adopts its own Rules of Procedure and this year it adopted a Code of Conduct for the members of the Board.

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