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UN staff pension funding level hits 147%

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  • UN staff pension funding level hits 147%

GLOBAL - The $40.6bn (€25.9bn) United Nations Joint Staff Pension Fund (UNJSPF) has reported a funding level of 147% and an actuarial surplus of 0.49% of pensionable remuneration.

Figures from the UNJSPF's annual report 2008 showed the latest actuarial valuation on December 31 2007 revealed a sixth consecutive actuarial surplus for the scheme, however the 0.49% surplus of pensionable remuneration is significantly lower than the 1.29% surplus recorded in 2005.

That said, the report also showed if pension benefits are adjusted for inflation, the funding ratio for 2007 falls from 146.9% to 95%, although this is still an increase from the figures of 140%, or 90% including pension adjustments, at the previous actuarial valuation in 2005.

The pension scheme, which consists of 22 member organisations including the United Nations and the World Health Organisation (WHO), saw the number of active participants increase by 8.3% from 98,431 at the end of 2006 to 106,566 in December 2007.

Bernard Cochemé, chief executive of the UNJSPF, highlighted a number of developments in the fund in 2007 including the establishment of the Pension Board's audit committee to improve governance mechanisms, and the enhancement of benefits such as lowering the reduction applied to the first consumer price index.

In addition, the pension fund completed its first Asset Liability Management (ALM) study in 2007, which reported the fund had a "solid asset allocation", consisting of 60% in equities, 33% in bonds, 4% in real estate and 3% in short-term holdings such as US treasury bonds, as of December 31 2007.

However, the annual report also revealed although scheme assets increased from $36.3bn in 2006 to $41.4bn at the end of 2007, the first quarter of 2008 saw the value of the fund fall by 2.7% to $40.6bn.

As a result, the asset allocation of the fund at the end of March 2008 was 57% in equities, 36.8% in bonds, 1.8% in real estate and 4.4% in short-term holdings, compared to its long-term strategy of 60% equities, 31% bonds, 6% real estate and 3% in short-term investments.

Over the year to March 31 2008, the fund returned 8.1% on its investments, compared to an overall benchmark of 5.2% - and well above its target rate of return of 3.5% - however in the first quarter it saw a negative return of -2.7%, albeit this again outperformed the benchmark return of -3.5%.

The annual report attributed this outperformance to active management of its assets, which the UN JSPF claimed added $337m to the value of the fund in the first three months of 2008.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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