Presentation to FFOA

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January 2014

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Sustainability Size and maturity Environment Main initiativesGeneral AssemblyASHI Conclusions

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Sustainability

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The Fund is in a well-funded position

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Compared to the 3.5% real return objective, long-term investment performance is still in-line with expectations

Annualized Real Rate of Return as of 31 March 2013

1 Year 6.6%

5 years 1.1

15 years 3.7

50 years 3.9

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1. Change in Normal Age of Retirement to 65 for new staff 1/1/2014

2. Working Group on Sustainability Recognized importance of 3.5% real rate of investment return

to achieve long-term sustainability Define risk appetite and tolerance Establish and asset liability monitoring committee Changes in early retirement age and reduction factors

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Fund’s size and maturity

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67,971 68,93574,432

80,082 82,715 85,245 88,35693,683

98,431106,566

112,804117,580

121,138120,774

121,098

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

UNJSPF Active Participants Count 2012/1998Growth 78%

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In less than a decade, the number of retirees and beneficiaries will reach 90,000

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Benefits processed after the initial separation from active service

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2012 (IPSAS)

2011 (UNSAS)

Contributions 2,163 2,140

Benefit Payments 2,228 2,130

Difference -65 +10

As a % of contributions 3.0% 0.5%

As a % of total assets 0.1% 0.03%

Number of Participants 121,098 120,774

Number of Retirees and Beneficiaries

67,677 63,387

In millions of US Dollars

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Assuming the expected annual 3.5% real rate of return is earned:

The principal of the Fund will not be utilized to cover benefits gap until 2047.

Even in a “catastrophic” scenario if the real return on investments is only 2% per year:

The principal will not start to be utilized until 2037.

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130.5%136.2% 132.4%

141.4%

180.1%

160.6%

144.5% 139.9%146.9%

139.6%130.00%

76.7% 80.5% 81.1%88.5%

113.4%106.1%

95.4%92.4% 95.3% 91.0%

86.20%

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

160.0%

180.0%

200.0%

1990 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Act

uar

ial V

alu

e o

f Ass

ets

Per

cen

t Fu

nd

ed

Year Ending 31 December

Without Pension AdjustmentWith Pension Adjustment

  1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Return on Actuarial Assets

16.72% 9.85% 10.99% 14.72% 19.83% 2.72% 5.11% 2.99% 4.59% 3.86% 6.80% 12.59% 13.69% 1.57% 5.58% 4.84% 1.86%

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a Excludes 0.39 per cent of p.r. for expenses

ASSETS Value of Present Assets Present Value of Future Contributions a on Behalf of: Present Participants Future Participants Total Assets

$40,815.0

21,153.8 62,498.8

$124,467.6 LIABILITIES Present Value of Benefits Payable to or on Behalf of Retired Participants and Beneficiaries Present Value of Benefits Expected to be Paid on Behalf of: Present Participants Future Participants Total Liabilities

$27,710.3

46,770.8 56,696.3

$131,177.4 SURPLUS (DEFICIT) Present participants, including present retired participants and beneficiaries All participants, including future participants

$(12,512.3)

$(6,709.8)

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Environment

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1. Changes in banking practices (IBAN codes, regulatory changes, new clearing methods, etc.)

2. Economic, political or social events that prevent (or make difficult) payments in a country or region;

3. Changes in national legislations regarding the definition of marriage and spouse;

4. Changes in financial reporting (IPSAS and IFRS);

5. Availability of technological improvements (driving changes in Member Organizations’ systems and increased demand for self-service options, etc.)

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10. Catastrophic events that affect retirees or beneficiaries or the Fund’s operations;

11. Possible aberrations in relationship of inflation and foreign exchange;

12. More volatile financial markets (which have a significant impact on a maturing Fund since there is a growing interdependence of assets and liabilities);

13. Economic conditions (need for increased efficiency);

14. Changes in demographic factors (i.e. early retirement rates, longevity, participation, etc.)

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Illustrative example –Other public DB schemes

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Source: Government Accountability Office (GAO) Report to Congress: “STATE AND LOCAL GOVERNMENT PENSION PLANS, Economic Downturn Spurs Efforts to Address Costs and Sustainability”. Report number GAO-12-322

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Main initiatives

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Integrated Pension Administration System (IPAS) implementation on schedule and on budget

IPAS Project

33 FIRST Financial Statements prepared under International Public Sector Accounting Standards Un-qualified audit opinionMain changes:

A.Reporting of financial instruments Recognition of unrealized AND realized gains and losses (Volatility) Separate presentation of foreign currency gains and losses Recognition and presentation of transaction costs and management fees Extensive disclosures related to financial instruments

B.Recognition and presentation of certain benefit payables

C.Presentation of administrative expenses on an accrual basis and budget reconciliation

D.Capitalization of Fixed and Intangible Assets (included in other assets)

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In order to significantly reduce the banking charges in 13 countries in West and Central Africa, the Fund is implementing a new banking mechanism that directly connects six local accounts (3 in XAF and 3 in XOF) with two regional clearing houses.

This project implies departing from centralized disbursement method and “opening” PENSYS during IPAS implementation.

We have developed a new IT program, tested the new mechanism and changes to the payroll system.

This project will benefit some 1,200 beneficiaries. Successful implementation. The target to initiate in 2013 was met.

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Assets and Liabilities Monitoring Committee In order to improve communications between the Fund’s

management and the Board on investment policy and strategy and to enable the Fund to better monitor the balance of assets and liabilities, the Working Group recommends the establishment of an Assets and Liabilities Monitoring Committee;

The ALM Committee will work with the support of the Fund’s management, the Investments Committee, the Committee of Actuaries and the Consulting Actuary to monitor the solvency of the Fund and to provide advice and recommendations to the Board with regard to risk management, funding policy, asset-liability management and investment policy.

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Risk Management For sustainability, important to manage two areas of risk

effectively: 1) the risks associated with investments, and 2) the risks associated with asset-liability imbalances;

Latest risk assessment of UNJSPF identified “Articulation of risk appetite and risk tolerance” as a high risk;

Working Group recommends that: (i) the Fund define its risk appetite, risk tolerance and risk policy; and (ii) these be presented to the Board for action in accordance with the Fund’s regulatory framework.

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• Increased utilization of Emergency Fund

In line with its more proactive approach, and more recently, a total of 224 cases, representing $ 67,200.00, have been disbursed during the current reporting period as payment for claims from the Emergency Fund relating to the significant flooding in Thailand at the end of 2011.

In November 2013, the Fund established emergency measures (expedited process and dedicated process) to deal with retirees/beneficiaries residing in Philippines that may have been affected by Typhoon Haiyan.

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General Assembly

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Endorses conclusions and recommendations of ACABQ Report.

Approves budget request, some modifications (5% reduction in travel budget and 22 of 33 posts in original request). Authorizes $200,000 for Emergency Fund.

Requests the Fund to complete the review of policies concerning recruitment, promotion and retention of staff

Welcomes progress in IPAS implementation.

Request the establishment of a mechanism to tracking all withdrawal settlements paid to participants who separate with less than 5 years of contributory service.

Stresses the need to avoid any action that would compromise the Fund’s fiduciary responsibilities and long-term sustainability.

GA Resolution 68/247

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Amendments to UNJSPF Regulations:

article 1 (definition of normal retirement age), article 29 (early retirement benefit), and article 30 (deferred retirement benefit)

Normal retirement age is 65 for new staff whose participation in the Fund commences, or recommences, on or after 1 January 2014.

GA Resolution 68/247

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Eligibility for early retirement is age 58 for new participants.

Early retirement reduction factors for new participants:

For participants with less than 25 years of contributory service: 6 per cent for each year below age 65;

For participants with 25 or more years of contributory service: 6 per cent for each year below age 60, and 4 per cent for each year from age 60 to 64;

The current 1 per cent reduction factor for participants with 30 or more years of contributory service would not be available to new participants.

The updated version of the Fund’s Regulations and Rules has been posted on the Fund’s website http://www.unjspf.org

GA Resolution 68/247

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The General Assembly:

decided to defer the approval of a full time Representative of the Secretary-General to the first resumed part of its 68th session, and

requested the Secretary-General in this regard to prepare, in consultation with the Pension Board, detailed terms of reference for this post.

The draft TOR were shared with the members of the Board for their consideration, observations and suggestions on 17 January 2014. A copy of the request was also sent for information to the SPC’s.

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ASHIResolution 68/244Conclusions

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In resolution 68/244, the General Assembly:

Requested the Secretary-General to examine the option of broadening the mandate of the Pension Fund, based on input from the Pension Board, to include the cost-effective, efficient and sustainable administration of after-service health insurance benefits, taking into account the advantages and disadvantages of this option, including its financial and legal implications, without prejudice to the outcome of the examination, and to report thereon at its 70th session;

Underlined that the request in paragraph 3 above does not prevent the Secretary-General from considering other options.

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Conclusions

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The UNJSPF is well-funded.

The Fund’s number of retirees and beneficiaries continues to grow.

The Fund is maturing and its solvency is dependent on reaching 3.5% investment return.

There is greater interdependency of assets and liabilities.

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The Fund operates in a fast changing and challenging environment.

The Fun needs to continue to modernize and adapt to the changing environment.

There is significant progress in many aspects of the Fund. The Fund is implementing and is proactively launching many initiatives to maintain and/or increase efficiency, effectiveness and a high level of service.

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Finally, Fund’s aim is to ensure its retirees and beneficiaries are able to fully enjoy their retirement, secure in knowing that the Fund will be able to pay their benefits accurately and on time.