| GB.268/PFA/11/2
268th Session Geneva, March 1997 |
| Programme, Financial and Administrative Committee | PFA |
ELEVENTH ITEM ON THE AGENDA
Pensions questions
Report of the Administrative Board
of the ILO Staff Pensions Fund
1. The 103rd Session of the Administrative Board of the ILO Staff Pensions Fund was held at the International Labour Office on 30 January 1997, chaired by Ms. S.C. Cornwell. Mr. Aamir Ali and Mr. Y. Chotard were elected First and Second Vice-Chair, respectively.
Accounts
2. The Board noted that the balance of the Fund stood at US$1.3 million as at 31 December 1996.
Investments
3. The Board considered a report on the investments of the Fund and the record of the meeting held by the Investments Committee in December 1996. The Board noted that the average yield on investments was 1.04 per cent for 1996, as compared to 16.64 per cent for 1995 and -5.75 per cent for 1994. However, it noted that the yield earned during 1996 was not directly comparable with those of previous years as, in accordance with a recommendation by the ILO Investments Committee, the investments had been liquidated during 1996 and transferred to a multi-currency bond fund based in US dollars.
Financial position of the Fund
4. In accordance with the Board's request, which was confirmed by the Governing Body, an actuarial evaluation of the Fund was prepared on 30 June 1996 to estimate future financial requirements. The Fund is a closed fund with no new active participants. Payments are expected to last for another 15 to 20 years. The average age of the 25 remaining beneficiaries is 88 years. Pensions are annually adjusted for inflation according to a system modelled on that of the United Nations Joint Staff Pension Fund (UNJSPF).
5. The 1996 benefit disbursement is estimated at about 1.3 million US dollars. Following the Board's policy of closely matching income and expenditure, as adopted by the ILO Governing Body in 1989,(1) the capital of the reserve fund, which currently stands at approximately US$1.3 million, is expected to reach a level of less than US$1 million by the end of 1997, taking into account the allocation of US$300,000 due in 1997. Actuarial forecasts indicate that the Fund expenditure for the 1998-99 biennium will approximate US$1 million per annum, and an equivalent budgetary allocation will therefore be required to pay benefits. In view of the decline of the reserve funds and given the guarantee on the part of the ILO under article 13 of the Pensions Fund Regulations (see Appendix) for the payment of benefits due, the Administrative Board has recommended that benefits be budgeted in the ILO regular budget during 1998, when the existing reserve fund is expected to be exhausted, and thereafter. The Office will continue, as in the past, to report the Fund's budgetary requirements to the Governing Body and to monitor the membership statistics.
Direct management of the Fund by the ILO
6. In view of the small number of members of the Fund, and its expected decline, the Administrative Board, in line with previous discussions, has also recommended simplifying its proceedings by making the ILO directly responsible for the management of the Fund. The Office will continue to administer the Fund and provide service to the beneficiaries as in the past. In accordance with article 31.2 of the Regulations of the Staff Pensions Fund, the disappearance of the Administrative Board would require an amendment to the Regulations, which were taken over from the League of Nations in a revised form by resolution of the Conference adopted in 1946.(2)
7. The Programme, Financial and Administrative Committee is accordingly invited to recommend that the Governing Body propose to the International Labour Conference, at its 85th Session (June 1997), the adoption of the following resolution:
The General Conference of the International Labour Organization,
Recalling its resolution of 9 October 1946 by which it adopted revised Staff Pensions Regulations, under which, in particular, the Staff Pensions Fund became the property of the International Labour Organization to be administered for the purposes of the Regulations and managed by an Administrative Board,
Reaffirming the International Labour Organization's guarantee, in article 13 of the Regulations, of the payment of all annuities or capital sums due under those Regulations,
Considering that management by an Administrative Board is no longer justified having regard to the small number of beneficiaries and to the absence in recent years of any direct participation of the latter on the Board;
1. Decides --
- that the International Labour Office shall, under the supervision of its Governing Body, to which it shall annually report, henceforth have direct responsibility for the management of the Staff Pensions Fund and for the payment of benefits in accordance with the substantive provisions of the Regulations;
- that the pension adjustment system for the United Nations Joint Staff Pension Fund shall continue to be applied to benefits due under the Regulations and that any subsequent improvements in that system shall be reflected in the payment of those benefits.
2. Hereby abrogates, without prejudice to operative paragraph 1 above, all provisions of the Staff Pensions Regulations that are inconsistent with the present resolution or with any decision that may be adopted by the Governing Body pursuant to it.
Geneva, 21 February 1997.
1 GB.242/PFA/7/8 and GB.242/7/20, paras. 33-34.
2 Record of Proceedings of the 29th Session, p. 229 and Appendices V and XII.
Appendix
Extract from the Regulations of the
ILO Staff Pensions Fund Regulations
D. Guarantee of the International Labour Organisation
Article 13
1. The International Labour Organisation guarantees the payment of all annuities or capital sums falling due under the present Regulations.
2. If the payment of the benefits due under Article 1, paragraph 4, to retired officials of the Secretariat of the League of Nations and of the Registry of the Permanent Court of International Justice and to their widows and children involves a deficit for the Fund which has to be met by additional contributions from the International Labour Organisation, the amounts involved shall be divided among and form part of the contributions of those Members of the Organisation which were Members of the League on 18 April 1946, in the proportions in which those Members contribute to the other expenses of the International Labour Organisation.
Article 29
There shall be transferred to the Pensions Fund from the Staff Provident Fund:
(a) during or at the close of the year 1932, the balances of the accounts of all members of the Provident Fund who become subject to the present Regulations;
(b) at the end of the year 1932, a part of the account, known as the Death and Invalidity Fund, and a part of the Reserve, bearing the same proportion respectively to the total amount of the Death and Invalidity Fund and the total amount of the Reserve as the total amount transferred under (a) bears to the total assets of the Provident Fund at the end of the year;
(c) on the final liquidation of the Provident Fund, the remaining assets of that Fund.
Article 30
1. As from 1 January 1931, no new members shall be admitted to the Staff Provident Fund.
2. The Staff Provident Fund shall, as soon as possible, be liquidated and its assets be transferred to the Pensions Fund.
IX. Final Provisions
Article 31
1. The provisions of the present Regulations shall apply not withstanding any contrary provision in the Staff Regulations.
2. The present Regulations shall enter into force as from the date of their adoption by the Assembly of the League of Nations. They may be amended by the International Labour Conference.(1)
1 The amendments made by the Assembly of the League of Nations were as follows:
12th Session (1931): Articles 3 and 12.
16th Session (1935): Article 1.
17th Session (1936): Article 1.
18th Session (1937): Articles 1, 3, 12 and 19.
19th Session (1938): Addition of Special Article I (temporarily limiting certain provisions of Article 9 if circumstances rendered this necessary).
20th Session (1939-46): Addition of Special Article 2 (applicable to officials whose contracts were suspended under emergency measures of 1939).
Amendments to the following articles were made by the International Labour Conference:
30th Session (1947): Articles 1 and 19.
31st Session (1948): Articles 1, 2, 4, 7, 19 and 22.