pensions - aafi-afics - UNOG

ii) that the cost-of-living factors for deferred retirement pension benefits to be applied as from the date
of separation;
iii) the elimination of the limitation on the right to restoration for existing and future participants;
iv) the elimination of the 1.5 per cent reduction in the first CPI adjustment due to existing and future
beneficiaries;
v) the provision for the purchase of added years of contributory service; and
vi) the elimination of the one-year time limit for electing to validate and restore prior service, with a
study for the 2004 Pension Board session on validation, restoration and leave without pay, to
determine implications and resource requirements before implementation.
The recommendations (i) through (iv) above would be the reversal of previous economy measures, while
recommendations (v) and (vi) would involve new provisions. Only recommendation (iv) would affect UN retirees
since, if approved for immediate implementation, it would restore the 1.5. percent reduction made in the first
CPI adjustment at the time of separation. The approval of this recommendation was assigned the highest
priority by FAFICS at the Pension Board session.
In the Working Group’s second group of proposals, those targeted for the longer-term, a study is to be carried
out by the Pension Fund’s secretariat on the problems associated with the adjustment of pensions after award.
This study is to be submitted to the Pension Board in 2004. In the Pension Board session, FAFICS stressed that
this study of pension adjustments after award should also be given the highest priority since it had special
implications and potential benefit for UN beneficiaries in several developing countries.
The Pension Board devoted considerable time to the discussion of the Working Group's final report and (a) took
note of the Working Group’s report, (b) expressed strong appreciation and support for the scope and quality of
the report, and (c) for the fact that the Working Group's recommendations had been arrived at by consensus.
Members of the Pension Board believe that the report will become a landmark document in the decade ahead.
The Pension Board decided to recommend to the UN General Assembly for approval in 2002 to take effect as
from 1 April 2003, the following proposals:
(a)
(b)
(c)
that cost-of-living adjustments be applied to deferred retirement benefits as from age 50 (instead of at
age 45 as recommended by the Working Group);
that cost-of-living differential factors for deferred retirement be applicable as from the date of separation;
the elimination of the limitation on the right to restoration for existing and future participants.
Appropriate amendments will be made to the Pension Adjustment System for the changes in (a) and (b) above
and to the Pension Fund Regulations for the change in (c) above.
The Pension Board also approved the Working Group's recommendation to eliminate the 1.5 percent reduction
in the first CPI adjustment due after retirement to existing and future beneficiaries with the understanding that
the implementation of this modification would be subject to a surplus being revealed in the next actuarial
valuation to be performed as at 31 December 2003. However, FAFICS stated in the Pension Board that it “felt
that this measure should have received the highest priority and expressed its strong disappointment that it was
not recommended for implementation with effect from 1 April 2003”.
In addition, the Pension Board requested the CEO/Secretary to consult with the Committee of Actuaries and to
report to the Standing Committee in 2003 on a reformulated proposal for the purchase of added years of
contributory service. The provision would need to be narrowly defined and to be at no actuarial cost to the
Pension Fund.
The CEO/Secretary was also requested to undertake a study on validation, restoration and leave without pay, in
order to provide consistency in respect to the time limit for making such elections and on the elimination of the
one-year time limit for electing to validate and restore and present the study to the Standing Committee in 2003
along with the observations of the Committee of Actuaries.
The Pension Board agreed that the problems associated with the adjustment of pensions after award should
continue to be studied. The Pension Fund Secretariat was also requested to carry out a study that could
address the income replacement ratio aberrations in certain duty stations. Those concerned with the issue,
including FAFICS and its member associations, were invited to submit suggestions and to provide inputs to the
study which should be presented to the Pension Board as soon as feasible.
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