pensions - aafi-afics - UNOG

owing to illness, infirmity or similar causes. The result, with such a narrow definition of its field of intervention, is
that the Fund recorded only 15 disbursements in 2001-2002, leaving unspent the larger part of its
appropriations, whereas demand and real needs are notoriously more important. This situation has been on the
agenda of the Board for years without avail, although it is generally recognised that it is not satisfactory.
8. The connection with the problem of the beneficiaries in the former USSR is clear as it had been
envisaged to resort to the Emergency Fund to bring relief the these unfortunate former colleagues, but the idea
was discarded because it could not be accommodated within the regulations in force. So, the case of the
Russian, Ukrainian and Bielorussian former beneficiaries remains unsolved after 10 years of sterile discussions,
everybody seeming to be deeply sorry for this deplorable state of affairs but looking at it with much more
resignation than determination.
9. Another feature of the attitude of the managing board of the Fund is its dislike for recognising clearly
unpleasant facts: the present situation of retirees, with the sacrifices imposed on them, is such an unpleasant
fact. It is enlightening to read the comments made by the Tripartite Working Group and recalled in the report of
the Board (para.131) without any explicit endorsement: “The economy measures impacted quite heavily on
beneficiaries”; the lowering of the threshold from 3 to 2 percent for cost-of-living adjustment “did not go far
enough to address the significant share of past economy measures that beneficiaries had assumed.…The
Tripartite Working Group agreed that upon retirement, beneficiaries should be able to count on a pension that,
in line with the income replacement principle, provided a standard of living compatible with that enjoyed in the
last years of service. The Tripartite Working Group agreed that to apply an arbitrary 1,5 percent reduction in the
first cost-of-living adjustment seemed (our emphasis) to be contrary to that principle”.
10. AFICS has agreed to adopt a critical view on the perception of the nature of the Fund generally shared
by its sister associations. It is easy to find in the report of the Board examples of the misconceptions commonly
accepted in this regard. One of them illustrates both the temptations which are generated by such
misconceptions and the stubbornness of the Board when some obstacle is raised against its vagaries. Although
it has sometimes been lucidly recognised that the Fund was a financial institution, essentially a pension
scheme, and not an insurance company, a few voices proposed that provision should be made to allow for the
purchase of additional years of contributory service. In other words, the Board, in entertaining the idea, refused
to consider that this amounted to use the services of the Fund as if it were an insurance company operating on
the rent market. Less understandable still, although the Committee of Actuaries, duly consulted on such a
question, considering “the design and collective nature of the Fund…felt unable to support the recommendation
to provide for the purchase of additional years of service” (essentially for the reason of substance that it was
practically impossible to ensure the actuarial neutrality of such operations), the Board nevertheless requested
the CEO/Secretary to consult again with the actuaries on “a reformulated proposal for the purchase of added
years of contributory service”. (para. 134)
11. Offering a pension representing a given ratio of income replacement and guaranteeing the stability of
such an income would seem to be a reasonable programme for the institution and well enough to need full use
of its assets. The first part of this programme has been successfully carried into effect but the second part, of
paramount importance, is still raising problems. It should be realised that, in reaching maturity, the Fund is
progressively loosing flexibility, being more and more sensitive to the fluctuations in the rate of return on its
investments, an element which, as shown by current developments, may be extremely volatile. The Board,
however, for so-called social concerns, is still thinking of enhancing benefits whereas past economy measures
remain in force. To that end, it would be ready to extend to 65 the age of mandatory retirement, a measure
conceivably acceptable if intended to maintain the actuarial equilibrium of the Fund, but questionable if its aim is
the creation of new benefits or the enhancement of existing ones. For there is no built-in limit to actions based
on social considerations and the normal way for their promoters to translate their aspirations into reality is to
have them financed by an anonymous collectivity. This kind of illusion is at work in the minds of the participants
who, unconsciously or not, may think that they can buy new benefits for a third of their value, as the
organisations have a two-third share in the financing of the institution. On their side, the organisations have an
idée fixe which is to minimise their rate of contribution. These conflicting projects form a very unsound basis for
the management of the Fund and all parties concerned should realise that it is in their common interest to come
back to a more reasonable and rigorous view of the objectives of the Fund.
12. Whatever the subject, be it the survivors’ benefits or benefits to separated or divorced spouses any
enhancement will unavoidably entail either increasing contributions or pushing the Fund into a permanent
situation of actuarial deficit and to more stringent economy measures which, as shown by experience, would
impact heavily on retirees. The Fund provides for basic survivors’ benefits and whether they are sufficient or not
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