pensions - AAFI-AFICS, Geneva - UNOG

On the other hand, taking the lump sum does not reduce the survivor’s benefit which remains at 50% of the totalpension entitlement before taking the lump sum. This is a protection for the family.If our client says he intends to take the lump sum, either the maximum one-third or a smaller amount, we suggestthat he reflect on whether his needs, his lifestyle and habits will allow him to live on the reduced monthly pension;we urge him to study carefully how he will manage his finances.In a choice such as this, the number of years of contributory service is relevant. If a person has many years to hiscredit, he or she is much more likely to take a lump sum, the remaining monthly pension amount still beingconsiderable.We remind our interlocutor of the need to plan his life in retirement according to his income, which will normally bein large part his UNJSPF pension.Some people wonder whether taking the lump sum is financially judicious; because longevity is a factor in thecalculation of the lump sum, if they were to live to a greater age than the average participant or beneficiary (about83 years), they would not gain financially in the long run. My reply to this is to ask whether, financial considerationsapart, the fact of still being alive when many other colleagues died soon after retirement, is not a far greateradvantage than the purely financial one. It is my hope that being alive will always remain the prime consideration.What about the “dollar track” and “local track”The dollar track is stability in that currency and indexing of the basic pension to movements in the consumer priceindex of the United States. It is an excellent system for those who live in a country where the US dollar is ofprimordial importance or where substantial regular expenditure is made in dollars. We can, of course, pay a dollartrackpension in a currency other than US dollars. In this case we use the UN exchange rate operating during themonth prior to each quarter, and your pension could thus change every three months, up or down, according to theevolution of the exchange rate. For a pensioner living, for example, in Switzerland or another European countrywhere expenditure is mostly in local currency - Swiss francs or euros - these changes can be upsetting, evendifficult if the quarterly exchange rate were to fall substantially. That is where the local track comes in.Choosing the local track is to opt for a stable pension in the currency of your country of residence and to be linkedto movements in the consumer price index of that country. It offers security and peace of mind. You know inadvance how much your pension will be in the currency of expenditure. Calculation of the pension amount in localcurrency is based on the average exchange rate during the 36 months preceding retirement. This means that,according to the value of this average at the time of retirement and the quarterly value, it may be preferable to startretirement under the dollar track system and then, if the quarterly value falls below the average, change to the localtrack. We are ready to give advice both at the time of retirement and when pondering on changing to the localtrack.What problems do you encounter with active and retired officials?The majority of active international civil servants know little about the mechanics of the Fund and of the optionsavailable. As retirement approaches, these matters become urgent and people come to us for discussion andadvice. We see to it that this is conducted by staff with broad professional competence and a good sense ofcommunication. This is why such matters are handled by chiefs of section and their colleagues.Is this because of the complexity of the system?This also, because it is a system that must function equitably throughout the world, and that cannot be donesimply.Pensioners live in countries that have different currencies, different purchasing power and different cultures. Thereis thus an additional inherent complexity in the reasoning and nature of each client.Our role is to be available to these people, and, more importantly, not to sell a ready-made UNJSPF item, but tolisten carefully so as to perceive their nuances, their origins, their destinations, their environments, and to suggestthe approach that seems most beneficial to them, and not some ready-made “dollar-track” or “local-track” cliché, orperhaps suggest to consider the merit of a monthly pension versus a withdrawal settlement which in some cases ismore attractive.What are the problems for retirees?29