Governing Board of the Pension Fund

The Pension Fund Governing Board (PFGB) held its first two meetings in the new configuration on 16 November 2007 and 14 January 2008. Most of the items examined, such as the actuarial review, the strategic asset allocation, accounting standards and the new governance of the Pension Fund, were on the agendas of both meetings.

At its first meeting, held at ESO in Munich, the PFGB took note of matters pending referred to it by the previous Governing Board and addressed issues relating to its own functioning and to the measures to be taken with a view to gradual implementation of the new governance principles. In the interests of continuity, it extended the terms of office of the members of the Investment Committee appointed by the Board until the new Committee is set up, as well as those of the members of the Working Group on Actuarial Matters to allow them to complete the three studies referred to in a recent issue of the Bulletin (No. 6 of 5 and 12 February 2007). At its first meeting, the PFGB also decided to recommend the CERN Council to appoint D. Duret Vice-Chairman of the PFGB, which it did at its Session in December 2007.

The PFGB also decided to set up four working groups entrusted respectively with the tasks of revising Chapter I, Section 2 of the Rules and related Regulations of the Fund, of drafting a funding policy and funding principles for the Pension Fund, of carrying out a search for experts for the Investment Committee, and of carrying out a search for a General Manager and an analysis of the Pension Fund Unit.

At this meeting, the PFGB examined the three-yearly actuarial review. In this connection, it decided to entrust the Fund’s Working Group on Funding Policy and Principles with the task of examining the pertinence of the methodology used and whether the current parameters should be maintained for future three-yearly actuarial reviews. The two linked matters of the three-yearly actuarial review and the indexation of pensions will be finalised at the next PFGB meeting on 18 February 2008. At the request of the external auditors, the PFGB also addressed the issues of the introduction of new accounting standards and their consequences.

Finally, the PFGB decided to request the firm ORTEC to update its strategic asset allocation report before the Board takes a decision on the matter.

The new governance arrangements have resulted in fundamental changes to the working methods and style of the Governing Board. The new approach is evinced, for example, in the PFGB deciding to set up the four working groups, addressing issues such as a code of conduct and the strategic asset allocation and examining the actuarial data in relation to new accounting standards, while keeping in mind that the Fund’s primary objective is to guarantee the current and future benefits of the members and beneficiaries of the Fund, inter alia by achieving adequate returns. This is why, in this period of strong market volatility, the PFGB is not losing sight of the need to ensure good long-term asset management.

In this context, it may be noted that in 2007, the Investment Committee and the Fund’s Administration achieved a result for the Fund that was better than the 2.4% average return of Swiss pension funds (source: Crédit Suisse), while pursuing a prudent policy with regard to the choice of investments. Thus, the Fund’s overall performance at the end of 2007 should be of the order of 5%, i.e. close to its long-term target yield. It should be underlined that this estimate does not take real estate into account since the valuations of the Fund’s real-estate holdings have not yet been completed.

While the Fund’s annual financial performances will not be sufficient on their own to resolve all the structural problems of a retirement fund such as CERN’s that has reached a high degree of maturity, they nevertheless remain one of the pillars of pension guarantees.

Finally, the Governing Board noted, with regret, the deaths of the following members of the Fund:

Anneliese HAGEDORN, Mitzi NARDINI, Jacqueline ZBINDEN, Jean-Paul BACHER, Hubert CONUS and Michel FILLION.

by HR Department