Pension Fund governing board

On 16 March and 7 May, the Pension Fund Governing Board (PFGB) held its fourth and fifth meetings

The first of these meetings was primarily dedicated to the examination of the strategic asset allocation. The PFGB reaffirmed the main goal of the new strategic asset allocation: to improve the Pension Fund’s position with regard to risk by lowering overall portfolio volatility through suitable investments in less volatile asset classes such as real estate and absolute return strategies, where the return does not depend on market trends and negative growth is extremely unlikely. The finalised document will be presented to the Finance Committee and the Council at their June meetings for approval, in accordance with the provisions of the Levaux report.

The PFGB also took note of the Internal Audit’s report on Pension Fund operations and decided to refer it to Working Group I as a working document for establishing a control and internal monitoring system for Pension Fund operations.

Also at that meeting, the PFGB appointed S. Lettow and D. Duret to the new Investment Committee, and agreed that the PFGB Chairman should attend its meetings as an observer.

Finally, the Chairman, Professor F. Ferrini, announced that the Finance Committee, at its March meeting, had decided to postpone examination of the actuarial review to its June meeting.

The second PFGB meeting, a joint meeting with the Investment Committee, lasted an entire day. The Governing Board took note of the report by the external auditors on the Fund’s annual report, and of the comments by the Fund’s Administration.

The annual report was approved and will therefore be forwarded to the Council for approval in June. The PFGB thanked the Administration for the hard work that had gone into drawing up the documents. The PFGB also took note of the impact that the new accounting rules (IPSAS, the International Public Sector Accounting Standards) have on the calculated result of the technical balance of the Fund. The Governing Board noted that application of the new accounting standards results in a less favourable financial balance than that calculated using the traditional method. This led the Governing Board to consider whether the size of the asset fluctuation reserve, in particular, should be increased. However, the Board confirmed that it would not change the method of calculating actuarial liabilities for the time being. The latter is always based on a long-term view of the expected mean rate of return, whereas the technical rate, according to the new accounting standards adopted by the Organization, changes annually as a function of long-term government bond rates.

During the meeting, the Administration announced that the performance of the Pension Fund at the end of the first quarter of 2008 was negative, with a four-percent decrease in overall assets. C. Cuénoud underlined that the markets remained problematic, and that there was a continued need to exercise prudence. The Board reviewed the performance of two portfolio managers. Both mandates for investment services to the Pension Fund were retained.

On the subject of investments, the beneficiaries were informed about a real-estate investment opportunity in Paris, to which it was decided to give further consideration.

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


by HR Department