Pension Fund

The Pension Fund Governing Board (PFGB) held two meetings over the summer, the first on 9 June and the second on 1st September. The agendas of the two meetings had several items in common, including progress reports on the work of the four working groups. Group 1, which is responsible for the revision of Chapter I, Section 2 of the Rules of the Fund, has made good progress but will need more time to complete its terms of reference in view of the number and complexity of the articles to be amended. In parallel, the Group has approved a code of conduct for the Pension Fund, which is based, in particular, on the new charter introduced for Swiss pension funds by the Swiss Association of Provident Institutions (ASIP) and the CFA (Chartered Financial Analyst) code of ethics applicable to members of pension fund bodies. The PFGB took note that the Group had also been working on the rules relating to the status of the personnel of the Fund and the composition of the Investment Committee. The work of Group 2, responsible for defining the Fund’s funding policy and principles, is continuing. The actuary has been asked to draw up scenarios with a view to attaining a given funding ratio at the end of a projection period reduced from 30 to 20 years, taking account, inter alia, of different technical interest rate assumptions, the level of capital needed to cover a future indexation assumption and the impact of possible introduction of internal taxation of pensions. The work of Group 4, entrusted with the organisation of the Fund’s administrative unit, is also ongoing. The search for a new general manager should start in October at the latest. Between these two meetings of the PFGB, the CERN Council approved the new strategic asset allocation, took note of the results of the three-yearly actuarial study and decided to defer its decisions on equilibration measures until the results of Group 2 had been presented.

Concerning legal matters, the Legal Service reported on a rejoinder submitted to the ILOAT by a beneficiary regarding the pensions adjustment method and indicated that CERN was to respond with a surrejoinder over the summer.

In the framework of the future activities of the Investment Committee, the PFGB appointed S. Lettow as Chairman of the Pension Fund Investment Committee (PFIC) and D. Duret as a member of the Committee. Following the completion of the work of Working Group 3, the PFGB was also able to appoint the new experts to the PFIC, namely Susanne Haury von Siebenthal, Chief Investment Officer of the Publica Pension Fund in Bern, and Stewart Colley, former head of the British Steel Pension Fund in London. It should be noted that the two external experts have extensive experience of institutional investment and are completely independent of any financial group or institution.

On the investment side, the PFGB gave the green light to a proposal regarding two real-estate investments in Paris of a value totalling around 25 million euros. Over the summer the Fund continued to examine the acquisition of the properties in question and signed a purchase agreement. At the second of the two meetings, the PFGB took note of the performance of the Fund’s investments and of a drop in the value of the assets in the wake of the financial difficulties on the world markets, which have seen a decline in both bonds and equities since the beginning of the year. With a fall of 17% (according to the MSCI global equity index), equity has been particularly hard hit, thus making the biggest contribution to the fall in the value of the assets in the Fund’s portfolio. At the end of June, the performance of the Fund’s total assets stood at -7%.

Following the recent events on the financial markets, the Fund has reviewed its banking and financial counterparties and taken all the necessary measures to reduce counterparty risk to the minimum. In this framework, it should also be pointed out that the Fund does not invest in hedge funds and structured products, that it has a large bond portfolio consisting essentially of government bonds, that it has no sub-prime positions and that all cash not essential to the day-to-day operation of the Fund is invested with the Swiss Federal Finance Administration. It should be noted that the Fund’s investment strategy is based on long-term objectives. In these circumstances, the Fund monitors market trends attentively and with caution, avoiding ill-timed reactions and sudden changes in an investment policy based on a long-term strategic asset allocation.

At the same meeting, the Governing Board approved the budget of the Fund and took note of an appeal by a member of the Fund.

Finally, the PFGB noted, with regret, the deaths of the following beneficiaries of the Fund: Mr Marcel SERRE, Mr Jean ARDIN, Mr Maurice REGARD, Mrs Paula VERHEYDEN-LEFEBURE, Mrs Mafalda MENDOLA, Mr Robert ROCHAT, Mr Albert THIELAND, Mr Anthony SULLIVAN, Mr Bengt WESTERLUND, Mr Jean GUILLAUME, Mr Robert VAUDROZ, Mrs Hanna BERTHOLET-BÄHLER, Mrs Alice NICOLLE, Mr Leon GERARD, Mrs Chantal CRAPON DE CRAPONA, Mr Gordon L. MUNDAY, Mr René GAILLOUD, Mr André ROCHEX, Mrs Lina AYDEVANT and Mr Louis LEVRAT.

by HR Department