SOCIAL PROTECTION OF CERN EMPLOYEES AND PENSIONERS IN CASE OF WITHDRAWAL OF A MEMBER STATE OR DISSOLUTION OF THE ORGANISATION PENSION AND HEALTH INSURANCE
CERN’s Member States, in particular its two host States, Switzerland (through the Headquarters Agreement of 1955) and France (through the Social Security Agreement of 1970), have entrusted the Organisation with the responsibility of ensuring the social protection of its active and retired members of personnel.
On this basis, CERN has set up its own pension scheme (managed by the Pension Fund) and its health insurance scheme (CHIS).
In the event of the withdrawal of a Member State or the dissolution of the Organisation, the Member States asked the Management, as early as the 1970s, to study the risks associated with these two situations, to evaluate the consequences for the members and beneficiaries of the two schemes, and to propose appropriate solutions.
Main steps until the 1990s
• Beginning in 1976, the Organisation began examining the guarantee of payment of statutory benefits earned by members and beneficiaries of the Fund until the death of the last beneficiary.
• In 1986, the Council adopted a Resolution in which the Organisation committed itself to “Organisation commits to guarantee the statuarybenefits acquired by the members and beneficiaries of the Pension Fund (...) until of the rights of the last beneficiary expire”
• In 1989, this principle was enshrined in the Pension Fund Regulations (see Article I 3.03 “Guarantee of benefits”), approved by the CERN Council.
• In 1996, the Council adopted a second Resolution making it possible to set up a foundation under Swiss law to replace the Fund in the event of the Organisation’s dissolution. This foundation will make it possible to perpetuate and secure the Fund’s capital.
On this occasion, the Council also decided to examine, with the participation of the Tripartite Forum on Conditions of Service (TREF), which brings together representatives of the Management, the Member States and the members of personnel, four issues related to pension and health insurance coverage:
a) The withdrawal of one or more Member states during the existence of the Organisation and its consequences for the Pension Fund;
b) The maintenance of the level of benefits to be paid by the Foundation after the dissolution of the Organisation and the preservation of the purchasing power of the beneficiaries;
c) The guarantee that, in the event of dissolution, the Organisation will settle its debts to the Pension Fund;
d) Health insurance for the beneficiaries of the Foundation.
A working group of the Standing Consensus Committee (SCC), commonly referred to as the “Pension Fund Working Group,” was established in 1997 to address these issues and to develop the Foundation’s bylaws (defining the rights of members and beneficiaries).
This working group, chaired by a member of the Legal Department, is still active. The Staff Association, the Pension Fund, the CHIS, the HR Department and the GAC are represented in this group.
Where are we today?
Let’s take the four questions identified by the Council one by one:
a) Consequences for the Fund of the withdrawal of a Member State
After an in-depth examination by the working group, this question was the subject of the document “The obligations of CERN Member States in the event of withdrawal from the Organisation” that the Management submitted in December 2012 to the CERN Finance Committee and Council.
It’s reminded that:
• According to CERN’s constitutive Convention, all of the Organisation’s liabilities must be covered by the contributions of the Member States; long-term liabilities include, in particular, the cost of maintaining the long-term financial balance of the Organisation’s social protection schemes.
• The amount of the liability is shown in CERN’s financial statements, which are submitted to the Council each year; for the Fund, this represents approximately 7 billion Swiss francs; for CHIS, the amount is approximately 3 billion.
b) Preserving the purchasing power of retirees
In 2006, the Council adopted a new method for adjusting pensions which is independent of salary adjustments and takes into account the cost of living in Geneva and the financial situation of the Fund (see Article II 1.14 and Annex C of the Fund’s Regulations).
In addition, in 2010 and 2011, the Council adopted a package of measures (involving the Organisation, active members of personnel and retirees) aiming to restore the financial situation of the Pension Fund to balance over the long term.
c) Payment of the Organisation’s debts
In 2006, the Council also decided to pay off CERN’s debt to the Pension Fund, which dated back to 1981, for an amount of approximately 450 million Swiss francs.
Subsequently, the Regulations of the Fund were amended to avoid such situations (see Article I 2.03 “Assets of the Fund”).
d) Health insurance for the beneficiaries of the Foundation
This is a very important issue that has not been addressed until recently. How to ensure the continuity of the CHIS in the event of the dissolution of CERN? In order to ensure the continuity of beneficiaries’ health insurance rights, the working group examined in detail the work of other intergovernmental organisations, in particular the UN, and identified possible solutions.
It should be recalled that the jurisprudence of the ILO Administrative Tribunal has clarified that health insurance coverage is one of the basic conditions of employment that convince people to become , and subsequently remain, members of the personnel of an international organisation, and that it can therefore be concluded that entitlement to after-service health insurance coverage is an acquired right.
At its December 2022 session, on the initiative of the working group that had recommended this solution and on the proposal of the Management, the CERN Council explicitly recognized the above principle and authorized the Director General to add a new Article I. 1.07 to the CHIS Regulations, with an effective date of January 1, 2023. This article reads as follows:
“CERN guarantees the benefits acquired under the CHIS Rules by the Scheme’s Members until the cessation of the rights of the last Member.
In the event of the Organization’s dissolution, the CERN Council will take the measures needed to guarantee the rights acquired on the date of dissolution.”
This is an essential step forward in guaranteeing the social protection of CERN employees and pensioners.
The work of the working group (which should now be called the “Working Group on the Guarantee of Social Protection”) on the subject of health insurance is far from over. It must now be ensured that the Foundation under Swiss law that will replace the Pension Fund in the event of the dissolution of CERN will also be able to take care of health insurance. The working group is in contact with the Swiss authorities regarding this.
The working group will keep you informed of the progress of this work.
The SCC working group on Pension Guarantees.
