Governing Board of the Pension Fund

The Governing Board of the Pension Fund held its one-hundred-and-fifty-second and one-hundred-and-fifty-third meetings on 18 April and 15 May 2007 respectively. The latter was a full-day joint meeting with the Investment Committee.

At the first of the two meetings, on 18 April, the Chairman of the Governing Board, Professor F. Ferrini, reported on the outcome of the Finance Committee meeting and the Council Session of March 2007. The Council had taken note of a progress report by the Chairman of the Study Group on CERN Pension Fund Governance, Mr P. Levaux, had expressed satisfaction at the Study Group’s progress and was now looking forward to the proposal, largely bearing on the Pension Fund’s bodies and their composition, which is due to be submitted to the Council for approval at its June 2007 Session.

At the same meeting, the Governing Board approved the Annual Report and Accounts of the Fund for 2006 and thanked the Fund’s Administration for the substantial work entailed in providing the reader with as comprehensive a view as possible of the Fund’s position. At the same meeting, the Governing Board heard a report by the Chair of the Working Group on Actuarial Matters, Mrs D. Duret, and examined the models to be used for the three-yearly actuarial review as at 1st January 2007. This review will take account of the most recent demographic data based on personnel trends highlighted in the White Paper presented to the CERN Council in October 2006 and on the Council’s decision relating to the new method of indexing pensions. Finally, the Governing Board once again addressed computing issues and decided to set up a Steering Committee with the task of identifying an effective and secure solution adapted to the Fund’s requirements on the basis of specifications and questionnaires prepared by the Fund’s Administration.

At the joint Governing Board/Investment Committee meeting on 15 May, members took note of the new asset-liability modelling (ALM) report by the firm ORTEC, presented by Professor G. Boender, and of the new asset allocation proposed for the Fund. The aim of the new allocation is to enhance optimisation of the risk/yield ratio through the introduction, inter alia, of new asset classes such as absolute return and infrastructure, which have a different risk profile from traditional asset classes such as equity and bonds. The Governing Board paid considerable attention to this proposed substantial adjustment to the Fund’s asset allocation, with members putting many questions to the speaker not only about asset allocation but also about absolute return, short- and medium-term risk and the discount rate, etc. Finally, in the light of current circumstances, the members of the Governing Board decided not to commit the Fund in the direction proposed, considering that the Fund’s new governance bodies due to be set up by the Council should take a decision on this fundamental issue of asset allocation, both in terms of risk and return. The ORTEC report will probably be one of the first issues on which the new bodies will have to deliberate.

At the same meeting, the following subjects were also examined: the overall first-quarter performance of the fund managers and the detailed government bond performance of the financial management firm JPMorgan, which was deemed satisfactory; a tactical reduction of the equity allocation by about 175 MCHF; and an invitation to five fund managers specialising in corporate bond portfolios, selected on the basis of a report by the firm Mercer, to present their services to the Pension Fund.

The Governing Board also took note of the report by the Austrian External Auditors on the Annual Report and Accounts for 2006 and of the reply by the Administration of the Fund. Finally, the Governing Board approved new C factors applicable to the new salary grid which will enter into force on 1st July 2007.

The Governing Board noted, with regret, the deaths of the following beneficiaries: Mrs C. Erskine and Mrs G. Louvrier, L. Blanc, J. Dutrannois, G. Erskine, J. Gervaise, M. Jacob, Z. Jendrysiak, M. Lettry, C. Mutschler, R. Rotelli, F. Van Holten and C. Zinzeri.