Open Letter from the GAC-EPA to the Chairman of the PFGB
Mr. President,
As I had the opportunity to tell you last June, we are satisfied that, at your initiative, better communication has been put into place towards the members and beneficiaries of the Pension Fund who, I am sure, appreciate your decision to publish regularly articles in the CERN Bulletin.
In your article in No. 30+31 dated 25 July 2012, you mention that the Fund continues the implementation of the capital preservation approach and you announce a return on investments by the Fund of 2.0% as of 31 May 2012. You compare this number to a change by -8.5% in the Eurostoxx50 index.
The Fund’s return is certainly more favourable than the one obtained in 2011, but we should not forget that an evaluation of the Fund’s performance has to take into account two elements: its return objective fixed at 3% above inflation , and the result of a comparison with other providence schemes.
A direct estimate of the quality of the management of our Fund is possible by making comparisons with institutions having the same vocation; this does not allow, in our opinion, a comparison with changes in stock exchange indices like Eurostoxx50. In the past, comparisons have been made with the performance of Swiss funds. Well then, according to the latest Swisscanto monitor cited by the Le Temps newspaper in its 17 July 2012 edition their performances as of 30 June 2012 stand at + 2.8 % (an other index mentioned, Pictet LPP40, displaying +4.18 %). These results provoke two comments:
- They are proof that this choice for comparison is relevant: the performances of these funds have no direct link with variations in stock market indices. This could be expected and hoped for, as it concerns returns by Funds whose investments are in majority not on the stock exchange.
- The performance of our Fund lies below the average of these Swiss funds. We are aware that, in this area, comparisons have to be made cautiously; but it seems reasonable to us to take the Swisscanto monitor into account for a quality assessment of ours.
Hence, seen the result of the above comparison as well as the remark made earlier concerning the return objective of our Fund, we continue to believe that its management remains worrying. We believe also that the request made by the GAC-EPA and the CERN Staff Association (cf. our letter dated 21 March 2012) to imply the Internal Audit Service of the Organisation in the internal audit of the Fund is fully justified. Here we note that this concern is shared by the External Auditors of the Organisation, members of the Italian Court of Audit, expressed many times and once more this year in their report to Council.
To finish, I should like to mention my satisfaction to learn that an evaluation of the new governance will take place in 2013, as foreseen at the time of its introduction in June 2007.
Yours sincerely,
Gerrit Bossen, President of the CERN-ESO Pensioners’ Association (GAC-EPA), 21st August 2012
by GAC-EPA
