Spring report of the Pension Fund

In this column, the Chairman of the Pension Fund Governing Board (PFGB) presents the Board's latest main decisions, initiatives and accomplishments to the Fund's members and beneficiaries.

Since my last report in December, significant progress has been made on a number of issues concerning both the governance and the asset management of the Pension Fund.

At its meeting in February 2013, the PFGB received a report by the Fund’s actuary showing that the estimated funding ratio of the Pension Fund had increased by 2.2 points during 2012 to reach 65.7% at the end of the year.  Definitive results will be available in the Financial Statements of the Fund, which will be published in June.

The increase in the funding ratio was principally due to asset returns exceeding the objective in 2012 and to the non-indexation of pensions. The 6.89% return on assets exceeded the Fund’s return target of 3% above Geneva inflation by 3.89 percentage points, as inflation was zero in Geneva in 2012. It is worth noting that the Fund exceeded its investment mandate while maintaining a prudent risk level throughout the year, in compliance with the set risk tolerance level. 

Also in February, the Fund completed a major overhaul of the structure of its investment governance. For the first time in the Fund’s history, a full set of investment guidelines has been approved. The Fund now has a set of appropriate investment principles, which incorporate risk control and risk management processes.  These processes are aligned with the objectives and risk tolerance that are set by the Governing Board, and are documented in the Internal Control System.

The PFGB successfully concluded the tendering process for the new provider of internal audit services to the Pension Fund by approving the bid by Mazars Switzerland, the Swiss office of the French firm specialising in audit, accountancy and advisory services. Services to be provided will include the annual audit of the Financial Statements of the Fund, and the annual audit of the Fund’s Internal Control System. The contract will initially be signed for a period of three years, including options for up to two one-year extensions.

The PFGB also approved the work plan and timeline for the preparation of the 2013 actuarial study.  The first presentation to the PFGB is scheduled for September 2013, and the first presentation of results to Council by the Actuary has been tentatively scheduled for December 2013.

Dan-Olof Riska
Chairman, Pension Fund Governing Board