Actuarial matters

Actuarial situation

The result of the actuarial valuation as at 31 December 2003 was an actuarial surplus of 1.14 per cent of pensionable remuneration.

Article 119 Insurance companies engaging in insurance of persons must appoint and employ actuarial professionals recognized by the financial supervision and regulation department and establish an actuarial reporting system.

Figure 4 United Nations Joint Staff Pension Fund evolution of actuarial situation since 1990

The actuarial report will show required contributions and imbalances, an analysis of gains and losses, calculations of the actuarial value of accrued benefits, hypothetical projection results over 30 years and the results of monitoring of the two track system.

The United Nations Joint Staff Pension Board approved their statement on the actuarial position of the Fund.

The Board of Auditors has repeatedly reported this issue, with no result so far other than an improved actuarial computation.

His delegation was pleased that the Fund's value had increased substantially and that actuarial valuations had shown surpluses since 1997.

UNODC has now received information on the actuarial valuation, which shows that the potential liability will substantially exceed available reserves.

3. Notes that the Board approved the recommendation of the Working Group to eliminate the 1.5 percentage point reduction in the first consumer price index adjustment due to existing and future beneficiaries, subject to an actuarial surplus being revealed in the actuarial valuation to be performed as at 31 December 2003

(a) Preparation of an actuarial valuation to be performed in 2006, on the basis of data as at 31 December 2005, including production of the formal report and preparation of various papers for the Committee of Actuaries and United Nations Joint Staff Pension Board pertaining to the regular actuarial valuation work.

Once accepted, the study would be conducted by a specialized consulting firm and carried out concurrently with the next actuarial valuation.

The actuarial valuation of the post retirement health insurance benefits of UNDP and the United Nations Secretariat is carried out jointly.

Creation of such a post would mitigate risk by improving the quality of the actuarial valuation and related projections, particularly in relation to demographic trends.

Ontario has also introduced the Ontario Domestic Assault Risk Assessment (ODARA), an actuarial risk assessment tool used by frontline police officers in cases involving male on female assault.

The Tribunal continues to work with the Department of Management on issues relating to after service health insurance benefits (a recent actuarial report has been issued) and it will continue to monitor and take appropriate action.

2. Expresses its appreciation to the Secretary General and to the members of the Investments Committee for the investment performances of the Fund, which contributed significantly to the actuarial surplus of the Fund as at 31 December 1999

Actuarial valuations are in the process of being made in respect of pensions of judges and surviving spouses, and recommendations will be presented for the consideration of the General Assembly in the context of the 2008 2009 proposed budget.

The financial obligation of the organization to the Pension Fund consists of its mandated contribution at the rate established by the General Assembly together with any share of any actuarial deficiency payments under article 26 of the Regulations of the Fund.

(c) The benefit may be commuted by the participant into a lump sum if the rate of the benefit at the normal retirement age is less than 300 dollars. Such commutation shall be equivalent to the full actuarial value of the benefit.

Based on the results of the most recent actuarial valuation, the Committee of Actuaries and the Fund's Consulting Actuary were of the opinion that the present contribution rate of 23.70 per cent was sufficient to meet the benefit requirements under the Plan.

In paragraph 56 of its report, the Board recommended that UNICEF (a) promulgate its instruction on monthly reporting on medical insurance plan expenditure by field offices and (b) review the accuracy of data submitted by field offices that are used in actuarial valuation.

The financial obligations of the organization to the UNJSPF consist of its mandated contribution at the rate established by the General Assembly, together with any share of any actuarial deficiency payments under Article 26 of the regulations and rules of the Fund.

Having considered the results of the actuarial valuation of the United Nations Joint Staff Pension Fund as at 31 December 2003 and the observations thereon by the Consulting Actuary of the Fund, the Committee of Actuaries and the United Nations Joint Staff Pension Board,

Such deficiency payments are payable only if and when the General Assembly has invoked the provision of article 26, following determination that there is a requirement for deficiency payments based on an assessment of the actuarial sufficiency of the Fund as of the valuation date.

Actuarial valuations for the Fund are undertaken every two years to determine whether the present and estimated future assets of the Fund will be sufficient to meet its present and estimated future liabilities, using various sets of assumptions as to future economic and demographic developments.

This represents a yearly real rate of return of 4.1 per cent for the same period, after adjustment based on the United States consumer price index, and compares favourably with the 3.5 per cent long term real rate of return assumed in the actuarial calculation.

Asset allocation normally requires the use of an asset and liability model effectively, multiple actuarial valuations into the future over a variety of time horizons and economic scenarios which explore the impact of following different asset allocation strategies in terms of expected returns and risk.

Such deficiency payments are payable only if and when the General Assembly has invoked the provision of Article 26, following determination that there is a requirement for deficiency payments based on an assessment of the actuarial sufficiency of the Fund as of the valuation date.

The financial obligation of the Organization to the United Nations Joint Staff Pension Fund consists of its mandated contribution at the rate established by the United Nations General Assembly, together with any share of any actuarial deficiency payments under Article 26 of the Regulations of the Fund.

Such deficiency payments are only payable if and when the United Nations General Assembly has invoked the provision of Article 26, following determination that there is a requirement for deficiency payments based on an assessment of the actuarial sufficiency of the Fund as of the valuation date.

Having considered the results of the valuation of the United Nations Joint Staff Pension Fund, which revealed a fifth consecutive actuarial surplus as at 31 December 2005, and the observations thereon by the consulting actuary of the Fund, the Committee of Actuaries and the United Nations Joint Staff Pension Board,

In accordance with Programme and Budget Committee conclusion 2000 2, a detailed actuarial study to determine the financial impact of the after service health insurance was carried out, which showed the level of unfunded liabilities as at December 2004 to be 35.2 million ( 47.7 million based on the year end exchange rate).

5. Also takes note of the results of the monitoring of the costs savings of recent modifications of the two track feature of the pension adjustment system and of the intention of the Board to continue to monitor those costs savings every two years, on the occasion of the actuarial valuations of the Fund

A task force convened by IMF and the United States Bureau of Economic Analysis submitted recommendations for the January 2006 meeting of the Advisory Expert Group proposing to explicitly recognize the output of unfunded employers' pension schemes and to record flows and stocks of all defined benefit pension schemes in accordance with actuarial practices.

4. Takes note of the Board's intention to address in 2006, subject to a favourable actuarial valuation as at 31 December 2005, the possible total elimination of the balance of the 1.5 per cent reduction and, on an equal footing, the possible elimination of the limitation on the right to restoration based on length of prior service

(a) To make no changes to the current methodology used in the determination of final average remuneration but to consider at the meeting of its Standing Committee in 2005 a study containing actuarial cost assessments of a proposed early retirement protection measure, together with both the positive features and the anomalies that might arise as a consequence

1. Takes note of the results of the monitoring of the costs savings of recent modifications of the two track feature of the pension adjustment system and the intention of the United Nations Joint Staff Pension Board to continue to monitor those costs savings every two years, on the occasion of the actuarial valuations of the Fund

2. Approves, in principle, the changes in the pension adjustment system, as set out in annex XIII to the report of the Board,Official Records of the General Assembly, Fifty seventh Session, Supplement No. 9 (A 57 9). with implementation to begin when the actuarial valuation of the United Nations Joint Staff Pension Fund shows a clear upward pattern of surpluses, namely

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4. Approves, in principle, the changes in the benefit provisions of the Regulations of the Fund, as set out in annex XIV to the report of the Board,Official Records of the General Assembly, Fifty seventh Session, Supplement No. 9 (A 57 9). that would eliminate the limitation on the right to restoration for existing and future participants, with implementation to begin at such time as the actuarial valuation of the Fund shows a clear upward pattern of surpluses

5. A member who ceases to hold office before the age of sixty and who would be entitled to a retirement pension when he or she reached that age may elect to receive a pension from any date after the date on which he or she ceases to hold office. Should he or she so elect, an actuarial reduction factor of one half of one per cent per month would be applied on the retirement pension which would have been paid to him or her at the age of sixty.

6. No retirement pension shall be payable to a former member who has been re elected to office until he or she again ceases to hold office. At that time, the amount of his or her pension shall be calculated in accordance with paragraphs 2 to 4 above on the basis of his or her total period of service and shall be subject to a reduction equal in actuarial value to the amount of any retirement pension paid to him or her before he or she reached the age of sixty.

4. No retirement pension shall be payable to a former judge who has been re elected to office until he or she again ceases to hold office. At that time, the amount of his or her pension shall be calculated in accordance with paragraph 2 above on the basis of his or her total period of service and shall be subject to a reduction equal in actuarial value to the amount of any retirement pension paid to him or her before he or she reached the age of sixty.