United Nations staff pensions pushes back on findings of governance review

The board of the United Nations’ employee pension fund has said it is “not prepared to accept or reject” the findings of a largely critical governance audit performed at the behest of the UN General Assembly, citing time constraints.

The proposals if implemented would have radically shrunk the fund’s 93-strong board and reformed its governance structure. 

The audit, which was conducted independently by Denver-based consultancy Mosaic Governance Advisors at the request of the General Assembly (Resolution 74/263), identified numerous gaps between the policies of the UN Joint Staff Pensions Fund (UNJSPF) and industry best practices which the consultant said had resulted in board members being able to circumvent term limits, and a lack of clarity as to the role of the board itself.

Mosaic has called for creation of a new 15-member Transition Board, drawn from and elected by the current pool of 93 board members, to act on the audit’s recommendations. This includes implementing a fiduciary governance model to shrink the board composition, adopting limits on board member terms, subjecting the board to the same financial disclosure process as pension fund staff and clarifying the mandate and responsibilities of the board.

Mosaic was founded by former Aon Hewitt investment consultant Amy McDuffee and counts former PGGM Senior Advisor on Responsible Investments, Catherine Jackson, and the ex-Chief Operating Officer of Colorado Public Employees' Retirement Association (PERA), David Maurek, on its senior team.

The fund has also been asked to address the lack of a board-approved policy on the professional and ethical codes of conduct for members participating in board decision-making.

In its response, the board of the UNJSPF said that it would push forward a decision on the findings to July 2021 as it was not given sufficient time to “digest the report and give it due consideration” due to a late submission.

However, initial comments from the UNJSPF’s Governance Working Group questioned the appropriateness of the review’s recommendations, alleging that some had gone beyond the scope which was initially defined by the General Assembly. This is disputed by Mosaic which noted that the audit’s scope had been “contractually established”.

The Working Group has also said that the adoption of fiduciary-based governance to shrink the board’s composition was “unlikely”, as the board had recently reaffirmed the “fair and equitable” model which underpinned the structure of its 93-man board.

According to the annual report of the UNJSPF board, there is “buy-in” among members to appoint the fund’s Standing Committee – a committee which acts on the board’s behalf when it is not in session – in place of a Transition Board to act on the audit’s findings. Mosaic has dismissed the suggestion as untenable, describing “a perception among the Board that the Standing Committee is not effective”.

Separately, the Federation of Associations of Former International Civil Servants (FAFICS) which represents UN retiree associations on the board, questioned “whether such a radical rebuild is worth the risk”. Citing the fund’s sound financial position, FAFICS alluded to the old adage of ‘if it ain’t broke, don’t fix it’.

According to the audit report, peer funds which were identified for comparison with the UNJSPF included the UK’s Brunel Pension Partnership, New Zealand Super, Norway’s Government Pension Fund Global and the Ontario Teachers’ Pension Plan.

This comes after years of alleged governance scandals at the UNJSPF. Former fund CEO Sergio Arvizú resigned in January 2019 after widespread criticisms over his handling of a new IT system and allegations of historical mismanagement and fraud.