BUDGET COMMITTEE TAKES UP ISSUE OF PENSION BENEFITS FOR INTERNATIONAL JUDGES
| |||
Department of Public Information • News and Media Division • New York |
Sixty-third General Assembly
Fifth Committee
22nd Meeting (AM)
BUDGET COMMITTEE TAKES UP ISSUE OF PENSION BENEFITS FOR INTERNATIONAL JUDGES
The members of the International Court of Justice (ICJ) and judges of the International Tribunals should receive a compensation package commensurate with their high status and responsibilities, the representative of Antigua and Barbuda (on behalf of the “Group of 77” developing countries and China) said in the Fifth Committee (Administrative and Budgetary) today, insisting that their pension benefits should not diminish following the Assembly’s approval of a base salary of $158,000 plus post adjustment in April last year.
The Committee was considering the Secretary-General’s proposals to address the unintended impact of resolution 61/262, which, effective 1 January 2007, set a new annual net base salary for those officials, with additional post adjustment, to replace the previous larger base salary without post adjustment.
As pointed out by the Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), who introduced that body’s reports today, the pension benefits of members of the Court and judges of the Tribunals would decrease, as a result of the change in the basis on which pensions are calculated, from $170,080 to $158,000. Among numerous specific recommendations contained in the Secretary-General’s report, which the Advisory Committee generally supported, was the proposal that pension schemes for members and judges and ad litem judges of the Court and the Tribunals should remain defined-benefit schemes and continue to be non-contributory.
The Advisory Committee had recommended against the proposal that retirement benefits for members and judges should be based on 55 per cent of the annual net base salary (excluding post adjustment), assuming completion of nine years of service. Instead, the ACABQ recommended that the retirement benefits should continue to be based on salaries and should be 50 per cent of the net salary, or $84,040, whichever was higher. The ACABQ also did not support the proposed increase in maximum pension from two thirds to three fourths of annual net base salary.
While the Group of 77 stood ready to work with all partners to find a solution, on the basis of respect for the statutes of the Court and Tribunals and on the basis of a non-contributory pension scheme, the representative of the Russian Federation wondered why the Secretary-General had recommended retaining the pension scheme, which was not contributory.
As for the consulting firm’s statement that the current pension scheme design was “not unreasonable”, the United States representative wondered about the basis for that conclusion. The whole world was shifting from defined benefit to a defined contribution scheme, which reduced the exposure of organizations to providing for long-term payments -- clearly a liability for the Organization. Why was the Secretariat going against the trend and sticking with the old benefit scheme? he asked.
Also considered this morning were additional requirements arising from this year’s decisions of the Economic and Social Council and the proposal to establish a liability reserve fund to cover the risk that previously-sold United Nations stamps would be presented for mailing.
On the latter, the representative of Antigua and Barbuda (on behalf of the Group of 77 and China) said that he saw many merits in creating a reserve for contingent liabilities for postal services for previously issued stamps. Therefore, once the appropriate level of the requirements had been determined, the Secretary-General should explore the feasibility of any initiative to gradually establish such a contingency fund, under full compliance with accounting standards.
While expressing appreciation for the measures that had been undertaken to deal with the “looming issue” of the contingent liability of the United Nations stamps, the United States representative wondered about the United Nations Postal Administration’s income and future prospects.
In response to those queries, the Chief of the Commercial Activities Service, Office of Central Support Services, said that the outlook was positive. Although reduced, the philatelic market had stabilized, and expansion of the promotion of memorabilia products was proving very effective. A reduced programme of issuances had increased the desirability of the product, and most current issuances were sold out soon after they came out. Stamps had been issued on such popular themes as sport for peace in connection with the Olympics and endangered species. Also popular were personalized stamp sheets, where individuals could modify part of the stamp sheet to include their images.
Other documents were introduced by Marianne Brzak-Metzler, Chief, Conditions of Service Section, Office of Human Resources Management; and Linda Wong, Chief of Service II of the Programme Planning and Budget Division.
The Committee will meet again at a future date, to be announced.
Background
As the Fifth Committee (Administrative and Budgetary) met today, it had before it the report of the Secretary-General on conditions of service and compensation for members of the International Court of Justice and judges and ad litem judges of the International Tribunal for the Former Yugoslavia and the International Criminal Tribunal for Rwanda (document A/62/538/Add.2), which addresses options for designing pension schemes for those officials.
A recent report by an independent consulting firm corroborates most provisions of the current pension schemes approved by the General Assembly for the members of the International Court of Justice (ICJ) and the judges and ad litem judges of the International Tribunals. However, it does not account for the unintended impact of resolution 61/262, which, effective 1 January 2007, set a new annual net base salary, with additional post adjustment, to replace the previous larger base salary without post adjustment for those positions. The report makes recommendations to rectify the resulting reductions in pension payments to those currently receiving them, as well as members and judges currently sitting on the Court and the Tribunals.
The Secretary-General maintains that it would be inequitable and contrary to fundamental principles espoused by the United Nations if the pensions of retired judges and their dependants were decreased, especially as those amounts have been frozen for a prolonged period, while their real value has already diminished considerably. Further, he notes the Court’s comment that if current income was calculated as base salary plus post adjustment, a member of the Court retiring in April 2008 after serving a full term would receive less than 30 per cent of present income. Yet, the consulting firm’s report states that 75 to 80 per cent of current income would be a reasonable target, and that the current system, based on 50 per cent, is not overly generous.
Among numerous specific recommendations contained in the report, the Secretary-General proposes that pension schemes for members and judges and ad litem judges of the Court and the Tribunals should remain defined-benefit schemes and continue to be non-contributory. He also recommends that retirement benefits for members and judges should continue to be correlated to salaries and should be defined as being equal to 55 per cent of the annual net base salary (excluding post adjustment); and that pension levels should be determined by years of service rather than a term of office.
If all recommendations are approved by the Assembly, the additional budget requirements for the biennium 2008-2009 would come to $8,800 for members of the International Court of Justice; $1 million for judges of the former Yugoslavia Tribunal; and $476,100 for judges of the Rwanda Tribunal. The next comprehensive review by the Assembly, should it choose to revert to the three-year review cycle (the current review having come after two years), would be undertaken at its sixty-fifth session in 2010.
A letter from the Secretary-General to the President of the General Assembly (document A/C.5/61/19) transmits a request from the Registrar of the International Criminal Court inviting the Assembly to consider amending the pension scheme regulations for the judges of the International Court of Justice, the International Tribunal for the Former Yugoslavia and the International Criminal Tribunal for Rwanda in order to ensure that no former judge of any of those courts or tribunals receives a United Nations pension while serving as a judge of the International Criminal Court.
The Advisory Committee on Administrative and Budgetary Questions (ACABQ), in a related report (document A/63/570), notes that the Secretary-General has proposed essentially only one option and that he has relied on a consultant, rather than seeking the expertise available within the Organization. In the view of the ACABQ, the advice of the International Civil Service Commission (ICSC) and the United Nations Joint Staff Pension Fund would have been helpful in developing options.
The Advisory Committee recommends approval of the Secretary-General’s proposals that the pension scheme for ICJ members should remain a defined-benefit non-contributory scheme; the level of pension should be determined by reference to years of service rather than a term of office; the retirement age should remain at 60 years; the actuarial reduction factor, at a rate of 0.5 per cent per month, should continue to be applied in the case of early retirement; the level of the benefit should be adjusted on the occasion of increases in the annual net base salary of ICJ members; and pensions in payment should also be adjusted on the occasion of increases in the annual net base salary of the members of ICJ.
In connection with the recommendation that the retirement benefit of the members of the International Court of Justice should continue to be correlated to salaries, as are judicial and other pensions, and should be defined as being equal to 55 per cent of the annual net base salary by reference to nine years of service, the Advisory Committee recognizes that that proposal is intended to avoid a decrease in pension entitlements. At the current calculation, pension benefits would be decreased as a result of the change in the base from $170,080 to $158,000. While the current level of pension for sitting members of the Court and for those judges and their dependants who are currently receiving pensions should not be diminished, the ACABQ does not agree that it is necessary to increase the level to 55 per cent. Instead, it recommends that the retirement benefit of ICJ members should continue to be based on salaries and should be 50 per cent of the annual net base salary (excluding post adjustment), or $85,040, whichever is higher, by reference to nine years of service. Future consolidation of post adjustment multiplier points into base salary will eventually increase the base on which the pensions are calculated. Also, under the current arrangements, a member of ICJ who is re-elected is entitled to receive one three-hundredth of his or her retirement benefit for each further month of service beyond nine years.
With regard to the proposal to increase the maximum pension from two thirds to three fourths of annual base salary, the Advisory Committee is of the view that the current maximum pension provides adequate recognition of service beyond nine years, especially taking into account the fact that the pension schemes for members of the ICJ are non-contributory. The ACABQ recommends, accordingly, that a member of the Court who is re-elected should receive one three-hundredth of his or her retirement benefit for each further month of service beyond nine years, up to a maximum pension of two thirds of annual net base salary (excluding post adjustment). The Advisory Committee also suggests that the Assembly may wish to raise the judges’ age of retirement.
While recommending approval of several proposals on the retirement benefits of the Tribunals’ judges, the Advisory Committee, in line with its recommendations on the ICJ, recommends that the retirement benefit of judges should continue to be based on salaries and should be 50 per cent of the annual net base salary, or $85,040, whichever is higher, assuming completion of a period of service of nine years. It also recommends that a judge of a Tribunal who has been or will be re-elected should receive one three-hundredth of his or her retirement benefit for each further month of service beyond nine years ofservice, up to a maximum pension of two thirds of annual net base salary (excluding post adjustment).
The Advisory Committee points out that, should the Assembly approve its observations and recommendations, there would be consequential reductions in the financial implications. Accordingly, it recommends that the Secretary-General provide the Assembly with revised estimates in that regard. Related resource requirements should be reflected in the context of the relevant performance report for the biennium 2008-2009.
The Secretary-General’s report, on the contingent liability reserve for the United Nations Postal Administration (UNPA) (document A/63/320), outlines the reasons UNPA has previously requested a reserve for contingent liabilities for postal services in the amount of $3.3 million, namely, a concern that only 12 per cent of overall stamp sales have been presented for mailing, leaving the possibility that the remaining 88 per cent could be presented for mailing at any time. The UNPA has agreements with the local postal services where UNPA offices are located -- Vienna, Geneva and New York -- under which it reimburses those services for the cost of the mailings. The concern is that those outstanding stamps that are not part of collections may be purchased at reduced rates and used for bulk mailings.
With the introduction of the euro, making the Austrian schilling-denominated stamps obsolete, and changes and limitations regarding bulk mailings implemented in response to a request by the Assembly in its resolution 62/238, the risk has been greatly diminished. In particular, bulk mailing has been eliminated at the United Nations Offices at Geneva and Vienna. In New York, effective 1 September 2007, UNPA put in place a new policy to restrict large consignments of mail, specialized mail services and mass mail, thereby eliminating bulk mail charges.
The Secretary-General recommends that a reserve not be established at this time, and that the existing practice be continued, which involves meeting from current income any additional expenditure incurred for postage from sales recorded in prior periods. Once a trend emerges from the implementation of the new policy, it will be possible to determine the appropriate level of contingent liability. At that point, United Nations Postal Administration, in coordination with the Office of Programme Planning, Budget and Accounts, would estimate the new level, which would be brought to the attention of the Assembly.
The Advisory Committee, in a related report (document A/63/568), notes that the elimination of bulk mail has not only reduced the risk of outstanding stamps being presented, but also had a positive effect on the profitability of the Postal Administration, which reported a net profit of $1.5 million in 2006-2007. The ACABQ was also informed that the Postal Administration had continued to reduce costs by streamlining its operations and restructuring staff resources. The Advisory Committee welcomes these developments.
The Advisory Committee reiterates its views as to the merits of creating a reserve for contingent liabilities for postal services for previously issued stamps, adding that such a reserve could be created through the sale of so-called “value-added stamps” (premium stamps that are sold at a price above their face value). Accordingly, it recommends that the Secretary-General be requested to explore the feasibility of issuing value-added stamps for the purpose of establishing a reserve for contingent liabilities.
In connection with stamp sales, the Advisory Committee requests the Secretary-General to ensure that United Nations stamps continue to be sold in New York during the construction phase of the Capital Master Plan.
The report of the Secretary-General, on revised estimates resulting from resolutions and decisions adopted by the Economic and Social Council at its substantive session of 2008 (document A/63/371), notes that the additional expenditure requirements arising as a result of those resolutions and decisions are estimated at $420,500 under the regular budget 2008-2009, all of which could be absorbed. The requirements for the biennium 2010-2011 will be considered within the context of the proposed programme budget for that biennium.
The decisions of the Economic and Social Council also entail modifications to the programme of work under sections 16 and 18 resulting from decisions of the Economic and Social Commission for Asia and the Pacific (ESCAP) and the Commission on Narcotic Drugs, which are contained in the present report for approval by the Assembly at its current session.
Additional appropriations are not sought over and above the level of funding approved in the programme budget for the biennium 2008-2009. Should the actual requirements exceed the absorptive capacity of related budget sections, the additional provisions would be reported in the context of the second performance report for 2008-2009. Extrabudgetary funds are also expected to cover the need for supplementary resources that have been identified in the biennium.
The ACABQ, in a related report (document A/63/567), notes that a requirement of $407,000 would be required under section 2, General Assembly and Economic and Social Council Affairs and Conference Management, of the 2008-2009 budget as a result of the adoption of Economic and Social Council decision 2008/247. These requirements are related to the preparations for the high-level segment of the fifty-second session of the Commission on Narcotic Drugs on the follow-up to the twentieth special session of the Assembly. The additional resources would provide conference servicing for five open-ended intergovernmental expert working groups, meeting for a total of 30 meetings, to assess the achievement of the goals and targets set by the General Assembly at its twentieth special session, as well as areas requiring further action, and to draw conclusions for further intersessional discussions.
The Advisory Committee has no objection to the course of action proposed by the Secretary-General in his report.
Introduction of Documents
MARIANNE BRZAK-METZLER, Chief of the Conditions of Service Section, Office of Human Resources Management, introduced the Secretary-General’s report on the conditions of service of other-than-Secretariat officials. He said that, as a general comment, Mercer Human Resources Consulting, which had undertaken the study of the pension schemes, had concluded that most of the provisions of respective pension scheme regulations adopted by the Assembly in respect of the members of the Court and judges of the Tribunals were not unreasonable, including the basic target levels of benefits and the provision of death and disability benefits. However, the consulting firm believed that there were some inconsistencies under the schemes, as well as areas of potential improvement.
With respect to the financial implications based on the Secretary-General’s proposals, she said that the figures had been revised since the report had been finalized in April. In light of the recent re-election of some judges of the International Court of Justice, only three judges were retiring in February 2009. Accordingly, the financial implications should be revised to $6,300. The biennial requirements subsequent to 2008-2009 were estimated at $82,000, assuming that the sitting judges would retire at the end of their current tenure. With regard to the Tribunals, she recalled that the terms of several judges had been extended. As per the latest information, there would be no financial implications resulting from the approval of the Secretary-General’s proposals for the biennium 2008-2009. Regarding the cycle of periodic review, should the Assembly decide to continue the three-year cycle, the new review would be undertaken at the sixty-fifth session in 2010.
The Chair of the ACABQ, SUSAN MCLURG, introduced that body’s report, saying that the ACABQ had been informed that the financial implications of the Secretary-General’s proposals in respect of the members of the ICJ had been revised from $8,800 to $6,300 for the current biennium and that there would be no financial implications for 2008-2009 resulting from the proposals pertaining to the two Tribunals. Should the Assembly approve the recommendations of the Advisory Committee, there would be consequential reductions in the financial implications for the biennium 2008-2009 that would result from changes in the pension scheme for the members of the Court. Those revised estimates would need to be provided to the Assembly, and related resource requirements should be reflected in the performance report for the biennium.
Statements
CONROD HUNTE (Antigua and Barbuda), also speaking on behalf of the “Group of 77” developing countries and China, said the work of the International Court of Justice and the Tribunals was of the utmost importance and, as such, the members of the Court and the judges of the Tribunals should receive a compensation package commensurate with their high status and responsibilities. The Group of 77 and China supported the key principles enshrined in the statutes of the Court and Tribunals, which stated that the salary and allowances of the judges should be fixed by the General Assembly and not decreased during the term of office.
Bearing in mind the provisions of the statutes of the Tribunals, he said the Group of 77 and China also supported, in a general manner, the principle of equity in the benefits to the judges of the Tribunals, with those of the International Court of Justice. The two Tribunals should receive the necessary support for the General Assembly to complete their mandates.
In respect to the proposals under consideration, he expressed regret over the fact that they were presented after an analysis provided by a consulting firm, as there was enough in-house expertise so as to not have to resort to external services. The pension scheme should provide adequate after-service benefits to judges having met the requisite eligibility criteria relating to retirement age and period of service, based on the premise that the pension benefit maintained a standard of living as replacement income.
While the Group stood ready to work with all partners to find a solution, on the basis of respect for the statutes of the Court and Tribunals and on the basis of a non-contributory pension scheme, he said the system adopted must ensure that the current level of pensions was not diminished. In addition, any decisions reached with regard to the pension scheme of members of the Court and the judges of the Tribunals should not constitute a precedent for any other category of judges working within the United Nations system.
THOMAS REPASCH ( United States) said that, generally, he was satisfied with the information presented in the Secretary-General’s report. However, he noted from paragraph 3 of the ACABQ report that the Secretary-General had presented essentially one option and relied on the services of a consultant. Perhaps the ICSC or the Pension Fund could have been of assistance. He wanted to know why the Secretariat believed there was no expertise available in the Organization. It was regrettable that it was not tapped. He also wanted to receive information on how much the United Nations had paid for the report issued by the consultants.
As for the consulting firm’s conclusion that the current pension scheme design was “not unreasonable”, he wanted to know what measure had been used in that regard. What comparisons had been used? Did the consultants have access to data of similar organizations, if such existed? What comparators were used to judge that the scheme was “not unreasonable”? His view was that the whole world was shifting from defined benefit to a defined contribution scheme, which reduced the exposure of organizations having to provide long-term payments, which were clearly a liability for the Organization and should be recognized. Why was the Secretariat going against the trend here and sticking with the old benefit scheme?
ANDREY KOVALENKO ( Russian Federation) asked the Secretariat to distribute the report of the consultants to the Committee and wanted to know on what basis the Secretary-General had recommended retaining the pension scheme, which was not contributory.
Explaining why an outside firm had been used, Ms. BRZAK-METZLER said that the decision had been made in light of the fact that judges were not staff members and based on the desire to get additional information from “a wider source”. In the mid-1990s, there had been a study by an outside firm, and in light of the Assembly’s request, it was considered the better way to go. The Secretary-General had researched the options and all signs pointed to Mercer Human Resources Consulting. The study had been commissioned at the cost of $40,000. The consulting firm had access to lots of information from national judiciaries and other tribunals, although there were not many in the world. The majority of national schemes for supreme courts provided for non-contributory schemes, based on a certain percentage of salaries. It was also believed that the information available corroborated similar conclusions in 1995. She would respond later to the request for providing the consulting firm’s report.
In response to the question on why the Secretary-General had recommended a non-contributory scheme, she said that it was a typical pattern outside the United Nations. Few national judiciaries asked their supreme court judges to contribute. The current scheme had been approved by the Assembly since the 1940s, and it was found to be current now.
Mr. KOVALENKO ( Russian Federation) reiterated his request to have the report of the consultants submitted to the Committee. That document was the basis for all the Secretariat’s proposals. Without that report, it would be difficult to consider the item.
UNPA and Economic and Social Council Decisions
LINDA WONG, Chief of Service II of the Programme Planning and Budget Division, introduced the Secretary-General’s report on the contingent liability reserve for the United Nations Postal Administration (document A/63/320) and the report on the revised estimates resulting from resolutions and decisions adopted by the Economic and Social Council at its substantive and resumed substantive sessions of 2008 (document A/63/371).
Ms. MCLURG, Chairman of the ACABQ, speaking on the Secretary-General’s report on the contingent liability reserve for the UNPA, said the Committee had recommended that the General Assembly take note of the report and, in so doing, had noted the positive effect that measures to eliminate bulk mail had had on the profitability of the Postal Administration, which reported a net profit of $1.5 million for the biennium 2006-2007. Further, the Committee was pleased to see the proactive measures that the Postal Administration had taken to alleviate the immediate need for the creation of the reserve.
Turning then to the decisions adopted by the Economic and Social Council, she said the additional expenditure requirements arising as a result of the resolutions and decisions adopted by the Council at its substantive session were estimated at $420,500, under the regular budget. Those requirements were related to the preparations for the high-level segment of the fifty-second session of the Commission on Narcotic Drugs on the follow-up to the twentieth special session of the General Assembly. The Secretary-General had indicated that those requirements would likely not need additional appropriations over and above the level of funding approved in the programme budget for the biennium 2008-2009. In addition, the Advisory Committee had no objection to the course of action proposed in paragraphs 32 and 33 of the report.
Statements
Mr. HUNTE (Antigua and Barbuda), speaking on behalf the Group of 77 and China, said the implementation of UNPA policy, including the streamlining of its operations and the restructuring of staff resources, had resulted in a continuing reduction in the estimate of the contingent liability for stamps sold in previous periods, as well as a net profit of $1.5 million for the biennium 2006-2007. According to the report, all possible alternative measures aimed at establishing a contingent liability reserve had already been implemented. Nevertheless, there continued to be difficulties in estimating the value of the UNPA contingent liability reserve. Such a situation might continue until a trend emerged from the implementation of the new policy, which could imply the adoption of new measures.
In any case, he said there continued to be many merits regarding the creation of a reserve for contingent liabilities for postal services for previously issued stamps. Therefore, once the appropriate level was determined, the Secretary-General should explore the feasibility of any initiative to gradually establish such a contingency fund, under full compliance with the respective accounting standards. Touching briefly on the construction phase of the Capital Master Plan in the General Assembly Building and how it might affect the sale of United Nations stamps, he stressed the need for the continuing sale of stamps in another New York location during the construction period.
Mr. REPASCH ( United States) expressed appreciation for the measures that had been undertaken to deal with the “looming issue” of the contingent liability of United Nations stamps. Regarding paragraph 4 of the Advisory Committee report, regarding the net profit for 2006-2007, he asked whether the figure included any kind of expense for contingent liability and, in addition, if the Secretariat could provide an update on the net income picture for the current year, as the year was almost at its end.
Turning to paragraph 6 of the ACABQ report, he said he was not necessarily in agreement with the request for United Nations stamps to be sold in New York during the construction phase of the Capital Master Plan, since the stamps were available on the internet for sale. Further, he wondered whether other approaches to stamp sales had been considered, such as a machine that might sell the stamps, which would reduce some costs and make the stamps available on a 24-hour basis. In addition, he asked for a clarification on what the term “value-added stamps”, used in the report, referred to.
In conclusion, he asked the Secretariat for their candid view of the real prospects regarding the sale of United Nations stamps: was there a bright future for stamp sales and United Nations stamp collecting or was it more likely that sales would dwindle in the years to come? He noted that there might be concerns raised regarding the continued approval of a budget for an activity that did not seem to have a very bright future.
Responding to questions, ANTON BRONNER, Chief of the Commercial Activities Service, Office of Central Support Services, said that UNPA’s reported profit did not include provisions for contingent liability, which had not been made to date. The current profitability, as of 31 August, amounted to some $800,000, and he expected UNPA to make at least $1 million by the end of the biennium. As for installing vending machines, the main sales were philatelic and promotional products, mostly mint stamps that could be collected. UNPA products were not generally geared for mailing. Those were difficult to sell in vending machines.
The United Nations was planning to address the sales issue during the Capital Master Plan and was working with the Department of Public Information to establish a sales counter during construction. Until mid-2011, the visitors’ area would be open to visitors and sales, however. On value-added stamps, he said that, in addition to their mailing value, some extra amount was collected for a special purpose. For example, the revenues from one such stamp had been given to the Joint United Nations Programme on HIV/AIDS (UNAIDS). Such stamps could be issued for the purposes of contingent liability. However, value-added products were not easy to administer and not well regarded by stamp collectors. The issue would be further evaluated in the future.
On the operations of UNPA, he said it had had strong sales through the end of the 1970s, but since then, sales of traditional products had somewhat declined. The outlook was positive, however. A reduced programme of issuances increased the desirability of the product. Most current issuances were sold out soon after they came out. Stamps had been issued on such popular themes as sport for peace, in connection with the Olympics, and endangered species. Also popular were personalized stamp sheets, where individuals could modify part of the stamp sheet to include their images. That programme was very popular and he expected it to be expanded. The website had been established and was performing well. Although reduced, the philatelic market had stabilized, and expansion of the promotion of memorabilia products was proving very effective.
* *** *
For information media • not an official record