Page 48 - Bulletin, Vol.83 No.3, December 2024_version 11-12-2024

UNJSPF BOARD REPORT A/78/9 EXTRACT

SPECIAL ADJUSTMENT FOR SMALL PENSIONS
1

171. The Board reviewed a note by the Chief Executive of Pension Administration on the
adjustment scale applied to small pensions, as specified under section E of the Pension
Adjustment System. The note had been prepared in response to a request from the Board
at its seventy-seventh session, in April 2024, to set out:

(a) A proposal for a one-off uplift to the current small pension scale to reflect changes in
cost of living since the current scale came into effect in 2016; (b) An approach to
developing a longer-term mechanism for the special adjustment for small pensions
alongside the flat rates applied for the purpose of the minimum pension benefits under
article 28 (e) and (f).

172. To address item (a), the Pension Administration had conducted further analysis and
proposed the implementation of a new set of small pension adjustments to take effect on 1
April 2025.

173. The revised adjustments were considered with reference to the anticipated
cumulative United States cost-of-living adjustments from April 2016 to April 2025,
amounting to an increase of 35 per cent from the current scale. It was also proposed that a
minor modification be made to the relative progression of the adjustments to address
some inequities that existed with the current scale. The above proposed scale is aimed at
increasing small pensions, such that an individual with longer contributory service cannot
receive a smaller benefit than a comparable individual who has had fewer years of service.
The new scale seeks to eliminate income inversion and ensure fair compensation for
retirees with higher base benefits.

174. The governing bodies group indicated that it would not be supportive of any automatic
indexation of small pension benefits.

175. To address the need to develop a long-term mechanism for the special adjustment for
small pensions that coexist with the minimum benefit thresholds, it was proposed that the
Pension Administration analyse potential options for the Board to consider at its April 2025
session, with a final proposal to be presented at the July 2025 session of the Board. In
response to a request by the Pension Administration, FAFICS noted that it would be
available to assist.

176. The Board recommended that the General Assembly approve the amendment
to the scale for small pensions for participants with 15 or more years of contributory
service, under section E of the Pension Adjustment System, with effect from 1 April
2025, as contained in annex V. The consulting actuary of the Fund confirmed that
that change would not have any meaningful impact on the actuarial balance of the
Fund.

1 This issue was defended by AAFI-AFICS Geneva, which is delighted that the Caisse is taking account of the difficulties
faced by retirees with small pensions, sometimes less than $100 a month.

46 AAFI-AFICS BULLETIN, Vol. 83 No. 3, 2024-12

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