Page 29 - DIVA_2_2007_No.29

retirees and beneficiai'ies. We improve tlie way we manage ruiderstandiitg of the risks invol- portfolio, tlie bond pottfolio
liave to make sire tliat the per- tlie Pensioi'i Fund. ved, and also the costs iiivolved and tlie real-estate poitfolio.
foi'i'nance acliieved by tlie Outsourcing is one of tl'ie in clia+iging tlie investment poli- The bulk of orir iiivesh'nents is
assets matcl'ies oir long-tenn many possible options. It lias cy. Basically, the discussions oritside tlie US. Invesh'nent
liabilities. So far, so good! In been implemented in several were on these issues. Many peo- advisers liave been appointed
otl'ier words, this Pension areas of tlie Fund. We liave ple were rmcomfoitable because to assist the Fruid's asset
Fruid enjoys a sru'plus, wl'iicli beei'i worlciiig for many years tliey felt that tlie discrissions mai'iagers iit tl'ieir iiiveshnent
means that if orir demograpliic witli outside companies for focused mainly on tlie tool and decisions in tlie various
and economic assumptions actiiai'ial valuations, IT opera- not enough on tlie risk profile, regions of tlie world, in
are coi'rect (and we cl'ieck tions as well as for tlie invest- risk appetite, or on tlie asset-lia- equities, bonds, real estate,
them every two years throrigli ment of tlie ASSETSof tl'ie Fund. bility i'nanagement, for wlffch a emerging markets, cru'rei'icies

aii actuai'ial valuation wlffcli is For exainple,the management study is cui'rently being can'ied etc.

cai'iied out by an extemal tlmd of tlie small CAa'S (ii'ivest- orit. Tliese documents and
paity), then we can safely say ment in small companies) repoits will be presented to tlie The Fund's asset managers
tliat we will be able to meet categoiy of assets is already Pension Board iii July 2007. are selected tluorigli the com-
orir promises and cover our outsourced, simply becarise it petitive UN reciuitment pro-
long-tenn coi'i'unih'nents. So would be veiy difficult for tl'ie Tlie paiticipants' representatives, cess; all posts are adveitised
far, the UN Pension Fruid is in Pension Fund to rely solely on and tlie retirees, expressed on tlte {JN website. Providers
a strongly funded position. its own iifforination or staff to concem about dianges iii tlie aiid iiiveshnent advisors are
invest in si'iiall companies iiwestinentpolicy. Of cotirse, tlffis selected tlirougli a similar
Q: So you have beaten the around tlie world. is iiripoitant for many of them, as competitive process ma+iaged
market several times? tlieir ctu'rei'it and future pensions by tlie UN procurement
Your question refers to discus- are or will be tlieir only source of sei'vice.
Tlie Fund's asset managers sions tliat l'iappened in the revetuie.
liave an excellent track record Pension Board a year ago. At Q: Do the people working
and liave consistently beaten tliat tiine, oritsoirciiig of tl'ie I am vei'y pleased when orir on the Asian market, for
tlieir aggregate marlcet bencli- North Ai'nei'ican Equity poit- constituents give tlieir pension instance, follow the working
mark. hi fact, for the Pension folio was presented to our fimd tlffs level of attention. Tliey hours of the Tokyo Stock
Fund tlie key objective is to govenffng body composed of are risually veiy supportive of Exchange?
aclffeve a peifonnance wlffcli representatives of all our proposed changes in favour of
meets its rehu'n objectives. Member Organizations, inclu- modemization, and tliey feel tliat Tlie Fru'id's managers are all
Basically, the objectives iii ding staff and retirees. tliey own tlie Pension Fund. Tlus here iii New York. Of coru'se,
non'iinal tei'ins are to aclffeve a feeliiig of ownersliip is great and they h'avel, but a lot can be
7.5% rate of retiu'n on an The Pension Board eventually tliey are prorid of the peifoi'irian- done fi'o+n New Yoi'k.
annual basis, and in real tenns decided to outsorirce this par- ces acliieved rip to now. I mentio- Second, tliis is a pension fiind,
3.5%. Over tlie last foity-six ticular poitfolio and to liave it ned earlier tliat tliis is a strongly so daily trading is not a core
years, the fund has-on an managed iii tlie passive mode. funded pension fund; tlffs is due activity. Most of tlie assets are
average aiuuial basis-peifor- In otlier words, it decided not to good and pi'iident manage- long tenn.
med above tlffs objective. to tiy "to beat tlie market" ment and good govei'+iance. Tliis

tlu'ougli active management, is a rarity in tliis world wliere Q: What do you think about

Q: There have been qtiite a but basically to replicate tlie many pension fimds sh'iiggle to your job of managing the
lot of worries ainong tlie 1JN market indexes in tliis US and stay afloat. Participants want the Pension Fund?
staff about t}ieir pensions. Is Canadian eqriity poitfolio. '[JN Pension Fuid to be able to
the Pension Ftind going to Many people liad no problem continue to meet its pension obli- When I was selected for tlie
be outsourced or is it going witl'i tlie passive or indexii'ig gations of tlie fiitiire. Tliere are, job, and appointed as CEO, it
to stay tlie waft it is? Could approach. Indexation is a tool; therefore, lots of reasons for our was becarise tliis was already

yori clarit:i wliat is going on? and it is a fact tliat in those constituency to keep an eye on my area of specialization -
Is there son'ietliing to woriay transparent and efficient mar- wliat is happening to tlie Pension managing pension fimds iii
about? kets, wlien managers actively Frind. France. Wbat is new about it
manage a poitfolio-and stii- is tlie intemational nature of
What is clear is tliat managing dies iltustrate tlffis point very Q: You said earher that you tliis activity. The tecl'u'iiques,
a Pension Fund is a complex well-it is difficult for tliem to had a Governing Board and wlien it comes to actuarial
activity reqriiriiig a lot of pro- consistently aclffeve a better 160 people working here in matters, iiivesti'nents, IT, are
fessional knowledge-not peifoi'inance than tlie market New York. How do you select all tlie same.
only iii tenns of administ'a- index. your people - are they all
tive skills, managing conh'ibu- investment bankers? Q: Where do you siant to
tions, calculatiiig and payiiig Tlie discussion basically focu- see tlie Pension Ftind ten
pensions, but also an in-depth sed on tlie question of sh'ate- Tlie Fund lias a limited munber years from now?
laiowledge of actiiai'ial mat- gy. Is the strategy only to of asset managers, brit oit gover-
ters, iiweshnent matters, IT rep[icate an iiidex or is tliere ning bodies-tlie Pension Board Obviorisly, tlie Pensio+i Fund
processes and things like tliat. more to it? Many people and tlie United Nations General will be larger, not only in

For us, tlie key question is to believe a more compreliensive Assembly, our legislative body - tenns of ASSETS but also in
make sure tliat all tliis assessment of tl'ie pros and liave agreed to strengtl'ien tliis terms of membersliip.
la'iowledge is available wlien cons sliould be presented. small team of liighly skilled pro- Basically, tlie {JN is expan-
we need it. From tiine to time, Managing a portfolio fessionals wlio liave tlie respon- ding. Tliere is a great demand
we need extemal resorirces to obviorisly reqriires a clear sibility of managiiig tlie equity addressed to tlie United

2 2007 Diva 27

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