the President of Staff Assiociation and
the President of GAC-EPA Committee
to the President of the PFGB
To: Professor Dan-Olof RISKA
President of the Pension Fund Governing Board
Finnish Society of Science and Letters
FIN-00170 HELSINKI 17
Geneva, 21 March 2012
The CERN Pension Fund, despite the measures taken in recent years, has seen its performance deteriorate yet again in 2011. This is likely to increase even further the anxiety felt by the members and beneficiaries concerning the situation of our Pension Fund. In 2008 the auditors already observed that: having a goal of 5% return on investment [as stated by the CERN Council], under volatile market situations, makes a "minimum risk policy" not applicable, and therefore, the risks of significant Asset loss, although mitigated, remain.1
In addition, the Fund, which acquired a new governance in 2007, has since gained considerable autonomy, while continuing to be an integral part of the Organization. Also, in this worrying situation, the way in which the operation of the Fund is monitored seems critical to us.
The Austrian Court of Audit wrote in 2008: The External Auditors are of the opinion that due to the fact that CERN and its Pension Fund form one legal entity the internal audit should be entitled to perform audits in all areas of CERN including its Pension Fund.2 However, the Pension Fund Governing Board has chosen to entrust the internal audit function to a private company, PricewaterhouseCoopers (PwC), a firm to which it simultaneously assigned the task of certifying the accounts. The sheer fact of entrusting these two functions to a single entity can only raise deep concerns and serious reservations on our part.
As to the addressee of the audit reports, here also we share the view expressed by the Austrian Auditors in 2008, supported three years later by their Italian successors: While internal audit reports to the Director General on audits performed on CERN core activities, internal audit should report to equivalent executive bodies of the Pension Fund on audits performed on the Pension Fund.3 This is also what we think.
Therefore, on behalf of the members and beneficiaries of the Pension Fund, we invite you to follow the advice of the Auditors of the Organization to ensure that CERN's Internal Audit Service also carries out the Internal Audit of the Fund for the reasons mentioned previously.
Members and beneficiaries of the Fund need to have full confidence in the independence of the unit that controls the operation of the Fund. They simply ask you to follow the repeated and insistent advice of the Auditors. We are convinced that such a measure would bring some relief in the current climate of concern.
Michel Goossens, President of the Staff Association,
Gertjan Bossen, President of the GAC-EPA Association.
As I had the opportunity to tell you last June, we are satisfied that, at your initiative, better communication has been put into place towards the members and beneficiaries of the Pension Fund who, I am sure, appreciate your decision to publish regularly articles in the CERN Bulletin.
In your article in No. 30+31 dated 25 July 2012, you mention that the Fund continues the implementation of the capital preservation approach and you announce a return on investments by the Fund of 2.0% as of 31 May 2012. You compare this number to a change by -8.5% in the Eurostoxx50 index.
The Fund’s return is certainly more favourable than the one obtained in 2011, but we should not forget that an evaluation of the Fund’s performance has to take into account two elements: its return objective fixed at 3% above inflation1, and the result of a comparison with other providence schemes. A direct estimate of the quality of the management of our Fund is possible by making comparisons with institutions having the same vocation; this does not allow, in our opinion, a comparison with changes in stock exchange indices like Eurostoxx50. In the past, comparisons have been made with the performance of Swiss funds. Well then, according to the latest Swisscanto monitor cited by the "Le Temps" newspaper in its 17 July 2012 edition their performances 2 as of 30 June 2012 stand at +2.8 % (an other index mentioned, Pictet LPP40, displaying +4.18 %). These results provoke two comments:
Hence, seen the result of the above comparison as well as the remark made earlier concerning the return objective of our Fund, we continue to believe that its management remains worrying. We believe also that the request made by the GAC-EPA and the CERN Staff Association (cf. our letter dated 21 March 2012) to imply the Internal Audit Service of the Organisation in the internal audit of the Fund is fully justified. Here we note that this concern is shared by the External Auditors of the Organisation, members of the Italian Court of Audit, expressed many times and once more this year in their report to Council.
To finish, I should like to mention my satisfaction to learn that an evaluation of the new governance will take place in 2013, as foreseen at the time of its introduction in June 2007.
President of the CERN-ESO Pensioners’ Association
21 August 2012
1. Cf also article by the Staff Association in Echo No. 26+27 of 25 June 2012
2. These figures rely on data obtained from 340 Swiss provident institutions totalling 437 billion CHF of assets value
Since our last report, the Governing Board (PFGB) has met on 26 April, 10 May, 28 and 29 June and 27 September 2012. The 2013 General Assembly will most likely take place on 11 September (morning).
You can view the Pension Fund site.
You can find on there the financial statements and the usual statistics as well as the presentation (English only) made to the General Assemblies at ESO and CERN on 11 and 12 September. The numbers of the CERN weekly bulletins which contain information on the Fund are also listed there.
The telephone number for the Fund administration is +41 22 767 8798.
Briefly the main subjects treated have been :
A few quantitative results:
Compared with the 31 December 2012 results, the funding ratio has improved to reach 66.4% on 30 June 2012 taking into account the under-indexation mechanism. Given the excellent returns on investment during the summer and the fact that the Geneva cost-of-living index for 2013 (August 2012/2011) has been settled at -0.2%, these results may have improved by a further 2 points at the time of writing. This is of course not brilliant but the trend is excellent and justifies the management strategy that has been adopted — investment with the aim of risk control. On 30 June 2012 the Fund membership comprised 3367 active members (average age 42.3 years) and 3478 beneficiaries (average age 72.5 years) The financial liabilities were 5596 MCHF (taking the under-indexation procedure into account) and the maximum loss of buying power taken into account (pensions prior to 1 January 2005) of -2.6%. With the parameters adopted, the Fund will not reach 100% funding ratio within the foreseen timescale. In order to do so it would be necessary either to increase the contributions of the Organisations by 40 MCHF or to increase the contributions by 17 points !
That apart, how does the economic and financial situation look ?
(Ref. Finanz und Wirtschaft and Le Temps)
Surprising as it may seem, the trend of the general economic situation is somewhat negative while at the same time the trend of the stock exchanges is positive :
[diagrams taken from the site http://www.onvista.de/]
…but not in the same way, as may be seen from the two graphs.
Growth perspectives are better in the USA than in Europe but trading is going at full speed, with of course the attendant risk of inflation. In China the yuan is up at its highest level ever against the dollar since the establishment of a market in 1994. Growth has been 14% since 2010 and 45% since 2005, not enough to upset the trade balance unless China succeeds in reducing its industrial investment while massively increasing its domestic demand, a path that risks becoming politically necessary.
Western countries are increasing their debts massively in an effort to reduce their unemployment levels but all are encountering the same difficulty: how to channel these credits in the best way!
Evolution of the US debt as percent of GNP (2011)
Some private and state debts of selected states (2011)
[two diagrams from an issue of Finanz und Wirtschaft]
The continuation of my contribution is in the Free speech corner column.
For the list of deceased beneficiairies of the Pension Fund consult the list of deaths.
If you wish to write a word of sympathy to the bereaved family you can send it via the CERN Pension Fund, which has the address but is not authorised to give it to third parties.
A tribute has been written for Jean-Paul Diss.
The following families thank the GAC-EPA and its members for the expression of their condolences at the passing away of their beloved:
Family Götschmann for Louis René Götschmann.
Family Moehl for Dieter Moehl.
Family Diss for Jean-Paul Diss.
It only remains for me to give my position regarding a decision taken by the majority of the Committee, that is to end prematurely my second mandate on the Governing Board of the Pension Fund which finishes on 31 October 2013. This decision must yet be backed by the President of the CERN Council who was the person who set the limit to my mandate at this date of 31 October 2013.
Montesquieu wrote in «The Spirit of the Laws»:
«So that power may not be abused there must be a mechanism whereby power stops power.»
The President of Council, on the recommendation of the Administrative Director of CERN, has planned to meet me and I shall ask him to apply the Statutes and Rules of the Pension Fund as allowed for in Article I 2.06.3 :
The members of the Governing Board shall be appointed for their competence in the matters falling within the remit of the Governing Board. They shall accept standard terms of appointment by which they undertake in particular to act solely in the best interests of the Fund and not as representatives of their respective constituencies.
I think that I have faithfully followed the conditions on the code of conduct that I signed by agreeing to be a member of the Governing Board of the Pension Fund and the punitive decision envisaged is just an abusive application of this same article of the Statutes and Rules which foresees:
Any member may be dismissed from his office by the authority which appointed him at any time by a procedure similar to that followed for his appointment.
My election at the top of the list with 92% of the votes at the last ballot shows that my position within the Administration Council was understood and supported by the members of our Association, and my priorities have not changed since :
To defend the interests of the Fund, which is strongly under-capitalised and right in the middle of restructuring.
The new rules which suppressed the yearly deductible on reimbursements and introduced different reimbursement levels are now mainly in force since they concern 2012 treatments. We can already observe these different levels, from 80% to 100%, on our reimbursement notifications, depending on the country where the treatment took place and the individual year-to-date expenses to be met (FCA), which can be below or above the thresholds fixed in the rules. The year-to-date expenses are now shown on the reimbursement recap, which UNIQA sends us.
All those insured who are over 50 years of age have received a letter from UNIQA inviting them to perform screening tests which according to the new rules are reimbursed 100%.
An audit of UNIQA SA in Geneva has just taken place. A call for tenders to administer CHIS will thus be relaunched and we aim to present Finance Committee with a tender for this contract in June or September 2013. Whatever the result of the call for tenders, the contract with UNIQA will last until end 2013.
The Supervisory Committee of the Health Insurance Scheme (CHIS Board) is continuing to study modifications still to be made to the rules. In particular specific cover, which offers a voluntary insurance to associate staff members, is under question and alternative options are being sought.
Some statistics at end June 2012 :
An increase in the total number of people insured has been recorded : +4.2% in 6 months, i.e. total of 14,014. For pensioners the increase is +1.5%, i.e. total of 5,138.
The reserve funds of CHIS have evolved as foreseen. End July 2012 they amounted to 139 MCHF and the sums placed in two banks produced an average yield of 4.39%.
We hope to put the new version of the public site on-line early 2013, as planned. The members database works well too, small improvements are made as needed.
The worrying point is translation of content: we have not received a single proposal to volunteer! We remind you that timely dissemination of our information in both official languages of CERN is important: help us by volunteering for translation tasks (French to English, but also English to French). The task is light if you are many, it's about translating a few pages per year. You should preferably be of mother tongue of the language into which you translate. There is no need for text processing skills (but an internet connection is required). Please come forward! Contact : email@example.com (adress no longer in use/adresse plus en service)
Jean François Michaud.
Dear retired colleagues who live in France,
Every year the time comes round to fill in the income tax return. A question that arose during a meeting of the GAC Committee : “Must you declare every year that you have a bank account in Switzerland?” Most of us thought not. On asking the tax authorities, however, we got the reply that this procedure is obligatory every year.
Below you will find several articles that set out the obligation to make this declaration.
THE LAW FIRST OF ALL
Article 1649 A As amended by Law 89-935 1989-12-29,-art. 98 I 2 Finance for 1990 JORF, 30 December 1989. The public services, the establishments or organisations subject to control by the administrative authority and all persons who regularly receive on deposit stocks, shares or cash must declare to the tax authorities the opening and closure of accounts of all kinds…
Individuals, associations, not-for-profit societies, domiciled or established in France, must declare, at the same time as their declaration of income or profit/loss, the details of all foreign accounts, whether open, in use or closed. The methods of application of this clause are established by decree…
A TAX ACCOUNTANT’S REPLY TO A WEB QUESTION:
Yes, you must declare all foreign bank accounts irrespective of whether they are open, in use or closed. This is an element of the obligations related to fiscal oversight. You must declare, at the same time as making your income tax return, the details of these accounts. Each account must be declared separately, either on a form 3916 (Cerfa n°11916*05 or 50869#05) or on a blank sheet with the same headings as the printed form.You can download the form from http://www.impots.gouv.fr. This obligation concerns individuals, associations and societies that are not commercial in character, with place of residence in France.
PROCEDURES FOR AN ACCOUNT ABROAD
The holders of foreign bank accounts must respect certain procedures in their declaration.
Holders of foreign bank accounts must tick the box 8UU on page 4 of their income tax returns. They must also make a declaration n°3916 (downloadable from http://www.impots.gouv.fr) for each of these accounts and attach them to their tax declaration.
The penalty for omitting to declare a foreign account stands at 1'500€ for each undeclared account. The fine increases to 10'000€ when the account is held in a so-called «uncooperative» state or territory, i.e. one that has not signed an administrative-aid agreement with France allowing access to banking information. Since 16 March 2012, whenever the total of the positive balances of the undeclared foreign account(s) is equal to or greater than 50'000€ on the 31 December of the year for which the declaration should have been made, the fine applied is 5% of the positive balance of each account but in any event not less than the 1'500€ previously mentioned (10'000€ in the case of an «uncooperative» state). This 5% fine thus applies already to declarations that had to be made by 31 May 2012 at the latest.
Owners of foreign accounts must also keep in mind that the income tax authorities can demand payment as much as 10 years in arrears, no matter the country in which the account is held, unless the taxpayer can prove that the total of the positive balances of his/her foreign accounts was less than 50'000€ on 31 December of the year for which the declaration should have been made.
This information should allow you, dear colleagues, to judge for yourselves and take your decisions accordingly.
For most of us this Swiss account is a salary account that serves only a transitional function. According to the lady to whom I spoke on the phone, you should not run the risk of any sanctions if you put things right by setting out the name, address and number of this account (without however indicating its balance) on a sheet of paper along with your next tax declaration.
More news will follow regarding the CSG, CRDS and CMU in Bulletin 44, in March 2013
Gunilla Santiard, René Barthélémy, Jean François Michaud.
The Information Sessions (permanences) are run by Gunilla Santiard, René Barthélémy and Jean François Michaud.
They take place every first Tuesday of the month except in January, July and August, in the small Staff Association conference room (Main Building), between 13:30 and 16:00. See the dates, which are also announced in the Echo, the Staff Association bulletin.
Any pensioner having a problem or query can seek help or support from this Commission. In general most of the problems raised concern taxes, health insurance or the PRP programme, rights following divorce or remarriage, authorization to enter the CERN site, car parks and access to different gates, etc.
If the Commission is not able to give the answer to the person during the interview, it will do its utmost to find out from the relevant services and will contact the person in question, if he/she has left an address or telephone number.
Most of the time, the requests are completely justified but occasionally some requests are not warranted and a previous personal effort on behalf of the person concerned could often resolve the problem. The Commission should be regarded as the last resort, once the person has looked into all the possible solutions. It should be remembered that the CERN services are also there to help and have most of the necessary information.
The GAC-EPA Committee is considering the creation of a «Forum» accessible to the pensioners, where it will be possible to find answers to the most frequently asked questions. Internet access is of course necessary.
This team of young pensioners which makes up the «Permanences» Commission will do its utmost to find the solutions to the requests it receives and sometimes the meetings are also an opportunity to reminisce about CERN’s history.