FC 109/24


Finance Committee

Hundred and Ninth Session

Rome, 9 - 13 May 2005

Decisions of the General Assembly on International Civil Service Commission and UN Joint Staff Pension Board (including Changes in Salary Scales and Allowances)

Table of Contents

1. The purpose of this paper is to report on the decisions of the United Nations General Assembly (UNGA) at its 59th session (2004), which considered the annual reports of the International Civil Service Commission (ICSC) and of the United Nations Joint Staff Pension Board (UNJSPB) for 2004, and to inform the Committee on recent developments of the conditions of service of staff in the Professional and higher categories and General Service staff.

I. International Civil Service Commission (ICSC)

A. UNITED NATIONS COMMON SYSTEM

2. The General Assembly reaffirmed its commitment to a single unified United Nations common system as the cornerstone for the regulation and coordination of the conditions of service of the United Nations common system being convinced that the common system constitutes the best instrument to secure staff of the highest standard of efficiency, competence and integrity for the international civil service, as stipulated under the Charter of the United Nations. The UNGA also reaffirmed the statute of the Commission and the central role of the Commission and the General Assembly in the regulation and coordination of the United Nations common system.

B. CONDITIONS OF SERVICE OF STAFF IN THE PROFESSIONAL AND HIGHER CATEGORIES

Evolution of the margin

3. Under a standing mandate from the General Assembly, the Commission continued to review the relationship between the net remuneration of the United Nations staff in the Professional and higher categories in New York and that of the United States federal civil service employees in comparable positions in Washington, D.C. (referred to as the margin). The Commission reported to the General Assembly the margin forecast of 110.3 between the net remuneration of the United Nations staff in grades P-1 to D-2 in New York and that of the United States federal civil service in Washington, D.C., for the period from 1 January to 31 December 2004.

Base/floor salary scale

4. The UNGA approved the recommendation of the ICSC that the current base/floor salary scale for the Professional and higher categories be increased by 1.88 per cent through the use of the standard method of consolidating post adjustment multiplier points, on a no-loss/no-gain basis, with effect from 1 January 2005. The financial implication of this change for FAO is estimated to be US$150 000 for the year 2005 in respect of mobility/hardship allowance and scale of separation payments.

Pensionable remuneration

5. In accordance with article 54 (b) of the regulation of the United Nations Joint Pension Fund the scale of pensionable remuneration for the Professional and higher categories is to be revised whenever the net remuneration in New York is adjusted. Effective 1 September 2004, the Chairman of the ICSC announced a 4.42 percent increase in the post adjustment in New York and, concurrently, promulgated a revised scale of pensionable remuneration for the Professional and higher categories increased by the same percentage and with effect from the same date. The financial implication of this change for FAO is estimated to be US$1.45 million for the year 2005.

Impact of decision of General Assembly on post adjustment up to February 2005

6. The levels for the Rome post adjustment classification, showing the fluctuation of the post adjustment multiplier relative changes in the rate of exchange were announced by the ICSC from February 2004 to February 2005 as follows:

TABLE 1

Cost-of-living

Post Adjustment (Applying 4-month waiting period)

Month

Index1

 Month

Euro/Dollar
Exchange Rate

Index

Multiplier

Oct.2003 108.1 Feb. 2004 0.804 141.3 41.3
Nov.2003 108.7 Mar. 2004 0.804 141.3 41.3
Dec. 2003 108.6 Apr.2004 0.820 138.8 38.8
Jan. 2004 108.7 May 2004 0.844 135.2 35.2
Feb.2004 109.0 June 2004 0.816 143.2 43.2
Mar. 2004 109.2 July 2004 0.821 142.4 42.4
Apr. 2004 109.4 Aug. 2004 0.831 140.9 40.9
May 2004 109.8 Sep.2004 0.831 140.9 40.9
June 2004 109.9 Oct. 2004 0.812 143.8 43.8
July 2004 109.9 Nov. 2004 0.786 148.1 48.1
Aug. 2004 110.0 Dec. 2004 0.754 153.7 53.7
Sep. 2004 110.2 Jan. 2005 0.737 154.0 54.0
Oct. 2004 110.0 Feb. 2005 0.765 148.9 48.9

C. REMUNERATION OF THE GENERAL SERVICE AND OTHER LOCALLY RECRUITED CATEGORIES

Rome interim adjustment

7. In line with the procedure for interim adjustments established by the ICSC and approved by the Council2, an across-the-board 2.39 per cent net increase in salaries of the General Service staff came into effect on 1 November 2004.

8. The annual pensionable remuneration was revised by the same percentage increase applied to the net salaries (1 to 1 interim adjustment procedure) and with effect from the same date.

9. The annual net amount of the children’s allowance was revised from € 1 052.40 to € 1 078.00.

10. The annual amounts of the first and second language allowances were revised by the same 2.39 per cent increase as that applied to the net salaries and with effect from the same date, 1 November 2004.

11. The financial implication of these changes for FAO is estimated to be US$2.1 million for the year 2005 at the current rate of exchange.

D. CONDITIONS OF SERVICE APPLICABLE TO BOTH CATEGORIES OF STAFF

Education grant

12. The UNGA approved the recommendation of the ICSC to:

    1. Increase the maximum reimbursement levels expressed in local currency for the following countries:
      2. Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Japan, Netherlands, Spain, Sweden, Switzerland, United Kingdom, United States of America and outside the United States of America (in United States dollar);
    2. Take into account the flat rates for boarding within the maximum admissible educational expenses and revise the additional amounts for reimbursement of boarding costs over and above the maximum grant payable to staff members at designated duty stations.

13. The financial implication of these changes for FAO is estimated to be US$150 000 for 2005.

Review of the pay and benefit system

14. Within the framework for the review of the pay and benefits system (and in particular, on broadbanding/pay-for-performance), the International Civil Service Commission decided that a pilot study should be conducted of one broadbanded structure model which consists of P-1 and P-2 in band 1, P-3, P-4 and P-5 in band 2 and D-1 and D-2 in band 3. The following three models will be used to test the related pay-for-performance systems and other initiatives, recognizing the different stages of reforms of the organizations.

15. The UNGA took note of the information provided by the International Civil Service Commission (ICSC) on the pilot study on broad banding and pay for performance.

16. The UNGA also noted that if all three models of the pay and performance system were not tested, this could diminish the value of the pilot study and requested the Commission to keep this in mind in its further consideration of the issue.

17. The UNGA recognized that an effective and credible performance appraisal system is the key for the possible introduction of a pay-for-performance system, and requested the Commission to ensure that the performance appraisal systems in volunteer organizations are developed, in full consultation with staff members, and clear, effective and credible for all parties concerned, including Member States. The UNGA decided that no new strategy on pilot projects in broad banding or pay for performance should be undertaken until the General Assembly has had an opportunity to review the results of the pilot study on broad banding and pay for performance being conducted by the Commission.

Contractual arrangements

18. The Commission noted that significant progress had been made in categorizing contract across organizations. It decided to:

    1. Report to the General Assembly that there was now a model within which to apply some definition to the varying contractual arrangements across the United Nations common system;
    2. Request its secretariat to refine the model in collaboration with organizations and staff and to provide a revised version as well as information on the distribution of staff in the organizations by contractual category to the Commission at its sixtieth session (spring 2005);
    3. Provide a final report to the General Assembly at its sixtieth session on the question of contractual arrangements.

Mobility and Hardship allowance

19. The Commission decided to:

    1. Separate the mobility element from the hardship element;
    2. Delink both the mobility and hardship allowances from the base/floor salary scale;
    3. Defer the implementation of the decisions until a new system has been put in place;
    4. Establish a working group comprising members of the Commission, its secretariat, organizations and staff to develop various options for compensating staff for service in hardship duty stations and for encouraging mobility, to estimate the cost of those options, and to submit its recommendations to the Commission at its sixtieth session.

II. United Nations Joint Staff Pension Board (UNJSPB)

20. The United Nations Joint Staff Pension Board (UNJSPB) held its 52nd session in July 2004 in Montreal, Canada. The major items dealt with by the Board were:

    1. actuarial matters, including in particular the results of the twenty-seventh actuarial valuation of the Fund, as at 31 December 2003;
    2. the management of the investments of the Fund, including reports on the investment strategy and performance for the two-year period ending 31 March 2004;
    3. the report of the Working Group on the size and composition of the Pension Board and its Standing Committee;
    4. the progress report on the management charter of the Fund;
    5. revised budget estimates for the biennium 2004-2005; and
    6. proposal for changes to the Fund’s Pension Adjustment System.

21. Other matters considered by the Board were related to:

    1. proposed transfer agreements between the Fund and the Organization for Security and Cooperation in Europe (OSCE) and the World Trade Organization (WTO) Pension Plans;
    2. possible applications for membership in the Fund by the Inter-Parliamentary Union (IPU), the International Organization for Migration (IOM) and the International Commission for the Conservation of Atlantic Tunas (ICCAT).

22. Among the recommendations and decisions taken by the Board at its fifty-second session which were presented and subsequently approved by the General Assembly are:

    1. a phased approach in the elimination of the 1.5 per cent reduction in the first consumer price index adjustments due after retirement. As a first step, the reduction rate stipulated in the Pension Adjustment System is reduced from 1.5 per cent to 1 per cent, with effect from 1 April 2005. Additionally, with effect from 1 April 2005, a 0.5 per cent increase is to be applied to the next adjustment of benefits being paid to existing retirees who have already had the 1.5 per cent reduction applied to their benefits;
    2. the Pension Adjustment System be amended to provide for an adjustable minimum guarantee at 80 per cent of the United States dollar-track amount, with effect from 1 April 2005, on a prospective basis only.

23. The Standing Committee of the Board will hold its 188th meeting in July 2005 in New York. At this meeting, the items on which the Committee will be reporting to the General Assembly relate to the revised budget estimates for the biennium 2004-2005 and the proposed budget for the biennium 2006-2007. The other standard items on the Standing Committee’s agenda include the financial statements of the Fund for the year ended 31 December 2004, valuation methodology and assumptions for the twenty-eight actuarial valuation of the Fund as of 31 December 2005, a report on the Fund's investment performance,and the membership of the Investments Committee. The Board has also requested the Standing Committee’s consideration of certain policy items, namely:

    1. possible establishment of an Audit Committee of the Pension Board and draft Terms of Reference for such a committee;
    2. the Second Management Charter for the Fund;
    3. some possible changes in UNJSPF benefit provisions; and
    4. proposed amendments to the Administrative Rules of the UNJSPF.

24. In addition, there will likely be some review and appeal cases, the consideration of which are the responsibility of the Standing Committee under the Fund's Administrative Rules.

___________________

1 Index of cost-of-living for international officials in Rome. Please note that the index has been re-based effective 1 October 2000, date of the last cost-of-living survey

2 CL 82/REP, para. 186.187; CL 86/REP, para. 160(b)