RESTRICTED  
  
WT/BFA/W/638  
 
12 June 2023  
(23-3943) Page: 1/26 
Committee on Budget, Finance and Administration  Original: English  
 
   
   
WTO PENSION PLAN 202 2 INTERIM  ACTUARIAL VALUATION  
NOTE BY THE CHAIRMAN OF THE WTOPP MANAGEMENT BOARD  
The WTO Pension Plan undergoes a full actuarial valuation every three years and interim valuations 
in the years between full valuations. The attached interim actuarial valuation is based on 2022 data 
and is the latest actuarial report to be issued by the W TOPP. The next full actuarial valuation will be 
completed next year using 2023 data and, unlike interim valuations, will include a full review of the 
actuarial assumptions used.  
 
The 2022 interim valuation report shows an increase of the actuarial deficit identified in the 2020 full 
valuation. This evolution is driven principally by the performance of investment markets. While a 
positive financial performance decreased the gap in 2 021, the significantly negative financial 
performance in in 2022 contributed to increase the gap. Additionally, the gap increase arises from 
the structural underfunded position of the Plan identified since 2020.  
 
Following the identification of an actuari al deficit, the WTOPP Management Board is responsible for 
recommending corrective actions to the General Council (through the Committee on Budget, Finance 
and Administration) to restore an actuarial balance. The Management Board has recommended 
corrective action as required and looks forward to engaging further with all stakeholders in the 
process of subsequently implementing a set of agreed measures to address the imbalance.   
 
 
Jean-Marc Van Dril, Chair of the Management Board  
 
 
_______________  
 
 
 
 WT/BFA/W/638  
 
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Interim Actuarial Valuation Report  
as at 31. December 2022  
World Trade Organization – WTO Pension Plan  
 
 
 
 
 
 
 
 
 
 
 
Contact:   Dr. Reto Leibundgut, Partner c -alm AG  
   Email: reto.leibundgut@c -alm.ch; Tel.: +41 (0)71 227 35 35  
 
Date:    June 12, 2023  
 
 WT/BFA/W/638  
 
- 3 - 
 
  Contents  
 
1 Executive Summary  ................................ ................................ ................................ ........................  4 
2 Data  ................................ ................................ ................................ ................................ ..................  7 
2.1 Liability Side  ................................ ................................ ................................ ................................ .........................  7 
2.2 Asset  Side ................................ ................................ ................................ ................................ ...........................  10 
3 Assumptions  ................................ ................................ ................................ ................................ . 11 
4 Methods  ................................ ................................ ................................ ................................ ........  12 
5 Results  ................................ ................................ ................................ ................................ ...........  13 
5.1 Required Contribution Rate  ................................ ................................ ................................ ........................  13 
5.1.1 Derivation  ................................ ................................ ................................ ................................ ..........................  13 
5.1.2 Reconciliation  ................................ ................................ ................................ ................................ ...................  14 
5.1.3 Actuarial Gap  ................................ ................................ ................................ ................................ ....................  15 
5.2 Cash -Flow Analysis  ................................ ................................ ................................ ................................ ......... 17 
6 Alternative Measure: Funding Ratio  ................................ ................................ ..........................  20 
7 IPSAS Results  ................................ ................................ ................................ ................................  21 
A1. Cash -Flow Projections  ................................ ................................ ................................ .................  22 
A2. Glossary  ................................ ................................ ................................ ................................ .........  25 
A3. Disclaimer  ................................ ................................ ................................ ................................ ...... 28 
 WT/BFA/W/638  
 
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  1 Executive Summary  
1) This report sets out the results of the interim actuarial valuation completed as 
of 31. December 2022  for the World Trade Organization Pension Plan ( WTOPP).  Present report  
2) The last actuarial report is the interim actuarial valuation report as of 31. 
December 2021.  Last report  
3) As usual with an interim valuation all methods and assumptions are kept 
unchanged (exception: discount rate for first 10 years).  Methods and  
assumptions  
4) Hence, the main differences to the mentioned last interim actuarial valuation 
report are the valuati on date of the assets and the changes in the insured 
population.                                                    Differences to  
last report  
5) The funding principle of WTOPP is that the existing assets together with the 
future contributions and the futur e investment incomes need to finance all the 
future benefits and administrative costs. This funding principle is analysed  in 
the open -group valuation (ongoing perspective).  Funding principle:  
open -group  
6) The long -term cost (required contribution rate) of the pension plan has 
increased from 33.1% at year -end 2021  to 35.7% at year -end 2022 .  Required  
contribution rate  
7) As the actual contribution rate has been kept unchanged at 23.7%, there is an 
actuarial gap of 12.0% at year -end 2022 .  Actuarial gap:  
YE2022  
8) The following plot shows the development of the actuarial gap from year -end 
2021  until year -end 2022 .  Actuarial gap: 
YE2021   -> YE 2022  
Plot 1: Development of the actuarial gap: YE 2021  -> YE2022   
 
  
  
9.4%0.3%3.2% -0.9%
12.0%
​ 0%2%4%6%8%10%12%14%
Actuarial gap YE21 Update population Update assets Update discount
rateActuarial gap YE22WT/BFA/W/638  
 
- 5 - 
 
   9) As the above plot shows, the actuarial gap increased from 9.4% at year -end 
2021  to 12.0% at year -end 2022 . The main reason for this development is the 
significantly lower -than-expected investment return in the year 2022 .  Discussion  
10) Since the actuarial gap is large, we st rongly recommend that the WTOPP 
Management Board continues with the reform process in order to bring the 
required contribution rate of the plan into balance with the actual contribution 
rate paid to the plan. Moreover, we recommend to closely monitor the f urther 
development of the actuarial gap.  Recommendations  
and actions  
11) This should be done taking into account the long -term nature of the pension 
fund and the corresponding sake of continuity in contributions and benefits.  Sake of continuity  
12) However, it has to be noted that from one valuation to the next, the actuarially 
calculated required contribution rate may vary due to changes in asset values 
and the insured population, changes in the benefit provisions, changes in 
demographic and financial assumptions, etc.  But: volatility  
13) Principally, the necessary reform can be carried out by decreasing certain 
benefits and/or by increasing the actual contribution rate and/or with capital 
infusions by WTO (as it is proposed in the current reform package). However, 
there are many details re garding the necessary reform that need to be analysed 
and discussed. For instance, there are several different benefit types that can 
be reduced, benefits can be reduced for certain groups of participants and 
beneficiaries only and lastly, any actions on t he benefits and/or the 
contributions can be carried out immediately or step -wise over time. It is 
important as well to take into account acquired rights of current staff and 
current beneficiaries when analysing reform measures.  
We continue assisting the WT OPP in any work regarding this necessary reform.  Reform variants  
14) We are available to answer any questions on the material contained in this 
report and to provide explanations or further details, as may be appropriate.  Availability  
15) Readers interested in the disclaimer to the present report are referred to 
appendix A3. Disclaimer  
16) Lastly, the glossary given in Appendix A2 contains an explanation of the most 
important (technical) terms used in the present report.  Glossary  
  WT/BFA/W/638  
 
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 Respectfully submitted,   
St. Gallen, June 12, 2023   
  
   
Dr. Reto Leibundgut  
Lead actuary  
Partner  
Fully qualified actuary SAA  
Federally certified pension fund actuary  Christian Graf  
Deputy actuary  
Senior Actuary  
Fully qualified actuary SAA  
Federally certified pension fund actuary   WT/BFA/W/638  
 
- 7 - 
 
   2 Data  
17) All data was provided directly by WTOPP staff.  Data provider  
18) Unless stated otherwise all figures are in CHF.  Currency  
2.1 Liability Side   
19) In this chapter we present tables and plots to get a grasp on the characteristics 
of the insured population (plan participants and beneficiaries).  Insured  
population  
20) A summary of the insured population data used for the present interim 
valuation at 31. December 2022  and the previous valuation at 31. December 
2021  is set out below.  Headcount  
Table 1: Insured population: headcount   
 
  
  
21) The following table summarises the most important statistics of the insured 
population including a comparison to the previous year.  Statistics  
31.12.2021
Male Female Total absolut in %
Participants 305               400               705               716                -11                 -1.5%
Beneficiaries 196                220               416                402               14                 3.5%
Retirement 170               176               346               332               14                 4.2%
Disability 11                 11                 22                 22                 -                0.0%
Spouses 6                   25                 31                 29                 2                   6.9%
Children 9                   8                   17                 19                 -2                 -10.5%
Total 501                620               1’121              1’118              3                   0.3%
Share of beneficiaries 39.1% 35.5% 37.1% 36.0%Change
Headcount31.12.2022WT/BFA/W/638  
 
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1 Note that all information given in this table is «stock» -information at the mentioned due dates. Hence, there are 
naturally (moderate) differences to the «flow» -information given in the income and expenditure statement 
(WTOPP’s financial statement). For in stance, the benefits presented in the income and expenditure statement are 
the benefits actually paid in a certain year. In contrast to this, the benefits given in this table are the benefits of all 
beneficiaries at the mentioned due dates. In this table, we deliberately present «stock» -information only, as the 
insured population at current year -end serves as the basis for all actuarial projections.  Table 2: Insured population: statistics1  
  
FAR: final average remuneration; YoS: years of service   
22) The two tables above show that the  population of plan participants has 
changed slightly. The population of beneficiaries has increased by 3.5%, 
whereas the population of participants has decreased by 1.5%. This explains the 
fact that the share of beneficiaries has increased from 36.0% to 3 7.1%. This is 
only natural as the pensioner population is still quite small and young at the 
moment and thus, it will gain in significance in the future.  Discussion  
23) Finally, the following diagram displays the age structure of the insured 
population.  Age structure  
31.12.2021
Male Female Total absolut in %
Participants
∑ FAR 57’347’088    63’571’273    120’918’361  122’086’801  -1’168’440    -1.0%
Ø FAR 188’023         158’928         171’515         170’512         1’003             0.6%
∑ Pensionable Renumeration 58’815’012    65’102’995    123’918’007  124’631’842  -713’835       -0.6%
Ø Pensionable Renumeration 192’836         162’757         175’770         174’067         1’703             1.0%
Ø YoS 14.5              13.2              13.8              13.4              0.4                3.2%
Ø Age 48.2              46.4              47.2              46.6              0.6                1.2%
Beneficiaries
∑ Benefits 14’917’686     14’238’453    29’156’138     27’596’241    1’559’898      5.7%
Retirement 13’794’918    12’311’254    26’106’171    24’540’847    1’565’324      6.4%
Disability 715’308         716’218         1’431’526      1’476’764      -45’239          -3.1%
Spouses 350’700         1’166’491      1’517’191      1’472’902      44’289           3.0%
Children 56’760           44’491           101’251         105’727         -4’476           -4.2%
Ø Benefits
Retirement 81’147           69’950           75’451           73’918           1’533             2.1%
Disability 65’028           65’111           65’069           67’126           -2’056           -3.1%
Spouses 58’450           46’660           48’942           50’790           -1’848           -3.6%
Children 6’307             5’561             5’956             5’565             391               7.0%
Ø Age
Retirement 70.7              69.5              70.1              69.6              0.5                0.7%
Disability 64.5              57.6              61.1              60.1              1.0                1.7%
Spouses 60.8              71.2              69.2              67.7              1.5                2.3%Amounts in CHF31.12.2022 ChangeWT/BFA/W/638  
 
- 9 - 
 
    Plot 2: Insured population:  age structure   
 
  
  
24) The above plot shows that the ages around 40 until 60 years are the most 
dominant ones what regards the population of plan participants. The 
population of pensioners is clearly small and young at the moment. This will 
change in the future as the pension fu nd matures in age structure.  Discussion  
1820222426283032343638404244464850525456586062646668707274767880828486889092949698100102104
161820222426283032343638404244464850525456586062646668707274767880828486889092949698100102104
25 20 15 10 5 0 5 10 15 20 25 30
Age (Females)Age (Males)
Males                    Number of insured                    Females
 Participants Retirement Spouses Disability Deferred Retirement  Total previous yearBelow 18 Below 18WT/BFA/W/638  
 
- 10 - 
 
   
 
2 The market values of assets are determined by the capital shown on the balance sheet excluding the 
balance  sheet entry for accrued expenses.  2.2 Asset  Side 
25) The waterfall chart below provides a reconciliation of the market value of 
assets2 (all amounts are shown in MCHF) from year -end 2021  until year -end 
2022 .  Reconciliation  
Plot 3: Reconciliation of market value of assets: YE 2021   -> YE2022   
 
 
  
* In the last year‘s report, an asset value of 737.7 MCHF was shown. The reason for this difference (0.9 
MCHF ) can be explained by the fact that the asset values as of YE21 have been adjusted after the 
finalization of the YE21 report.    
26) The following table displays some information on the investment return in the 
reporting year 2022 .  Investment return  
Table 3: Investment  return in 2022   
 
  
Source: Inflation rate according to Swiss National Bank (SNB)   
27) As stated in Plot 3, the nominal investment income in the year 2022  amounts 
to -94.5 MCHF. This corresponds to a nominal investment return of -12.8% 
(calculated by assuming that all cash -flows take part in the middle of the year). 
With the inflation of 2.8% th is implies a real investment return in the year 2022  
of -15.6%.  Discussion  
738.6 30.8 -33.6 
-94.5 
641.2 
600620640660680700720740760780
Market Value BoY* Contributions Benefits & Admin
CostsInvestment Income Market Value EoYMCHF
Nominal Return Inflation Rate Real Return
Year A B C=A-B
2022 -12.8% 2.8% -15.6%WT/BFA/W/638  
 
- 11 - 
 
    
 
3 Since the number of plan participants is assumed to be constant at 700 and as there are 705 plan participants at 
year-end 2022  (see Table 1), there are no entries modelled until the number of 700 is obtained (after exits and 
retirements, mainly).   3 Assumptions  
28) As usual with an interim valuation all assumptions are kept unchanged 
relative to the last full actuarial valuation as of year -end 2020. Hence, the 
interested reader is referred to that report.  Everything  
unchanged…  
29) The only exception to this rule is the discount rate for the next 10 years, since 
this parameter should reflect the current market conditions such that 
consistency to the used market value of assets (starting value for the cash -
flow projections) is achieve d. The discount rate over the next 10 years has 
been increased from 3.7% as of year -end 2021  to 4.2% as of year -end 2022  
(+0.5% -points).  … only one  
exception  
30) The following table provides a summary of the assumptions used in the open -
group valuation.  Assumption  
overview  
Table 4: Summary of assumptions 3  
  
The changed assumptions are highlighted in red font.  The references to certain sections regard the last full 
actuarial valuation report at year -end 2020.   
BVG 2020 cohort table
70% of BVG 2020Market
0.2%31.12.2022
4.2% for the first 10 years, 4.5% thereafter
1.0% until 2029, and 1.5% thereafter
1.0%
1.0%
BVG 2020 cohort table
70% of BVG 2020Market
0.2%
Demographic31.12.2021
3.7% for the first 10 years, 4.5% thereafter
1.0% until 2029, and 1.5% thereafter
1.0%
1.0%Financial
Discount Rate
General Salary Increase
Pension Increase
Inflation RateAsset Value
WTO Specific (rates in Section 3)
Active Head CountWTO Specific (rates in Section 3)
Age Difference WTO Specific (rates in Section 3) WTO Specific (rates in Section 3)WTO Specific (rates in Section 3)
WTO Specific (rates in Section 3)
50%
25%
700 700Early Retirement
Individual Salary Increase
WTO Specific (rates in Section 3)
Lump Sum Share
New entrants WTO Specific (rates in Section 3) WTO Specific (rates in Section 3)MortalityAdministrative Costs
WTO Specific (rates in Section 3) WTO Specific (rates in Section 3)Withdrawal vs. DeferredWTO Specific (rates in Section 3)
WTO Specific (rates in Section 3)
WTO Specific (rates in Section 3)
50%
25%
Proportion Married on DeathDisability
Termination
Lump Sum ProbabilityWT/BFA/W/638  
 
- 12 - 
 
    4 Methods  
31) As usual with an interim valuation all methods are kept unchanged  relative to 
the last full actuarial valuation as of year -end 2020 . Hence, the interested reader 
is referred to that report.  Everything  
unchanged  
32) However, the present interim actuarial valuation report contains the results of 
the open -group valuation only, as the closed -group valuation is performed in 
the full actuarial valuation solely.  Only open -group  
valuation  WT/BFA/W/638  
 
- 13 - 
 
    5 Results  
33) Note that the present interim actuarial valuation report contains the results of 
the open -group valuation (ongoing perspective) only, as the closed -group 
valuation is performed in a full actuarial valuation solely.  Open -group only  
34) We first analyse  the sustainability of the WTOPP with the present values of the 
various cash -flows and the current level of assets in chapter 5.1. Afterwards, we 
consider the development of the assets and the various cash -flows over time in 
chapter 5.2.  Outlook  
5.1 Required Contribution Rate  
5.1.1 Derivation   
35) The following table contains the derivation of the required contribution rate 
(RCR).  Derivation of RCR  
Table 5: Derivation of the required contribution rate   
 
    
PV: present value   
36) The required contribution rate (RCR ) increases from 33.1% at year -end 2021  to 
35.7% at year -end 2022 . In the following, all changes are explained step -by-
step.  Discussion  
in MCHF 31.12.2022 31.12.2021
A Assets 641                    738                    
B PV Benefits
a) Current beneficiaries 460                    453                    
b) Current participants 837                    871                    
c) Future participants (new entrants) 596                    621                    
Total [a+b+c] 1’894                 1’945                 
C PV Pensionable remuneration
a) Current participants 1’120                 1’165                 
b) Future participants (new entrants) 2’405                 2’501                 
Total [a+b] 3’525                 3’666                 
D Calculated contribution rate (CCR)
[(B-A)/C] 35.5% 32.9%
E Administrative costs 0.2% 0.2%
F Required contribution rate (RCR)
[D+E] 35.7% 33.1%WT/BFA/W/638  
 
- 14 - 
 
  5.1.2 Reconciliation   
37) The following plot shows the change of the required contribution rate (RCR) 
from year -end 2021  until year -end 2022 .  Change RCR:  
YE2021  -> YE 2022  
Plot 4: Reconciliation of the required contribution rate: YE 2021  -> YE2022   
  
  
38) The starting point is the required contribution rate (RCR) at year -end 2021  
given in Table 5.  RCR at YE 2021  
39) As already shown in Chapter 2.1, the insured popul ation has changed 
compared to the previous year. The number of plan participants has decreased 
slightly whereas the number of beneficiaries has grown moderately. As the step 
of updating the insured population to year -end 2022  uses the expected value 
of assets for the year -end 2022 , this step includes the cost of waiting. As the 
level of assets is insufficient at year -end 2021  given the acquired benefits of the 
current plan participants and the current beneficiaries, the expected value of 
asset s for year -end 2022 is not sufficient (not sufficient expected investment 
income can be generated in 2022 ). The cost of waiting mainly explains the 
increase in the RCR of 0.3% -points.  Update  
population  
40) Based on last year's projection, the market value of assets was expected to be 
approx. 759 MCHF at year -end 2022 . However, the actu al market value of assets 
at the year -end 2022  amounts to approx. 641 MCHF . There is one main reason 
for the significantly lower -than-expected market value of assets and thus, the 
correspondingly lower RCR. The net return on the assets was not 3.7% as 
assumed in the projection model, but -12.8% (see also section 2.2).  
 
 
 Update assets  
33.1%0.3%3.2% -0.9%
35.7%
30%31%32%33%34%35%36%37%38%39%40%
RCR YE21 Update population Update assets Update discount rate RCR YE22WT/BFA/W/638  
 
- 15 - 
 
  41) Lastly, as mentioned all assumptions are kept unchanged relative to the 
previous year. The only exception to this rule is the discount rate for the next 
10 years since this parameter should reflect the current market conditions such 
that consistency to the  used market value of assets (starting value for the cash -
flow projections) is achieved. The increase in the discount rate over the next 10 
years amounts to 0.5% -points and results in a decrease in the RCR of 0.9% -
points.  Update  
discount rate for 
next 10  years  
42) Starting with the required contribution rate at year -end 2021  of 33.1% and 
adding up all the above -mentioned changes leads to the required contribution 
rate at year -end 2022  of 35.7%.  RCR at YE 2022  
5.1.3 Actuarial Gap   
43) Clearly, the required contribution rate at year -end 2022  of 35.7% (see Plot 4) is 
much greater than the actual contribution rate of 23.7%. The actuarial gap in 
terms of contribution rate amounts to 12.0%.  Result:  
big gap…  
44) This large gap shows that a reform is absolutely necessary. Principally, the 
pensi on fund can be put back into a reasonable actuarial position by decreasing 
certain benefits and/or by increasing the actual contribution rate and/or with 
capital infusions by WTO.  …Reform  
necessary!  
45) However, there are many details regarding the necessary reform that need to 
be analysed and discussed. For instance, there are several different benefit 
types that can be reduced, benefits can be reduced for certain groups of 
participants and beneficiaries  only and lastly, any actions on the benefit and/or 
the contribution side can be carried out immediately or step -wise over time.  It 
is important as well to take into account acquired rights of current staff and 
current beneficiaries when analysing reform measures.  
We continue assisting the WTOPP in any work regarding this necessary reform.  Reform:  
many details…  
46) The reason for the high required contribution rate of 35.7% and hence, the 
large actuarial gap of 12.0% is that the current level of assets has to be judged 
as clearly insufficient after the assumption revisions implemented at year -end 
2019 and at year -end 2020. In addition, the (nominal) annual return in 2022  of 
-12.8% was significantly below the required value of +3.7%.  
Put more precisely, the current level of assets is insufficient given the acquired 
benefits of the current plan participants and the current beneficiaries.   Insufficient assets 
given the acqui red 
benefits  
47) With the reconciliation of the required contribution rate from year -end 2021  
until year -end 2022  given in Plot 4, the development of the actuarial gap can 
easily be derived, since the actual contribution rate has been kept unchanged Development  WT/BFA/W/638  
 
- 16 - 
 
   
  over the entire time period at 23.7%. The following plot shows the 
corresponding d evelopment of the actuarial gap.  
Plot 5:  Development of the actuarial gap: YE 2021   -> YE2022   
 
  
  
48) As the above plot shows, the actuarial gap has significantly increased from 
9.4% at year -end 2021  to 12.0% at year -end 2022  mainly due to the negative 
nominal asset return of -12.8%.  Discussion  
9.4%0.3%3.2% -0.9%
12.0%
​ 0%2%4%6%8%10%12%14%
Actuarial gap YE21 Update population Update assets Update discount
rateActuarial gap YE22WT/BFA/W/638  
 
- 17 - 
 
   
4 Strictly speaking investment income is not only a cash -flow since it contains als o unrealized capital gains.  5.2 Cash -Flow Analysis  
49) After having compared the present value of the various cash -flows to the 
current level of assets in the previous chapter, we now analyse the development 
of the assets and the various cash -flows over time.  Development  
over time  
50) We start by first comparing the liability -driven cash -flows:  
• Contributions  
• Benefits  
• Administrative costs  Liability -driven 
cash-flows  
51) The asset -driven cash -flows will be analysed later when we add the investment 
income4 to the above -mentioned cash -flows.  Asset -driven  
cash-flows: later…  
52) The following plot shows the expected development of the above -mentioned 
liability -driven cash -flows.  Development:  
liability -driven CFs  
Plot 6: Development of liability -driven cash -flows   
  
  
53) The above plot shows that contributions (liability -driven cash -in) are already in 
2023 (first projection year) not sufficient anymore to finance the benefits and 
administrative costs (liability -driven cash -out). This means that the pension 
fund has recentl y started to consume (rely on) its investment income.  Discussion:  
1. Pivotal  
time point  
54) This is no news as the interim actuarial valuation report at year -end 2021  has 
already presented similar findings.  Change to  
previous year  
 -160 -140 -120 -100 -80 -60 -40 -20 -
 - 50 100 150 200 250 300
2023
2028
2033
2038
2043
2048
2053
2058
2063
2068
2073
2078
2083
2088
2093
2098
2103
2108
2113
2118
2123
Net Cash -flow [in MCHF]Contributions / Benefits [in MCHF]
Contributions Benefits [incl. admin costs] Net Cash-flowWT/BFA/W/638  
 
- 18 - 
 
    55) The development of the liability -driven cash -flows depicted in Plot 6 can be 
explained by the development of the insured population given in the following 
plot.  Insured  
population  
Plot 7: Development of the insured population   
  
  
56) The above plot shows that the number of plan participants has decreased a bit 
in the recent past (since 2010) and that the number of beneficiaries has strongly 
increased. Hence, the share of beneficiaries has continuously risen in the past 
of WTOPP. As the  population of beneficiaries at year -end 2022  is still quite small 
and young, the number of beneficiaries will further grow. In contrast to this, the 
number of plan participants is assumed to be constant at 700. Thus, the share 
of beneficiaries is clearly expected to increase further. This naturally explains 
the reduction of the liability -driven net cash -flow over time shown in Plot 6.  Discussion  
57) Now we add the asset -driven investment income to the above discussed 
liability -driven cash -flows. This completes the picture as the current level of 
assets, the future investment incomes and the future contributions need to 
finance the future benefits and administrative costs.  Adding 
investment 
income  
58) The following plot shows the development of the revenues (contributions and 
investment incomes) and t he expenditures (benefits and administrative costs) 
over time. Furthermore, it contains the expected path of the assets.  Revenues  
and expenditures  
0%10%20%30%40%50%60%70%
 - 200 400 600 8001’000 1’200 1’400 
2010
2015
2020
2025
2030
2035
2040
2045
2050
2055
2060
2065
2070
2075
2080
2085
2090
2095
2100
2105
2110
2115
2120
share of beneficiaries in %number of participants / beneficiariesShare of Beneficiaries 
Participants Beneficiaries Share of beneficiariesWT/BFA/W/638  
 
- 19 - 
 
   Plot 8: Development of revenues and expenditures   
    
  
59) The second pivotal time point occurs when the revenues (contributions and 
investment income) are not sufficient anymore to cover the expenditures 
(benefits and administrative costs). This is the point in time when the pension 
plans’ assets start to decreas e. As can be seen from the above plot this second 
pivotal time point occurs in the year 2032.  
Taking into account the investment income, the WTOPP  currently displays a 
positive net cash -flow and hence, the assets are expected to increase further in 
the near future. However, the projections show that the assets start to decrease 
in 2032.   Discussion:  
2. Pivotal  
time point  
60) This finding is slightly  worse to the results in the last year’s actuarial report 
where the second pivotal time point occurs in the year 2035.  Change to  
previous year  
61) The third and final pivotal time point is when the assets are exhausted and there 
are no assets left to pay th e plan’s expenditures (benefits and administrative 
costs). On expectation this happens in the WTOPP in the year 2059.  Discussion:  
3. Pivotal  
time point  
62) This finding is slightly worse compared to the results in the last year’s actuarial 
report where the third pivotal time point occurs in the year 2065.  Change to  
previous year  
63) Clearly, the exhaustion of the assets in 2059 in Plot 8 shows the necessity of a 
reform.  Reform necessary!  
 -400 -200 - 200 400 600 8001’000 
 - 20 40 60 80 100 120 140
Assets [in MCHF]Revenues / Expenditures [in MCHF]
Assets Revenues ExpendituresWT/BFA/W/638  
 
- 20 - 
 
    6 Alternative Measure: Funding Ratio  
64) The funding principle of WTOPP  is that the existing assets together with the 
future contributions (of current and future plan participants) and the future 
investment incomes need to finance all the future benefits and administrative 
costs. The benefits consist of the benefits of the cu rrent beneficiaries as well as 
of the benefits of the current plan participants and the future participants (new 
entrants). The relevant view to steer the pension fund is the open -group 
valuation.  Valuation 
perspective  
65) Compared with RCR, the alternative m easure «funding ratio » is defined as the 
ratio of the existing assets together with the future contributions to the future 
benefits and administrative costs. The funding ratio measure has the following 
advantages:  
• When the funding ratio equals to 100%, the pension fund is fully funded. A 
funding ratio of 80% means that the pension fund is 20% underfunded. A 
funding ratio of 120% would mean that the pension fund is 20% overfunded. 
This measure is thus a very intuitive relative funding measure.  
• The f unding ratio measure is the most common funding measure for 
pension funds all around the world.  Funding ratio  
Table 6: Funding ratio as of year -end 2022 including comparisons to previous years   
 
   Results  
PV: present value   
66) The funding ratio decreased from 82.3% as of 31.12. 2021  to 77.7% as of 
31.12. 2022 . The funding ratio, which is significantly below 100%, shows  that the 
pension fund is underfunded and that a reform is necessary.  Interpretation of 
results  
in MCHF 31.12.2022 31.12.2021 31.12.2020
A Assets 641                    738                    666                   
B PV Benefits 1’894                 1’945                 1’899                
C PV Pensionable remuneration 3’525                 3’666                 3’627                
D Actual contribution rate 23.7% 23.7% 23.7%
E Administrative costs 0.2% 0.2% 0.2%
F Funding ratio
[A+C*D]/[B+C*E] 77.7% 82.3% 80.0%WT/BFA/W/638  
 
- 21 - 
 
  7 IPSAS Results  
67) In the WTO's financial statements, the pension liabilities are estimated at 
1’405  MCHF as of year -end 2022  according to IPSAS accounting rules. If the 
Pension Plan's asset value of 641 MCHF as of year -end 2022  is deducted from 
this amount, the result is an estimated net accrued liability for employee 
benefits of approximately 764 MCHF as of year -end 2022  (compared to 699 
MCHF at previous year -end). This net value represents the hypothetical liability 
of the Organization to cover all its current employees' and retirees' pension 
entitlements as of year -end 2022  (liquidation perspective).  IPSAS results  
68) For managing the plan, an ongoing perspective (open -group valuation) is used 
by considering future entrant s and by setting the discount rate in a best 
estimate manner that reflects the expected return of the WTOPP asset 
allocation. IPSAS would be the economically relevant valuation if the plan were 
to be liquidated immediately, the open -group valuation is the economically 
relevant valuation if the pension plan continues to exist.  Interpretation  
69) The open -group valuation (ongoing perspective) takes in particular into 
account future pension contributions and future benefits for an open group of 
participants. Its purpose is to produce best estimates of future benefits, pension 
contributions and inves tment returns. This model estimates the funding gap to 
be 424 MCHF as of year -end 2022 . As this is the relevant view to steer the 
pension fund, the Manag ement Board is working on a proposal for measures 
to close the funding gap.  Summary: open -
group relevant to 
steer pension fund  WT/BFA/W/638  
 
- 22 - 
 
  A1. Cash -Flow Projections  
70) The following table shows the expected cash -flows of the WTOPP in the open -
group valuation over the next 100 years based on the assumptions set out in 
Section 3. Note that these cash -flows were calculated with the current actual 
contribution rate of 23.7%.  Open -group 
valuation: cash -
flows  
Table 7: Cash -flows in the open -group valuation   WT/BFA/W/638  
 
- 23 - 
 
   
Year Contributions Investment income Benefits [incl. Admin costs]
2023 28.80              26.70                       37.60                                    
2024 28.50              27.50                       37.70                                    
2025 28.50              28.20                       40.50                                    
2026 28.50              28.80                       43.30                                    
2027 28.50              29.40                       45.40                                    
2028 28.60              29.80                       48.60                                    
2029 28.60              30.20                       51.60                                    
2030 28.50              30.40                       55.00                                    
2031 28.60              30.50                       57.90                                    
2032 28.80              30.50                       60.80                                    
2033 28.90              32.60                       63.40                                    
2034 29.20              32.40                       66.40                                    
2035 29.40              32.10                       69.10                                    
2036 29.70              31.80                       71.00                                    
2037 30.10              31.30                       73.40                                    
2038 30.50              30.70                       74.70                                    
2039 31.00              30.10                       76.30                                    
2040 31.50              29.40                       77.30                                    
2041 32.00              28.70                       78.80                                    
2042 32.50              27.80                       80.50                                    
2043 33.10              26.90                       80.90                                    
2044 33.70              25.90                       83.00                                    
2045 34.20              24.90                       83.80                                    
2046 34.70              23.80                       84.90                                    
2047 35.30              22.60                       85.90                                    
2048 35.70              21.30                       87.70                                    
2049 36.10              19.80                       91.30                                    
2050 36.40              18.20                       93.80                                    
2051 36.70              16.40                       96.30                                    
2052 37.00              14.40                       98.70                                    
2053 37.40              12.20                       99.80                                    
2054 37.80              9.90                         101.70                                  
2055 38.30              7.50                         102.40                                  
2056 38.80              4.90                         104.00                                  
2057 39.40              2.20                         105.10                                  
2058 40.00              -0.70                       106.00                                  
2059 40.50              -3.70                       107.30                                  
2060 41.20              -6.90                       108.10                                  
2061 41.80              -10.20                     109.30                                  
2062 42.40              -13.70                     110.30                                  
2063 43.10              -17.40                     111.20                                  
2064 43.80              -21.20                     112.10                                  
2065 44.50              -25.30                     112.50                                  
2066 45.20              -29.50                     113.10                                  
2067 46.00              -33.80                     113.70                                  
2068 46.80              -38.40                     114.40                                  WT/BFA/W/638  
 
- 24 - 
 
      
Contributions, investment income and benefits (including administrative costs) in MCHF   
Year Contributions Investment income Benefits [incl. Admin costs]
2069 47.50              -43.20                     114.90                                  
2070 48.30              -48.10                     115.80                                  
2071 49.10              -53.40                     116.90                                  
2072 49.90              -58.80                     117.90                                  
2073 50.60              -64.50                     119.10                                  
2074 51.40              -70.50                     120.40                                  
2075 52.10              -76.80                     122.40                                  
2076 52.80              -83.50                     124.20                                  
2077 53.50              -90.50                     126.30                                  
2078 54.20              -97.80                     127.90                                  
2079 55.00              -105.60                   129.60                                  
2080 55.80              -113.70                   131.60                                  
2081 56.60              -122.20                   133.00                                  
2082 57.40              -131.20                   134.70                                  
2083 58.30              -140.60                   136.10                                  
2084 59.10              -150.50                   137.80                                  
2085 60.00              -160.80                   139.70                                  
2086 60.90              -171.60                   141.40                                  
2087 61.80              -183.00                   143.40                                  
2088 62.80              -194.90                   145.30                                  
2089 63.70              -207.40                   147.30                                  
2090 64.70              -220.60                   149.50                                  
2091 65.70              -234.30                   151.50                                  
2092 66.70              -248.70                   153.40                                  
2093 67.80              -263.90                   155.60                                  
2094 68.80              -279.70                   157.80                                  
2095 69.90              -296.30                   160.50                                  
2096 71.00              -313.80                   162.80                                  
2097 72.10              -332.10                   165.40                                  
2098 73.20              -351.30                   168.40                                  
2099 74.30              -371.40                   171.50                                  
2100 75.40              -392.50                   174.40                                  
2101 76.50              -414.70                   177.60                                  
2102 77.60              -437.90                   180.80                                  
2103 78.80              -462.30                   184.40                                  
2104 79.90              -487.90                   187.90                                  
2105 81.10              -514.80                   191.10                                  
2106 82.30              -543.00                   194.10                                  
2107 83.50              -572.50                   197.50                                  
2108 84.70              -603.40                   201.00                                  
2109 85.90              -635.90                   204.60                                  
2110 87.20              -669.90                   207.90                                  
2111 88.50              -705.50                   211.20                                  
2112 89.90              -742.80                   214.70                                  
2113 91.20              -781.90                   218.40                                  
2114 92.60              -822.80                   221.90                                  
2115 94.00              -865.70                   225.20                                  
2116 95.40              -910.70                   228.80                                  
2117 96.80              -957.70                   232.20                                  
2118 98.30              -1’006.90                 235.70                                  
2119 99.80              -1’058.50                 239.70                                  
2120 101.40            -1’112.40                 243.20                                  
2121 102.90            -1’168.90                 247.20                                  
2122 104.50            -1’228.10                 251.10                                  WT/BFA/W/638  
 
- 25 - 
 
 A2. Glossary  
71) Accrued benefits  include benefits incurred but not paid in the current valuation 
year. In the case of WTOPP  the accrued benefits are calculated with the current 
final average remuneration and the so far acquired years of service of a plan 
participant. The actual benefits to be paid out in the future, however, will 
depend on the final average remuneration and th e acquired years of service at 
the commencement of the benefit.  Accrued benefits  
72) Actuarial assumptions  basically are all parameters needed for the actuarial 
projections. These include financial assumptions (i.e. discount rate, inflation 
rate, etc.) as we ll as demographic assumptions (i.e. growth of plan participant 
population, mortality rates, etc.).  Actuarial  
assumptions  
73) Actuarial surplus or deficit  is the actuarial position of the pension plan. This 
can be measured by the comparison of the required c ontribution rate to the 
actual contribution rate or by a funding ratio or by the difference between the 
pension fund's assets and the liabilities.  Actuarial surplus 
(deficit)  
74) Administrative costs  include the costs incurred in the general administration 
of the Pension Plan. They do not include the costs for the Plan's Secretariat, 
which are borne by the WTO (Article 5(f) of the Plan Regulations) and also not 
the investment -related administrative costs, since these costs are already 
considered in the determi nation of the expected net portfolio return (discount 
rate).  Administrative 
costs  
75) Best estimate  stands for expected value. What regards the assumptions, this 
means that they are chosen as realistically as possible. The chance that reality 
will show a high er or a lower value than the best estimate assumption is fifty -
fifty.  Best estimate  
76) Cash -flow projections  include all future contributions, investment incomes, 
benefits and administrative costs. These future cash -flows are basically 
computed using the current insured population, the pension plan’s Regulations 
and various actuarial assumptions. They are import ant for understanding the 
actuarial position of the pension plan.  Cash -flow  
projections  WT/BFA/W/638  
 
- 26 - 
 
  77) Closed -group valuation  determines the actuarial position of a pension fund by 
immediately closing the fund which means that no future entrants are taken 
into account . In the case of WTOPP this is done by modelling the accrued 
benefits of plan participants and beneficiaries only.   Closed -group  
valuation  
78) Commutation  refers to retirement benefits, early retirement benefits and 
deferred retirement benefits commuted at the request of the participant into a 
lump sum not exceeding 1/2 of the actuarial equivalent of the benefit or the 
amount of the participant's own contributions, whichever is the larger.  Commutation  
79) Discount rate  is the interest rate used in calculating the present value of future 
cash-flows. In an actuarial context, the discount rate is often assumed to be the 
expected net return of the investment portfolio.  Discount rate  
80) Final average renumeration  (FAR) is the remuneration during the last years or 
mont hs of service that serves as a basis for calculating any benefit payable 
under the WTOPP.  Final average  
remuneration  
81) Funding ratio  is defined as the ratio of the existing assets together with the 
future contributions to the future benefits and administrative costs.  Funding ratio  
82) Mortality rate  is the probability that a person of a given sex and age dies within 
one year.  Mortality rate  
83) Open -group valuation  determines the actuarial position of a pension fund by 
considering a given future time horizon where the fund is modelled as an open 
fund w hich means that future entrants are taken into account. After that time 
horizon the fund is closed (no further entrants) and the run -off is modelled.  Open -group  
valuation  
84) In economics and finance, a present value (PV) stands for a discounted value. 
Often not just a single future cash -flow is discounted to the date of valuation 
but an entire cash -flow stream. In this latter case, the present value is the sum 
of all discounte d future cash -flows.  Present value  
85) Rate of return  is the relative change (measured as a percentage; also called 
growth rate) in the value of the portfolio over a specified period, taking into 
account both the investment income (cash -flows like dividends)  and the change 
in the market value of the portfolio (capital gain). It is usually expressed as an 
annual rate. The nominal rate of return  is the rate of return before subtracting 
the inflation rate (measured on the basis of the annual movement of the 
consumer price index in Switzerland). The real rate of return  is calculated by 
subtracting the inflation rate from the nominal rate of return. The term gross Rate of return  WT/BFA/W/638  
 
- 27 - 
 
   means that the return is calculated before the deduction of investment -related 
costs while the term ne t refers to the return including all investment -related 
expenses. The target real rate of return  is the long -term real rate of return 
(typically, this is the same as the real discount rate) that the Pension Plan needs 
to achieve in order to meet its liabil ities. 
86) Regulations and Administrative Rules  refer to the Regulations and 
Administrative Rules adopted by the General Council on 16  October  1998, as 
amended by the General Council on 1  December  2005, on 28  July 2009, on 
26 October  2011, on 30  November  2015, on 7  December  2016 and on 26 July 
2017.  Regulations and 
administrative 
rules  WT/BFA/W/638  
 
- 28 - 
 
   
 
 
 
 
 
 
 
__________  A3. Disclaimer  
87) This report is confidential information and intended for the exclusive use of the 
WTOPP Management Board and the WTOPP  Secretariat. It may be shared with 
other WTO staff members, beneficiaries and WTO Members on a need -to-know 
basis only, in the context of the work/services which are the subject of this 
Contract, and only with the explicit authorization of the Chair of th e WTOPP 
Management Board or the Secretary to the WTOPP in his/her absence. It was 
produced by c -alm AG exclusively for use by the World Trade Organization 
Pension Plan for the specific purpose as well as in the specific environment and 
context indicated to  c-alm AG at the time of its preparation. Its content is based 
on the information made available to c -alm AG by the WTO Pension Plan or at 
its request. Its conclusions and recommendations are valid only for the specific 
purpose for which it was prepared, i n relation to the information made available 
to c-alm AG and to the extent that the form in which this report was issued by 
c-alm AG was not subsequently altered, edited or modified.  Use 
88) Neither c -alm AG nor any of its subsidiaries, affiliates, staff, age nts or 
contractors may be held liable for the content of any part of this report or for 
any action or omission any third party may be drawn to take on the basis of the 
content of this report.  Liability