RESTRICTED  
  
WT/BFA/W/585  
 
14 April 2022  
(22-3059) Page: 1/2 
Committee on Budget, Finance and Administration    
 
WTO LONG TERM LIABILITIES  
1  INTRODUCTION  
1.1.  Since the implementation of International Public Sector Accounting Standards  (IPSAS) in 2012 , 
Members have taken a particular interest in long term liabilities. Members expressed concerns 
regarding the significant  financial gap between long -term liabilities and long -term assets that was 
revealed by the implementation of IPSAS and the potential imp act on the budget and future 
contributions.  Starting in 2014 the CBFA began actively studying the issue.  
1.2.  There was recognition that the WTO Pension Plan (WTOPP) Management Board, comprising 
representatives of Members, the Secretariat and retirees, has a st atutory responsibility to report 
regularly to the CBFA about the WTOPP's actuarial position.  
1.3.   No comprehensive stakeholder governance structure exists for ASHI. Therefore, the CBFA 
decided to establish  a Working Group  dedicated  to review ing the liabilities  related to After Service 
Health Insurance (ASHI).  
2  ASHI WORKING GROUPS FROM 2014 TO 2017  
2.1.  The initial ASHI Working Group was constituted in April 2014. The recommendations from the 
Working Group included the suggestion that the CBFA mandate the WTO Secretar iat to develop a 
strategy aimed at addressing the growing ASHI liability and prospective funding approaches to be 
considered. There was also a recommendation to establish a new Working Group to assist the CBFA 
in monitoring the WTO Secretariat in its devel opment of a strategy.  
2.2.  The first meeting of the Working Group on the Monitoring of the ASHI Strategy Development 
was in April 2016. The Secretariat's ASHI strategy development team met frequently and provided 
input for the deliberations of the Working Group  on the Monitoring of the ASHI Strategy 
Development. The Secretariat's ASHI strategy development team  submitted an ASHI strategy to the 
Working Group on the Monitoring of the ASHI Strategy Development  in October 2016. The Working 
Group broadly agreed that the document and the areas covered were in accordance with 
expectations.  
2.3.  After taking note of the ASHI Strategy, the CBFA requested the Secretariat to explore options  
for an ASHI Fund. In this regard, the CBFA established yet another Working Group, which w as named 
the Working Group on an ASHI Fund.  The Working Group on an ASHI Fund  made the following 
two recommendations1 to the CBFA: 1) establish a Special Reserve Account (SRA) to capture and 
ring-fence budgetary savings from the WTO Medical Insurance budg et line; and 2) as consensus was 
not reached in the Working Group on an ASHI Fund on any proposed funding models, that the 
discussion  should  be further taken up in the CBFA.  
2.4.  The CBFA decided that a Special Reserve Account (SRA) be established but could not  agree on 
a structural mechanism for funding the ASHI liabilities. Since this time, the Secretariat has been 
providing annual updates on the WTO Medical Plan, the associated ASHI liabilities, and the status of 
the SRA to the CBFA.  
 
1 WT/BFA/W/431.  WT/BFA/W/585  
 
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  3  UTILIZATION OF THE ACCUMU LATED BUDGETARY SURPLUSES OF 2012 TO 2017  
3.1.  In July 2018, the Secretariat presented a paper on the proposed utilization of the accumulated 
budgetary surplus from 2012 until the end of 2017, which totalled CHF 52 million. The Secretariat 
noted that the intro duction of IPSAS in 2012 made it obligatory for the WTO to show certain long -
term liabilities and associated assets in its balance sheet, notably those related to Pension and After 
Service Health Insurance (ASHI).  
3.2.  The following factors were considered when  making the proposal for the utilization of the 
accumulated budgetary surplus: the extent of the net assets of the Organization; the cash flow 
patterns of the Organization; and the importance of having an adequate buffer for future financial 
needs. Emphasi s was made that the unfunded ASHI liability had been identified as a critical risk by 
the Secretariat and the subject of an observation by the External Auditors for several years.  
3.3.  With that context, the proposed allocation of the accumulated budgetary surplus of 
CHF 52 million was 50% (amounting to CHF 26 million) to set up an ASHI asset base to fund the 
ASHI liabilities; 25% (amounting to CHF 13 million) to be held in cash to cover cash flow needs for 
operational expenditure during the year; and 25% (amounting to CHF  13 million) to augment the 
Working Capital Fund.  
3.4.  Several Members emphasized that a sustainable approach for funding ASHI liabilities, through 
building up assets to offset the ASHI liabilities, was of high importance . Some Members ventured 
that they would have preferred for all, if not most, of the budgetary surplus to be allocated to ASHI . 
Other Member s were ready to endorse the proposal as presented.  A few Members stated that they 
were not inclined to support the allocatio n of funds to ASHI and that instead they wanted to see an 
allocation to offset long -term liabilities more generally.  
3.5.  Ultimately, in November 2018, the Committee agreed to recommend to the General Council 
that the WTO Accumulated Budgetary Surplus as at 31 December 2017, amounting to 
CHF 52.026  million, be transferred to the Working Capital Fund.  
4  LONG TERM LIABILITIES 2021 AND BEYOND  
4.1.  In 2021, when discussions around the utilization of the 2020 budget surplus came to the CBFA, 
Members actively discussed their  concerns related to long term liabilities. The Chair proposed that 
long term liabilities be included as a priority item for the Committee in 2022.  
4.2.  As a prelude to that work, Members were presented with updated reports based on actuarial 
studies of both AS HI and the WTOPP at the March CBFA. In both cases, it was noted that liabilities 
were increasing largely due to increasing life expectancies.  
4.3.  In the case of the WTOPP , it was further noted that low and negative interest rates are 
compromising the ability o f the pension plan assets to achieve the expected returns further 
deteriorating the actuarial position of the WTOPP.  
 
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