WT/L/ 1111  
14 July 2021 
(21-5554) Page: 1/29 
General Council  
27-28 July 2021   
 
 
 WTO PENSION PLAN  
ANNUAL REPORT AND FINANCIAL STATEMENTS  
FOR THE YEAR ENDING  
31 DECEMBER  2020  
 
 
 
 
 WT/L/ 1111 
 
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  CONTENTS  
CONTENTS  ................................ ................................ ................................ ........................  2 
MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD  ................................ ....... 3 
1   HIGHLIGHTS  ................................ ................................ ................................ ...............  4 
1.1   Investment return  ................................ ................................ ................................ ....... 4 
1.2   Asset allocation  ................................ ................................ ................................ ...........  5 
1.3   Participants and beneficiaries 2020  ................................ ................................ ................  6 
2   SUMMARY OF MANAGEMENT BOARD ACTIVITIES  ................................ ........................  7 
3   REVIEW OF THE WTOPP INVESTMENT PERFORMANCE  ................................ ................  8 
4   ACTUARIAL POSITION OF THE PLAN  ................................ ................................ ...........  8 
5   IPSAS ACCRUED LIABILITIES OF THE PLAN  ................................ ................................  9 
6   ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 31  DECEMBER  2020  ..... 9 
7   ACCOUNTS  ................................ ................................ ................................ ................  10 
8   EXTERNAL AUDITOR  ................................ ................................ ................................ .. 10 
OPINION OF THE EXTERNAL AUDITOR  ................................ ................................ ...........  11 
9   FINANCIAL STATEMENTS  ................................ ................................ ..........................  13 
9.1   Management letter of representation  ................................ ................................ ............ 13 
9.2   Statement 1: Income and expenditure statement  ................................ ........................... 14 
9.3   Statement 2: Balance sheet  ................................ ................................ ......................... 15 
9.4   Schedule A: Source and app lication of funds  ................................ ................................ ..16 
9.5   Schedule B: Breakdown of expenditures  ................................ ................................ ........ 16 
9.6   Schedule C: Investment mandate overview  ................................ ................................ ...17 
9.7   Schedule D: Asset allocation  ................................ ................................ ........................ 18 
9.8   Schedule E: Investment performance  ................................ ................................ ............ 19 
9.9   Schedule F: Investment performance history from inception to 31  December  2020 ............. 20 
9.10   Schedule G: Exchange rates used for closing on 31  December  2020................................ 20 
9.11   Schedule H: Participation in the Pension Plan  ................................ ............................... 21 
9.12   Schedule I: Structure of the WTO Pension Plan  ................................ ............................. 22 
9.13   Schedule J: Glossary of terms  ................................ ................................ .................... 22 
ANNEXES  ................................ ................................ ................................ ........................  25 
 WT/L/ 1111 
 
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  MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD  
The Management Board of the World Trade Organization Pension Plan (WTOPP) is pleased to present 
to the General Council and to Plan participants and beneficiaries its 2020 Annual Report prepared in 
accordance with Article 5 of the Regulations of the Plan.  
 
2020 was an unprecedented and challenging year  with the spread of the Covid -19 pandemic affecting 
many aspects of our lives . Nonetheless, the pandemic has not materially affected the regular 
operations of the Pension Plan nor the Board's ability to govern . Since the restrictions caused by the 
pandemic have been put in place , the Pension Plan Secretariat and the Management Board 
successfully continue d to maintain regular operations remotely and to hold Board and Working Group 
meetings virtually.  
 
The spread  of Covid-19 has created sharp movements in financial markets in the first quarter 
of 2020. Fortunately, the WTOPP portfolio is designed to withstand a certain amount of volatility. As 
a long -term investor the Plan can tolerate, and even benefit from , volatility, through a  rebalancing 
discipline of buying new assets at  better relative prices.  This year the Board made an  important 
decision to review the Plan's strategic asset allocation and increase exposure to equity markets from 
40% to 50%. The relat ively favourable cash -flow profile combined with lower asset prices due to the 
Covid crisis supported this decision.  However, potentially adverse longer -term consequences of the 
economic impacts of the global pandemic cannot be ignored . 
 
In 2020, the WTO P ension Plan investment portfolio had a nominal return of 4.2%. This is above the 
long-term target rate of return used in the actuarial assumptions . The 2020 performance results 
partly from the Management Board's opportune decisions, at a time when equity p rices were 
particularly favourable, to rebalance the portfolio while increasing the strategic allocation to equities . 
The positive return in 2020 was also due to increasing market valuations. In this regard, 
it is important to understand that price volatil ity as measured by the value of the portfolio on 
31 December of each year is usually not a good indicator of the underlying economic potential of  the 
investments. C urrent economic circumstances remain challenging for investors and are likely to 
remain so f or some time. More information on the investment philosophy of the Management Board 
and details on the allocation of assets can be found in the report and its annexes.  
 
Apart from  changing the strategic asset allocation, the work of the Management Board in  2020 
included a successful completion of a comprehensive review of all actuarial assumptions of the Plan 
based on the Plan's actual experience, which will be used in the forthcoming actuarial valuations.  
Following the sudden and unexpected decision by Me rcer to make the Plan's lead actuary redundant 
in the second half of 2020, the Board promptly commenced a procurement process for new actuarial 
advisory services, which has been  completed in early 2021.  Furthermore, in July 2020, the full 
renewal of Board membership for a new three -year term ending in July 2023 was completed . 
 
In closing, I would like to thank the members of the Management Board for the ir engagement and 
valuable contributions to matters concerning the Plan. On behalf of the Management Board , I would 
like to thank WTOPP Secretariat staff for their support and service. The Management Board and the 
Plan's Secretariat are fully engaged in ensuring the continued good governance of the WTO Pension 
Plan and are pleased to share this annual report w ith you.  
 
 
Jean-Marc van Dril, Chair of the Management Board  
 WT/L/ 1111 
 
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  1  HIGHLIGHTS  
1.1  Investment return   
Figure 1 Historical returns net of inflation and fees   
 
1. The Plan's investment gains are ultimately driven by the portfolio's underlying economic 
potential in the long run. In this respect, the Management Board focuses on monitoring the portfolio's 
long-term return against its 3.5% target rate set for actuarial purposes rather than fluctuations in 
annual investment performance. From this point of view, the 2020 investment return caused an 
increase in the five -year average annual investment return to 5.4%. This was partly due to 
opportune investment decisions by t he Management Board to review the strategy and increase 
equity holdings at a time where their prices were favourable (see paragraphs 3 and 14 below). The 
2020 investment performance was also due to increasing market valuations. While above -average 
expected  returns are generally welcome, over the past several years investment performances have 
been consistently inflated by market valuations that exceeded actual economic performance of the 
underlying assets. This increases the likelihood of below target retur ns in the coming years.  
 
2. In 2020 the Pension Plan's portfolio delivered a nominal rate of return of 4.2%. As Swiss 
inflation for 2020 was -0.8%, the portfolio's real return was 5% for the year.   
Table 1 Net investment return  
 Nominal  Real 
2018  -5.8%  -6.5%  
2019  12.6%  12.4%  
2020 4.2%  5.0%  
 -40%-30%-20%-10%0%10%20%30%
target rate: 3.5%
Moving average: previous five yearsWT/L/ 1111 
 
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  1.2  Asset allocation   
Figure 2 Asset allocation as of 31 December 2020, actual vs. strategy  
 
3. Figure 2 represents a new strategic asset allocation as of 2020, due to  the Management 
Board's decision  to increase exposure to equity markets from 40 % to 50%  by reducing the fixed 
income exposure from 40 % to 30%. Asset allocation is the main source of the Plan's portfolio 
returns.  
 
4. The WTOPP rebalances its portfolio in the f irst quarter of each year, by re -aligning the 
allocation to each asset class with the strategy.1 This mechanism takes advantage of volatility in 
financial markets as it consists of  selling securities that have become relatively more expensive and 
buying a ssets that have become relatively cheaper.  Since a Board decision in 2020, a rebalancing 
will also be triggered by changes in financial markets causing the weight of equities in the portfolio 
to deviate from the strategic allocation by more than 10%.  
Figure 3 Detailed asset allocation 2020  
 
 
1 See reference to rebalancing in the Glossary and Annex 2 for more information on this approach.  0%10%20%30%40%50%60%
Global Equities CHF Bonds Real Estate Insurance Linked
SecuritiesCashAllocation
Strategy
International 
Equities
33.1%
Emerging Markets 
Equities
10.5%
Small Caps
8.7%CHF  bonds
3.6%Emerging 
Countries Bonds
9.8%Senior Loans
6.7%Euro Real Estate
4.2%Prisa Lp
4.9%Swiss Real Estate
8.9%Insurance Linked 
Securities
4.7%
Cash
4.7%WT/L/ 1111 
 
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  1.3  Parti cipants  and beneficiaries 2020   
Figure 4 Plan membership by type  
 
a including deferred retirement benefits.  
 
5. The number of participants has remained largely stable. On 31 December 2020, there were 
709 participants, down from 718 on 31 December 2019. On the other hand, the number of 
beneficiaries increased from 393 to 408 over the same period.  
 
Table 2 Plan membership   
Membership  2019  2020 
Number of Participants  718 709 
Number of Beneficiaries  393 408 
 
Table 3 Types of benefits   
Types of benefits  Total number  Average monthly benefit  
Year 
2019 Year 
2020 Year 
2019  Year 
2020  
Retirement benefits  175 182  CHF 7,000   CHF 7,000  
Early retirement benefits  126 136  CHF 5,000   CHF 5,100  
Disability benefits  22 22  CHF 5,600   CHF 5,600  
Surviving spouse's benefits  24 26  CHF 4,000   CHF 4,100  
Child's benefits  19 18  CHF 400   CHF 400  
Deferred retirement benefits  27 24   -     -  
 
6. As the number of beneficiaries continues to increase, so does the amount of benefits paid 
annually by the Plan. Periodic benefits and lump sum benefits amounted to CHF 28.2 million in 2020, 
which is a similar amount compared to the year before. The periodic benefits have not yet exceeded 
the received contributions (CHF 28.8 million), as predicted in the previous actuarial valuation. 
Pension benefits will exceed the amoun t of pension contributions in the near future, but the balance 
will continue to be positive thanks to investment returns.  Participants
65%31%Disability
2%Surviving 
spouses
2%
Retirees aWT/L/ 1111 
 
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  Figure 5 Contribution income and benefit expenditure  
 
a Including transfer values paid to other Organizations.  
b Including transfer values received from other Organizations.  
 
2  SUMMARY OF MANAGEMENT BOARD ACTIVITIES   
 
7. In 2020 the WTO Pension Plan Management Board met five times in regular Board meetings 
and twice in special sessions. The meetings occu rred in virtual or hybrid format due to Covid -19 
restrictions, they took place on February  28th, April  30th, June  24th, September  25th and December 
3rd. As ongoing items, the agendas for all meetings included the presentation of the investment 
situation an d a report by the Secretariat on matters arising since the previous meeting of the 
Management Board. Additionally, the Board's agenda included recurring items such as the approval 
of the Plan's Annual Report and Financial Statements for submission to the G eneral Council and 
review of the Plan's actuarial position. During the summer, a full renewal of Board membership for 
a new three -year term ending in July 2023 was completed.  
 
8. Outside the formal Board meetings, the Management Board Working Groups met six times. 
For comparison, the working groups met 12 times in 2019, nine times in 2018, and six in 2017. The 
meetings included four on the topic of investment (to prepare a revision to the investment strategy 
and asset allocation, and as an orientation of new members), and two on actuarial issues (focused 
on the finalization of the assumptions for the pending valuation and as orientation of new members).  
 
9. In 2020 t he Board made important investment decision s, such as revising the Plan's strategic 
asset allocati on to include 50% equities, 30% fixed -income and 20% real estate, changing three 
investment vehicles and introducing an additional rule for rebalancing. The decisions were followed 
by revising the Plan's Investment Guidelines accordingly.  
 
10. Another significant accomplishment  by the Board was  adopt ing a revision of Plan's  
assumptions used for the actuarial valuation , based on a comprehensive review of experience and 
expectations for future medium -term economic developments.  Further to this comprehensi ve 
review, the Secretariat produced a report enabling the Board to monitor the assumptions in 
comparison with the  Plan's  actual  experience on an annual basis.  
 
11. Through an exchange of official letters, the Board e xtend ed the scope of the transfer 
agreement  with OECD and related organizations to permit its application to participants on special 
leave without pay . 
 
12. In September the Board was informed that  Mercer,  its actuarial service provide r, had made 
the Plan's lead actuary  redundant . As this was disruptiv e for the Plan,  the Board decided to end the 
contract with Mercer and launch a procurement exercise, which has been  completed in early 2021.  04,0008,00012,00016,00020,00024,00028,00032,000
992000 010203040506070809101112131415161718192020Thousands
of Swiss Francs
Periodic Benefits Lump sum payments Contributions receiveda bWT/L/ 1111 
 
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  3  REVIEW OF THE WTOPP INVESTMENT PERFORMANCE  
13. The investment portfolio had a nominal return of 4.2% in 2020, compare d to 6.1% for the 
Pension Plan's benchmark. The shortfall against the benchmark is mainly explained by the 
underperformance of the CS fund in Swiss Real Estate (point 19 below). Swiss inflation for 2020 was 
close to -0.8%. Hence, the portfolio's real retur n was 5.0% for the year,  well above the plan's target. 
With the exception of global real estate investments, all investment categories generated positive 
returns for the year.  
14. The Covid -19 crisis created significant volatility in the first quarter. The systematic rebalancing 
(see paragraph 3 above ) enabled the portfolio to benefit from price fluctuations and acquire assets 
at lower prices. In order to meet the Plan's return needs, the Board decided to increase the exposure 
to equity markets from 40% to 50%. The relatively favourable cash -flow profile  combined with lower 
asset prices due to the Covid crisis supported this decision.  
15. The Plan's portfolio generated annual returns of +3.4% and +5.6% in nominal terms, 
respectively over the last three and five years. The 5 -year return exceeds the Plan's targ et return 
(Swiss inflation + 3.5%) by 1.9%.   
16. In 2020, the Plan's portfolio continued to benefit from lower rates and rising valuations across 
all asset classes. Equity investments, which now represent 50% of the Pension Plan's target asset 
allocation, had  a return of 5.5% close to the benchmarks (5.7%). Fixed income investments (21% 
of the Pension Plan's target asset allocation) returned 3.8% vs. 4.9% for the Plan's benchmark. 
CHF denominated bonds returned 0.9% during  the year. Furthermore, investments in  Insurance 
Linked Securities (5% of the Pension Plan's Strategic Allocation) had a return of 2.7% for the year 
compared to 4.6% for the benchmark.  
17. While financial returns were generally positive in 2020, economic fundamentals deteriorated 
due to Covid 19. Global corporate earnings fell more than 20% and dividends declined around 15%. 
Default rates and bankruptcies increased and real estate investments saw vacancies increase and 
rents weaken.  
18. Lower interest rates and accommodative government and central ban k policies supported 
asset valuations, which increased significantly. Higher valuations reduce long -term return prospects.  
19. Real Estate investments represent 20% of the target asset allocation. The return on this 
portion of the portfolio was -2.1%  for the y ear. The Swiss real estate fund, managed by Credit 
Suisse, had a return of 0.5% in 2020 while the SXI index, which tracks the return of Swiss publicly 
traded real estate funds, had a return of 10.8%. Due to this large discrepancy, the Management 
Board has been monitoring this vehicle closely. Following investigations. the Board was reassured 
that t he fund's underperformance did not reflect a fundamental deterioration compared to the 
average, but was mainly due to changes in valuations. International real es tate funds, which include 
the Plan's investments in Warburg Henderson fund, PRISA LP and since December 2018 CBRE Fund, 
had a consolidated return of -4.9% (entirely due to currency fluctuations).  
4  ACTUARIAL POSITION OF THE PLAN  
20. The process of completing th e full actuarial valuation based on data at 31 December 2019 
has been interrupted in late 2020 as a result of the decision by Mercer to make the Plan's leading 
Consulting Actuary  redundant . Nonetheless, an in -depth review of the Plan's actuarial assumptions 
had been completed and resulted in updating the assumptions related to external financial factors 
(such as inflation, rate of return), as well as internal demographic changes, in order to better reflect 
the actua l situation of the Plan. As a direct result, the draft versions of the full actuarial valuation 
have shown an increase in the long-term cost for the Plan.  
 
21. The recruitment process of the new Consulting Actuary has been completed in the first half of 
2021 and the process of finalizing the full actuarial valuation and addressing the increased long-
term cost will be treated with the utmost priority  in the course of 2021 . WT/L/ 1111 
 
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  5  IPSAS ACCRUED LIABILITIES OF THE PLAN  
22. The WTO's financial statements include an actuarial estimate of pension benefits that differs 
in scope and method from the WTOPP's actuarial valuation discussed in Section 4 above. In line with 
the International Public Sector Accounting Standards (IPSAS), this estimate is produced for reporting 
on the WTO's  accrued liabilities for employee benefits as at 31 December of each year, which includes 
mainly pensions and after-service health insurance.  
23. The IPSAS estimate of the pension liability represents the hypothetical liability of the 
Organization to cover al l its current employees' and retirees' acquired pension entitlements as at 31 
December 2020. Unlike the Plan's actuarial valuation discussed in Section 4 above, the IPSAS 
estimate  does not consider future pension contributions receivable from current and f uture staff and 
uses a different methodology for setting the discount rate.  
24. Both valuations are reported together with the balance sheet, in Statement 2 of the financial 
statements.  
6  ORGANIZATION  AND STRUCTURE OF THE PENSION PLAN ON 31  DECEMBER  2020  
25. The Ma nagement Board of the Plan was duly constituted by the General Council in accordance 
with Article 4 of the Regulations on 26 March 1999.  
26. The Regulations and Administrative Rules of the WTO Pension Plan were adopted by the 
General Council on 16 October 1998  (WT/L/282). The General Council approved the Rules of 
Procedure of the Management Board on 8 May 2001 (WT/L/402). The Regulations of the WTO 
Pension Plan were amended by the General Council on 1 December 2005, on 28 July 2009, on 
26 October  2011, on 30  November  2015 and on 26 July 2017. The Administrative Rules were 
amended on 23  September  2005 and on 7  December  2016, and the Rules of Procedure were 
amended on 7  December  2016.  
27. Key components of the governance and administrative structure of the Pension Pla n included 
the following on 31 December 2020.  
  Mr.  Jean -Marc van Dril, Chairperson  
Mr. Robert Cook  
Members elected 
by the General 
Council  Ms. Antonia Carzaniga  
Members appointed 
by the Director -
General  Ms. Alicia Goujon  Mr. Christian Dahoui  
Mr. Conor Harrington  Mr. Rainer Lanz  
Ms. Darija Sinjeri  Mr. Thomas Verbeet  
Ms. Wei -Ting Chiu  
Alternates elected 
by the General 
Council  Ms. Kerry Allbeury  
Alternates appointed 
by the Director -
General  Mr. Loudon Mattiya  Ms. Laura Monnet  
Mr. Rodolfo Rivas  Ms. Nthisana Phillips  
Ms. Chiara Santangelo  Ms. Zheng Wang  
Mr. Robert Luther  Observer on behalf of the beneficiaries  
Mr. Paul Rolian  Alternate observer on behalf of the beneficiaries  WT/L/ 1111 
 
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  7  ACCOUNTS  
28. The financial statements and schedules are presented in Section 9 of this Report. The notes 
to the financial statements found in Annex 1 include important additional explanations about the 
accounts. These notes are integral to understanding the accounts an d the financial position of the 
Plan. 
29. The income and expenditure statement for the period 1 January – 31 December 2020 
is reproduced in Statement 1.  
30. The balance sheet as at 31  December  2020 is reproduced in Statement 2.  
31. The source and application of funds for the period 1  January – 31 December  2020 
are reproduced in Schedule A.  
32. Details of the exchange rates used for closing the accounts on 31  December  2020 and the 
currency breakdown as of 31  December  2020, after hedging, are provided in Schedule G.  
33. A glossa ry of terms to facilitate an understanding of the tables is reproduced in Schedule J.  
34. Explanations of significant events in the 2020 accounts can be found in the notes in Error! 
Reference source not found. . 
8  EXTERNAL AUDITOR  
35. The report of the External Auditor on the Accounts of the WTO Pension Plan for the Year ended 
31 December 2020 is produced separately from the Annual Report.  Secretariat  John Breckenridge, Secretary  
Yann Marcus, Pensions Officer  
Dário Muhamudo, Pension Specialist  
Martyna Ozimek, Pension Specialist  
Accounting and Outsourced 
Administrative Support services  Trianon S.A.  
Consulting Actuary  Vacant  
Medical Adviser  Centre d'expertise médicale Lancy (CEML)  
Investment Analyst/Consultant  MBS Capital Advice S.A.  
Global Custodians  The Northern Trust Company  
Pictet Asset Services  
Fund Managers   Babson Capital (senior loans portfolio hedged in CHF)  
Blackrock (emerging market bonds portfolio hedged in CHF)  
Crédit Suisse (Small cap equity portfolio, Swiss bond portfolio, 
Swiss real estate portfolio and senior loans portfolio hedged in 
CHF) 
GMO (emerging market bonds portfolio hedged in CHF)  
MFS (emerging market bonds portfolio hedged in CHF)  
NN (senior loans portfolio hedged in CHF)  
Pictet (Equity portfolios (global equities and emerging markets)  
Prisa LP (US Real Estate portfolio)  
Warburg Hende rson (European real estate portfolio)  
CBRE (European real estate portfolio)  
Scor (Insurance Linked Securities)  
Gam (Insurance Linked Securities)  
External Auditor  French Court of Audit  WT/L/ 1111 
 
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  OPINION  OF THE EXTERNAL AUDITOR  
 
Le Premier président   
  
 Paris,   June 16th 2021  
 
 
To 
Mr Jean -Marc VAN DRIL  
Chairman of the Management Board of the 
Pension Plan of the World Trade 
Organization  
 
 
 
 
 
AUDIT OPINION  
 
 
We have audited the Financial Statements of the Pension Plan of the World Trade 
Organization (WTOPP ) for the 12 months period ended 31 December 2020. These Financial 
Statements include a Statement of income and expenditure, the Balance Sheet and 
additionna l tables. They have been prepared in conformity to the Status and Rules of 
procedure of the Plan under the responsibility of the Secretariat of the Management Board of 
the Pension Plan of the World Trade Organisation, and in accordance to the principles an d 
accounting methods in use since the creation of the Plan. Our responsibility is to express an 
opinion on these statements based on our audit.  
 
We have conducted our audit in accordance with the International Standards on Auditing 
(ISA). These standards require us to plan and perform our audit in order to obtain reasonable 
assurance that the Financial Statements are free from material misstatements. An audit 
namely consists in collecting, by sampling, audit evidence regardin the amounts and the 
informatio n presented in the financial statements. It also consists in evaluating the 
appropriateness of the accounting principles and estimates made by the Secretariat of the 
Plan, and the overall presentation of the Financial statements. We believe that the eviden ce 
collected is sufficient and appropriate to constitute a reasonable basis for our opinion.   
 
In our opinion , the Financial Statements give a fair view of the financial position of the Pension 
Plan of the World Trade Organization as at 31 December 2020  in conformity with the special 
accounting framework of the Pension Plan of the World Trade Organization.  
 
WT/L/ 1111 
 
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  Emphasis of matter  
 
We alert users that the Financial Statements are prepared in accordance with a special 
purpose framework and that, as a result, th ey may not be suitable for another purpose.   
 
  
 
 
 
(signed)  
Pierre MOSCOVICI  
 
 WT/L/ 1111 
 
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  9  FINANCIAL  STATEMENTS  
9.1  Management letter of representation  
36. Pursuant to Article 5(d) of the WTO Pension Plan Regulations, t he Management Board of the 
WTO Pension Plan is responsible for these financial statements. The  financial disclosures in this 
report are intended to fairly present the Plan's financial results in  a manner that is complete and 
understandable.  
37. The Management Board is responsible for establishing and maint aining adequate internal 
control over financial reporting so as to provide reasonable assurance regarding the reliability of 
these financial statements for external purposes. This includes policies and procedures that 
1) provide for the maintenance of reco rds that accurately and fairly reflect the transactions of the 
Plan, 2) provide reasonable assurance that transactions are authorized and recorded in compliance 
with the Plan's Regulations and Rules and 3) provide reasonable assurance regarding the prevent ion 
or timely detection of unauthorized acquisition, use or disposition of the Plan's assets. However, due 
to the inherent limitations of internal control over financial reporting, these controls may not prevent 
or detect all misstatements.  
38. Based on the ab ove, the Management Board has concluded that these financial statements 
present fairly the Plan's financial position and performance as of 31  December  2020.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
____________________  ____________________  
Jean-Marc van Dril  
Chair 
WTOPP Management Board  John Breckenridge  
Secretary  
WTO Pension Plan  WT/L/ 1111 
 
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  9.2  Statement 1: Income and expenditure statement  
INCOME AND EXPENDITURE STATEMENT (expressed in Swiss Francs)   
2020  2019  
Income     
Investment income       
Profit on securities   28,322,317  71,915,993  
Currency revaluation   45,307  - 
  28,367,624  71,915,993  
Contributions    
Organization, regular contributions   19,216,651   19,360,684  
Organization, additional contributions   -     1,543,138  
Participants, regular contributions   9,608,334   9,680,348  
Interests on validations   408   345  
Restorations   -     11,887  
Transfers from other organizations   -     13,094  
  28,825,393  30,609,496  
Reimbursements claims under the death and disability 
insurance  1,346,247  322,259  
Total income  58,539,264  102,847,748  
Expenditure    
Periodic benefits    
Retirement benefits (Art. 23)   15,209,952  14,179,112  
Early retirement benefits (Art. 24)   8,169,088   7,481,849  
Disability benefits – (Art. 28)   1,483,685   1,512,441  
Surviving Spouse benefits (Art. 29)    1,180,840   939,585  
Child benefits (Art. 30)   98,006   100,430  
  26,141,571  24,213,417  
Lump sum benefits    
Withdrawal settlements (Art. 26)   582,051   291,684  
Commutations (Articles 23c), 24d), and 25c))   1,588,468   3,751,593  
  2,170,519  4,043,277  
Participants' death and disability coverage  697,185  992,115  
Loss on investment    
Currency revaluation   -      133,446  
Negative credit interest   166,885   104,237  
   166,885  237,683  
Investment and other administrative expenses    
Management fees   509,415   492,175  
Trianon and other administrative costs   227,155   208,134  
Consultancy fees   120,000   120,000  
Actuarial expenses   46,000   53,000  
Bank charges   24,946   24,499  
 927,516  897,808  
Total expenditure  30,103,676  30,384,300  
Profit / Loss ( -) for the period  28,435,588  72,463,448  
  WT/L/ 1111 
 
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  9.3  Statement 2: Balance sheet  
Balance sheet  
(expressed in Swiss Francs)  
Assets  At 
31.12.2020  At 
31.12.2019  Liabilities  At 
31.12.2020  At 
31.12.2019  
Investments     Current liabilities     
Securities   632,128,748   606,736,638  Accrued expenses  161,828  175,837  
Cash and cash 
equivalentsa  31,171,342  27,509,141    161,828  175,837  
  663,300,090  634,245,779  Capital    
Current Assets    Capital as at 1 
January   637,150,059  564,686,611  
Withholding 
taxes to be 
recovered   1,533,772  2,498,785  Profit / Loss ( -)   28,435,588   72,463,448  
Accrued income  913,612  322,337    665,585,646  637,150,059  
Receivable 
additional 
contributions   -    258,995     
    2,447,384  3,080,117     
Total assets  665,747,474  637,325,896  Total liabilities  665,747,474  637,325,896  
a Cash and cash equivalents include cash on bank accounts and cash held on investment accounts with 
custodian banks, which amount to CHF 27,529,836  and CHF 3,641,506 respectively . Cash held on investment 
accounts for extended periods of time is normally imma terial. However, since 2019 the Plan has started to use 
investment accounts to shelter operating cash from negative interests.  
 
39. Please note that this balance sheet shows neither the present value of future benefits (the 
pension liability) on the liability side, nor the capitalized future contributions on the asset side. In  the 
WTO's financial statements, the pension liabilities are estimated at CHF 1,379  million according to 
IPSAS accounting rules. If the Pension Plan's asset value of CHF  664 million is ded ucted from this 
amount, the result is an estimated net accrued liability for employee benefits of CHF  715 million. 
This net value represents the hypothetical liability of the Organization to cover all its current 
employees' and retirees' acquired pension e ntitlements as at 31 December 20 20. It differs from the 
long-term valuation used in managing the Plan mainly in that it does not consider future pension 
contributions receivable from current and future staff and uses a different methodology for setting 
the discount rate.  
40. On the other hand, the actuarial model used in managing the Plan per Article 9 of the 
Regulations takes into account future pension contributions and benefits for an open group of 
participants, and a projected real return rate based on expe cted return of the strategic portfolio 
allocation (see Schedule D). Its purpose is to produce best, yet conservative, estimates of future 
benefits, pension contributions and the investment returns. As explained in Section 4 of the Annual 
Report, the Manage ment Board has completed an in -depth revision of the model's assumptions for 
the purpose of the next full actuarial valuation, which would include the estimated present value of 
future benefits. The cycle of actuarial valuations was however interrupted due to Mercer's decision 
to terminate employment of the Pension Plan's lead actuary, which caused the Management Board 
to end Mercer's contract  in late 2020.  The draft actuarial valuation report at end -2019 has 
consequently not yet been adopted . The process will res ume as soon as the procurement for the 
new Consulting Actuary is finalized , which is planned for the first half of 2021.  
  WT/L/ 1111 
 
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  9.4  Schedule A: Source and application of funds  
Source and application of funds  
(expressed in Swiss Francs)   
2020  2019  
Funds as at 1 January  637,325,896  564,847,436  
Plus:   
Source    
Receipt of contributions   28,825,393   30,609,496  
Investment income   28,200,739     71,678,310  
Reimbursements of death and disability insurance claims   1,346,247   322,259  
Increase in current liabilities   -   15,012  
Total 58,372,379  102,625,077  
Less:    
Application    
Settlement of benefits   28,312,090   28,256,694  
Participants' death and disability coverage   697,185   992,115  
Investment and other administrative expenses   927,516   897,808  
Reduction in current liabilities   14,009  - 
Total 29,950,800  30,146,617  
Funds as at 31 December  665,747,474  637,325,896  
 
9.5  Schedule B: Breakdown of expenditures  
Expenditures  
(expressed in Swiss Francs)  
 2020  2019  
Investment Management fees    
MFS 147,66 7 172,372  
Northern Trust  37,168  44,964  
Pictet – Emerging Markets bonds  54,233  56,355  
Pictet – Emerging Markets equities  39,02 7 30,975  
Pictet – International equities  211,38 8 166,669  
Pictet – Senior loans  7,707  9,754  
Pictet – Real estate a -3,215  10,364  
Pictet – Insurance linked securities  7,898  722 
Pictet – Swiss bonds  2,651 - 
Pictet – Small Caps equities  4,891  - 
Total   509,415  492,175  
Consultancy fees    
MBS Capital Advice  120,000  120,000  
Actuarial expenses    
Mercer  46,000  53,000  
Administrative costs    
Trianon and other administrative costs  227,155  208,134  
Other expenses    
(bank charges and external audit)  24,946  24,499  
Total  927,516  897,808  
Note:  Management fees for mutual fund investment vehicles are frequently embedded in the reported 
value of the holdings. These fees are not presented separately in the statement of expenditure 
and total to CHF  1,440,954 for 2020.   
Costs related to the WTOPP Secretariat are borne by the WTO and are not reflected in the Plan's 
Financial Statements (see paragraph 9 of Annex 1).  
a Real estate management fee s are embedded in the fund value (see above note): this row 
reflects mainly Pictet's custody fees. The value is negative in 2020 as it includes a EUR  12,919 
cash payment received directly on the account as a rebate on CBRE fees.  WT/L/ 1111 
 
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  9.6  Schedule C: Investment mandate overview  
Investment mandate overview  
Asset  
class  Fund  
Manager  Benchmark  Ex-ante 
tracking 
error  Inception  Location  Website  
Global 
Equities  Pictet & Cie  40% MSCI Europe,  
40% MSCI 
North  America, 
20% MSCI  Pacific  Indexed  January  
2011 Geneva, 
Switzerland  pictet.com  
Emerging 
Markets 
Equities  Pictet & Cie  MSCI Emerging 
Markets Free  Indexed  May 
2016 Geneva, 
Switzerland  pictet.com  
Global 
Small Caps 
Equities  Credit 
Suisse  MSCI World ex 
Switzerland Small 
Caps Indexed  August  
2020 Zürich, 
Switzerland  credit‑suisse.com  
Emerging 
Market 
Bonds  BlackRock  JP Morgan EMBI 
hedged in CHF  Indexed  January  
2016 New York, 
United States  blackrock.com  
Emerging 
Market 
Bonds  MFS JP Morgan EMBI 
hedged in CHF 2%-3% January  
2011 Boston, 
United  States  mfs.com  
Emerging 
Market 
Bonds  GMO JP Morgan EMBI 
hedged in CHF  3%-5% January  
2011 Boston, 
United  States  gmo.com  
Senior 
Loans  Barings  CS Loans index 
hedged in CHF  3%-5% October  
2012 New York, 
United  States  babsoncapital.com  
Senior 
Loans  Credit 
Suisse  CS Loans index 
hedged in CHF  2%-4% October  
2012 New York, 
United  States  credit -suisse.com  
Senior 
Loans  NN CS Loans index 
hedged in CHF  2%-4% October  
2012 Phoenix, 
United  States  Inginvestment.com  
US 
Real Estate  PRISA LP  NCREIF Fund Index 
ODCE  - February  
2015 Madison,  
United States  pramericarei.com  
European 
Real Estate  Warburg 
Henderson  6.5% p.a.  - December  
2006 Hamburg, 
Germany  warburg -henderson
.com 
European 
Real Estate  CBRE  - - December 
2018 London, 
United 
Kingdom  cbre.com  
Swiss Real 
Estate  Credit 
Suisse  SXI Real Estate 
Fund Index  - November  
2008 Zürich, 
Switzerland  credit -suisse.com  
Insurance 
Linked 
Securities  Scor 
 Swiss Re Global 
CAT bond Hedged 
CHF - December  
2019 Paris,  
France  scor.com  
Insurance 
Linked 
Securities  Gam Swiss Re Global 
CAT bond Hedged 
CHF - December  
2019 Connecticut,  
USA gam.com/fr/manag
ers/fermat -capital -
management  
CHF Bonds  Credit 
Suisse  SBI AAA -BBB 1 -5 Y - August   
2020 Zürich, 
Switzerland  credit‑suisse.com  
 WT/L/ 1111 
 
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  9.7  Schedule D: Asset allocation  
Asset Allocation  
as of 31  December  2020 
Assets  MCHF  Current  
weightings  Strategy  Deviation from  
the strategy  
Global equities  347.2  52.3%  50.0%  2.3%  
Developed markets  219.6  33.1%  32.0%  1.1%  
Emerging Markets  69.8 10.5%  10.0%  0.5%  
Small Caps  57.9 8.7%  8.0%  0.7%  
CHF bondsa 133.8  20.2%  21.0%  -0.8%  
CHF Bonds  24.1 3.6%  4.0%  -0.4%  
Emerging countries bonds  65.2 9.8%  10.0%  -0.2%  
Senior loansb 44.5 6.7%  7.0%  -0.3%  
Real Estate  119.6  18.0%  20.0%  -2.0%  
European Real Estate  27.9 4.2%  5.0%  -0.8%  
U.S. Real Estate  32.6 4.9%  5.0%  -0.1%  
Swiss Real Estate  59.1 8.9%  10.0%  -1.1%  
Other Investments  31.5 4.7%  5.0%  -0.3%  
Insurance Linked Securitiesa 31.5 4.7%  5.0%  -0.3%  
Cash  31.3 4.7%  4.0%  0.7%  
Total  663.3     
Note:  Numbers may not add precisely to totals provided due to rounding.  
a Hedged in CHF. The Plan hedges 80% of foreign bonds and ILS investments renewed quarterly.  
b Senior loans are floating rate fixed income instruments, granted to sub -investment grade borrowers, 
have the highest level of seniority in the capital structure of corporate issuers and are secured by the 
assets of the borrowing company.  
  WT/L/ 1111 
 
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  9.8  Schedule E: Investment performance  
Investment Performance as of 31  December  2020 
(expressed in nominal terms)  
 Over  
1 year p.a.  Over  
3 years p.a.  Since  
inception p.a.  TEa IRa 
TOTAL       
Consolidated securities  4.2%  3.4%  5.3%   2.11%  -0.68 
Added valueb -1.9%  -1.2%  -0.2%    
EQUITY       
Consolidated equities  5.5%  5.0%  7.9%   0.42%  -0.73 
Added value  -0.2%  -0.2%  0.3%   
Developed markets  3.0%  5.0%  8.0%    
Added value  -0.2%  -0.2%  -0.2%    
Emerging markets  7.9%  2.5%  4.8%    
Added value  -0.1%  -0.3%  1.5%    
Small Caps  24.7%      
Added value  0.1%      
FIXED INCOMEc      
Consolidated fixed incomed   3.8%  2.3%  3.4%   1.50%  -0.03 
Added value  -1.1%  -0.3%  0.1%    
Emerging countries bonds  2.4%  4.4%  4.7%    
Added value  -0.9%  0.1%  0.3%    
Senior loans  -0.1%  1.7%  1.8%    
Added value  -1.3%  -1.1%  -0.8%    
CHF Bonds    0.5%      
Added value  -0.1%      
REAL ESTATE       
Consolidated real estate  -2.1%  3.2%  3.7%   ‑‑‑ ‑‑‑ 
Added valueb        
Europe  -1.2%  7.4%  4.5%   ‑‑‑ ‑‑‑ 
Added valueb        
USA  -7.4%  1.3%  3.8%  ‑‑‑ ‑‑‑ 
Added value  0.2%  -0.3%  -2.8%    
Switzerland  0.5%  1.3%  3.9%   ‑‑‑ ‑‑‑ 
Added value  -10.3%  -6.9%  -2.7%    
OTHER INVESTMENTS       
Insurance linked Securitiesc 2.7%      
Added value  -1.9%      
Note:  Performances are presented net of fees and costs. Consolidated performances (over 1 year, 3 years 
and since inception in August 1999) are calculated taking into account previous investment vehicles, 
which were liquidated prior to this reporting exercise and do not appear separately in the table.  
a TE = tracking error over 3 years , IR = information ratio over 3 years  
b Added value compares the performance to benchmarks, except when there is no formal benchmark 
(Warburg Henderson and CBRE), as specified in Schedule C.   
c In line with its inv estment principles, the Plan minimizes currency risk on its fixed income and ILS 
investments by investing in CHF -denominated instruments, or by hedging investments denominated 
in currencies other than CHF. In the latter case, the hedging instruments' gains , losses, and costs 
are embedded in the asset class' performance, which is consistent with the fact that the return 
target expected out of these instruments is being considered in CHF terms when making investment 
decisions.  
d In addition to the bonds' per formance, the consolidated fixed income performance also includes the 
interest paid on the Plan's cash.  WT/L/ 1111 
 
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  9.9  Schedule F: Investment performance history from inception to 31  December  2020  
 
 
9.10  Schedule G: Exchange rates used for closing on 31  December  2020  
Currency  pair Exchange rates  
CHF per 1 EUR  1.0816  
CHF per 1 USD  0.8840  
JPY per 1 CHF  116.80  
CHF per 1 GBP  1.2083  
Figure 6 : Currency breakdown as of 31 December 2020 after hedging  
 
WT/L/ 1111 
 
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  9.11  Schedule H: Participation in the Pension Plan  
The following tables show the trends in the numbers of participants and beneficiaries in  the Pension 
Plan in the cours e of 2020.  
Number of participants and beneficiaries on 31 December 20 20 
 2019 2020 
Active members  718 709 
Beneficiaries  393 408 
Participants in the Pension Plan in 2020  
  
Total number on 31 December 2019  718 
Movements in 2019   
  
- Entries  91 
- of which re -entries under the terms of Art.  15(b) of the Regulations  32 
- Separations  100  
   
Total number on 31  December  2020 709   
Breakdown of separations in 20 20    
- retirement  8 
- early retirement  9 
- deferred retirement  0 
- withdrawal settlement  30 
- transfer out  0 
- deferment of decision  52 
- death  1 
- disability  0  
 
Total separations  100 
Benefits paid by the Pension Plan  
Type of benefit  At 31 
December 
2019 New benefits  
in 20 20 Benefits ended  
in 20 20 At 31 
December 
2020 
Retirementa 175 9 -2 182 
Early retirementb 126 11 -1 136 
Deferred retirementc 27 0 -3 24 
Surviving spouse's benefit  24 2 0 26 
Partial /total disability benefit  22 0 0 22 
Child’s benefit  19 4 -5 18 
Total benefits  393 26 -11 408 
a  Includes one deferred benefit that commenced being paid in 2020.  
b  Includes two deferred benefits that commenced being paid in 2020.  
c  Includes only deferred pension benefits not yet in payments, for former staff members who made that 
choice on their sep aration and those who made the choice later, after initially deferring their decision. 
Deferred pensions in payments are classified as retirement or early retirement benefits.  
 WT/L/ 1111 
 
- 22 - 
 
  9.12  Schedule I: Structure of the WTO Pension Plan  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9.13  Schedule J: Glossary of terms  
Accrued expenses  include expenses incurred but not paid in the current accounting year.  
Accrued income includes income which has been earned but not yet received in the current 
accounting year.  
Active investment management  is a form of portfolio management whereby the portfolio 
manager invests the assets in a manner different from the benchmark in an attempt to produce 
higher returns than the benchmark. The disadvantages of such a management style are 
characterized by higher management fees, higher trading costs as well as the risk of significantly 
underperforming.   
Actuarial expenses  include expenses charged by the consulting actuary for the provision of 
actuarial services.  
Admin istrative costs  include 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).  
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 lar ger. 
Consultancy fees  include the fees charged by the investment analyst/consultant.  
Contributions  refer to sums payable for restoration, validation and benefit as detailed in Art. 20 of 
WTOPP Regulations . 
Contributions receivable  refers to contributions d ue in respect of contributory service in the 
accounting year but received after 31  December of the accounting year.  
Currency hedging. In line with the Plan's investment principles, the Plan seeks to limit exposure 
to currency risk on debt instruments becau se they bear a currency risk that is theoretically not 
 
INVESTMENT 
ANALYST/CONSULTANT  
 
ASSET MANAGEMENT 
SERVICES  
 
DIRECTOR -GENERAL  
 
PARTICIPANTS  
 
EXTERNAL AUDITOR  
 
ADMINISTRATIVE 
SERVICES  
 
CONSULTING ACTUARY  
 
MEDICAL ADVISER  
 
MANAGEMENT BOARD  
 
GENERAL  COUNCIL  WT/L/ 1111 
 
- 23 - 
 
  compensated in the long term, and because they play a stabilizing role to regulate the portfolio's 
short term volatility and allow rebalancing gains. When investing in debt assets denominated in 
curren cies other than CHF, the Plan therefore hedges the currency risk. Technically, this involves 
the use of forward contracts, in which two parties agree to exchange a set amount of one currency 
for another at a predetermined exchange rate at some future date.   If the currency of the investment 
depreciates causing losses on the portfolio, the hedging instruments will offset some of these losses. 
Hedging can have a cost, largely based on differences between lending and borrowing interest rates 
of the respective currencies.  
Currency revaluation  represents the adjustment of foreign currency -denominated bank account 
balances at 31  December  2020 to the exchange rate for that day. This adjustment reflects the 
variation in the exchange rate applicable to foreign curren cy-denominated bank account balances at 
the beginning of the year and in the exchange rates applicable to movements in the same accounts 
during the year, at the time each transaction took place.  
Indexed management  is a form of portfolio management that at tempts to deliver the returns of 
the underlying benchmark by replicating exactly or by getting as close as possible to the composition 
of the benchmark at any point in time. It differs from active management in that it is significantly 
less costly and does  not reflect the views, forecasts or opinions of the investment manager.  
IR or Information Ratio  is defined as the outperformance of the investment manager above the 
index divided by the portfolio's tracking error. The information ratio is used to represen t a manager's 
skill. Generally, any ratio over 0.30 is thought of as demonstrating skill. IR refers to the information 
ratio over three years.  
Insurance Link Securities (ILS)  are financial instruments whose values are driven by insurance 
premiums and loss events. ILS enable re/insurance companies to enter into a risk transfer contract 
with investors in the capital markets,  where the investor puts a collateral in exchange for a  premium. 
Depending on whether the risk happens, the collateral will be drawn or r eturned to the investor, and 
the premium adjusted for the next term.  
Interest on validations  and interest on restorations  refer to interest payments made under 
Articles 20(d) and 20(e) of the Plan Regulations.  
Management fees  include fees paid for the mana gement of WTO portfolios.  
Organization, additional contributions  refers to the additional contributions paid by the 
Organization to compensate for the additional actuarial cost generated by the early separation of 
participants in the context of restructuring exercises.  
Profit/loss on securities  is the result of:  
• capital gain/loss realized on securities;  
• profit arising from the distribution of dividends and interest received on investments;  
• revaluation of securities at their market price at 31  December (unrealized profit or loss).  
Rate of return  is the percentage o f change in value of the portfolio over a specified period, taking 
into account both the investment income and the change in the market value of the portfolio. It is 
expressed as an equivalent annual rate. The nominal rate of return  is the financial return  of the 
assets and is before correction for inflation (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 change 
in the Swiss CPI from the nominal rate of retur n. The term gross means that the return is calculated 
before the deduction of investment related costs while the term net refers to the return including all 
investment related expenses. The target real rate of return  is the long -term real rate of return th at 
the Plan needs to achieve in order to meet its liabilities.  
Rebalancing  refers to the realignment of the allocation of the Plan's portfolio with its strategy. A 
predefined process identifies the triggers and other operational aspects (e.g. timing) of re balancing 
actions. The rules are approved by the Board and applied automatically. This mechanism takes 
advantage of the inevitable excesses of financial markets.  WT/L/ 1111 
 
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  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.  
Restoration  refers to the inclusion in contributory service of the prior contributory service of a 
former participant who again becomes a participant.  
Senior loans  are floating rate fixed income instruments, granted to sub investment grade 
borrowers, have the highest level of seniority in the capital structure of c orporate issuers and are 
secured by the assets of the borrowing company.  
Time -weighted return  is a measure of compound return. It reduces the distorting effect of inflows 
and outflows and is used to compare the returns of investment managers and their resp ective 
benchmarks. The time -weighted return is very similar to the geometric mean return.  
TE or Tracking error  is defined as the standard deviation of the portfolio's outperformance versus 
the benchmark. It is used as a measure to determine the risk of the  portfolio versus its benchmark. 
This measure should not be confused with absolute risk; even though a portfolio has a very low 
tracking error, it can still be very risky due to the underlying nature of the market in which it invests. 
For an indexed manage ment mandate, the tracking error would usually be less than 0.8. Anything 
above this would be considered active. TE is over 3 years.  
Validation  is defined in Art. 2(v) of WTOPP Regulations, as the inclusion in contributory service of 
a period of non -contri butory service which occurred prior to the commencement of participation.   
Withholding taxes to be recovered  includes amounts of withholding tax levied by national tax 
authorities and subject to recovery after 31  December  2020. Recoverable withholding tax reflects 
the Plan's recognition as a tax -exempt entity due to its connection to the WTO. As an International 
Organization, the WTO is exempted from most national taxes such as value -added tax (VAT), federal 
stamp duty and tax on the interest earned on inve stments. Annually the Plan files tax reimbursement 
claims to the Swiss and other authorities. Occasionally the Plan's tax -exempt status is not 
automatically recognized by some national jurisdictions, in which case significant administrative and 
political i ntervention is often required to have this status fully recognized.  
 
_______________  WT/L/ 1111 
 
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  ANNEXES  
ANNEX 1 NOTES TO THE FINANCIAL STATEMENTS  
1.  Pursuant to Article 14(a) of the Regulations of the Pension Plan, the unit of account of the Pension 
Plan is the Swiss franc. For practical reasons, the current United Nations operational rates of 
exchange are used for the conversion of other currencies into the Swiss franc, except in the case of 
the investment portfolios where the rates shown in Schedule G were used for valuation purposes.  
2.  The accounting year is 1  January to 31  December.  
3.  Pursuant to Article 13 of the Regulations of the Plan and Rule A.8 of the Rules of Procedure, 
the Management Board shall be responsible for the financial security  and probity of the Plan and,  in 
particular, the maintenance of its actuarial balance and of financial controls and accounts.  
4.  Pursuant to Article 5(e) of the Regulations of the Plan and Rule C.1 of the Rules of Procedure, an 
audit of the accounts of the Pl an shall be made annually by the External Auditor, namely the External 
Auditor of the WTO. The provisions of Chapter XI ("External Audit") and the Appendix ("Additional 
terms of reference governing external audit") of the WTO Financial Regulations shall ap ply mutatis 
mutandis to the audit.  
Statement of income and expenditure  
5.  The Pension Plan registered a profit on securities of CHF 2 8.4 million.  This represented a 4.2% 
nominal investment return and , taking Swiss inflation into account , 5% in real terms. With the 
exception of global real estate investments, all investment categories generated positive returns for 
the year. The investment  return exceeded the Plan's long -term target of  3.5%.  Notwithstanding this 
good performance, current economic circumstances remain challenging and there is a strong 
sentiment among investment professionals that earning high returns in the current low inter est rate 
environment will be more difficult in the next few years.  
6.  Regular contributions received from the Organization and the participants amounted 
to CHF 28.8 million, similar as the year before. Furthermore , in 2020 there were no additional 
contributi ons received from the Organization, nor transfers of assets brought by participants 
transferring their pension rights from other organizations.  
7.  Total contributions into the Plan still exceeded the sum of periodic benefit and lump sum benefit 
payments in 2020. Periodic  benefits increased by almost CHF 2 million  and the lump sum benefits 
decreased by a  similar amount. The  total sum of periodic benefits (CHF 26. 1 million) and lump sum 
benefits (CHF  2.2 million) in 2020 was comparable to the amoun t paid last year.  
8.  The Plan received CHF 1.3 million as reimbursements of claims under its death and disability 
insurance coverage. The  premium paid for the insurance remained decreased to CHF 0.7 million 
in 2020, which was a result of a decision not to renew the insurance coverage for deaths 
of participants by natural causes or non -service incurred illness.  
9.  Investment and  other administrative expenses have slightly increased and exceeded CHF 0.9 
million. They are presented in further detail in Schedule B "B reakdown of Expenditures". The costs 
of providing a Secretariat for the Pension Plan are borne by the WTO and not reflected as a cost to 
the Plan. The Secretariat consists of a part -time Secretary and three full -time staff. In 2020, staff 
costs amounted to  CHF 528,270 including salaries and benefits.  Additionally, the Secretariat does 
not pay rent for office space and computers or phone services.  These are estimated to be 
CHF 20,916  based on the WTO cost accounting methodology . 
Balance sheet  
10.  The value of assets increased mainly due to investment gains registered in 20 20. Cash and cash 
equivalents increased to close to CHF 32 million in 2020, up from CHF 27.5 million in 2019.  
11.  Withholding taxes to be recovered amounted to CHF 1.5 million in 2020, a decrease  compared 
to CHF 2.5 million in 2019. This decrease was mainly due to a late reimbursement of Swiss taxes WT/L/ 1111 
 
- 26 - 
 
  from previous years but also from recovering taxes paid outside Switzerland. A decrease was also a 
result of writing off claims for years 2014 -2015, a s recommended by the External Auditors. 
Nonetheless, the Pension Plan Secretariat continues to pursue the recovery of the withholding taxes 
and regularly checks in with the custodian banks on the process.WT/L/ 1111 
 
- 27 - 
 
  ANNEX 2 INVESTMENT PRINCIPLES OF THE PENSION PLAN  
1.  Pursuant to Article 13 of the Regulations of the Pension Plan and Rule A.9 of the Rules of 
Procedure, the Management Board shall be responsible for the secure investment of all Plan assets, 
the formulation of inve stment policies after taking appropriate professional advice, and the 
appointment of investment managers to implement that policy.  
2.  Derivatives may be used within the global hedged fixed income mandate for hedging purposes, 
where they provide the opportunit ies to achieve the objective of the Plan more efficiently than would 
be the case through the direct dealing in underlying securities. Derivative instruments for this 
mandate are restricted to forward foreign currency contracts, futures, covered bond option s and 
interest rate options. Leverage and net short positions are not allowed.  
3.  In 2013 the Management Board approved a consolidated set of investment guidelines to 
articulate more precisely the Plan's approach to investment. A summary of these guidelines w as 
shared with Plan participants and beneficiaries and can be found below. In 2020 the investment 
guidelines were revised in order to include the Board's decision on the new strategic asset allocation 
(50% equities, 30% fixed income and 20% real estate) an d the new additional rule for rebalancing , 
however t he princip les behind the below summary remain unchanged.  
Summary of the WTO Pension Plan's approach to investment  
 
Long -term investing  
 
4.  The WTOPP is a long -term investor because its commitments are long -term and because behavior  
and decisions made with a long -term view are more likely to succeed. The long -term focus is rooted 
in the belief – supported by historical analysis – that in the long run, market returns will tend to 
reflect the assets' economic ac hievements.  
5.  This long -term orientation enables the Management Board to deploy its time efficiently by 
focusing on investment decisions with significant impact on portfolio returns while avoiding time 
spent on issues where the outcome is random or where the  long-term impact is negligible.  
6.  Cognizant of the unreliable nature of short - or medium -term forecasts and the potential losses 
they may cause, the Management Board will not engage in "timing" short -term market fluctuations. 
Bets on the short - or medium -term evolution of financial markets may convert temporary losses into 
permanent impairment of capital.  
Investment risk  
 
7.  The WTOPP should be concerned with permanent capital impairment. Non -recoverable loss 
permanently reduces future earning power. For example, money lent to a borrower that cannot fully 
honor  its debt will not only permanently impair capital but also its cap acity to generate future 
earnings.  
8.  Price volatility is commonly considered as a measure of investment risk. However, volatility fails 
to measure long -term investment risk and is only a threat to long -term investors if they misread its 
significance. For exa mple, if a company's share price quickly falls by 50%, its volatility will skyrocket. 
However, if the long -term perspective of the company has not changed, the risk for investors has 
been greatly reduced, not increased. Thus, investors should focus on the long-term perspective not 
on market driven price volatility.  
9.  The valuation of an asset affects its future returns. Therefore, the valuation of assets is a risk 
that can produce damages similar to permanent capital loss. This is why it should be monitored o n 
an on -going basis.  
10.  Monitoring the valuation does not constitute an attempt to predict the short -term evolution of 
market prices, but to appraise the long -term potential profitability of an investment given its current 
characteristics.  WT/L/ 1111 
 
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  Allocation of assets  
 
11.  Asset allocation is the main source of portfolio returns. Particular attention will therefore be paid 
to the definition and implementation of WTOPP's "strategic asset allocation".  
12.  Each asset class in the portfolio must generate a meas urable income and must contribute to 
increasing the value of the WTOPP's assets. This increase must be driven by reliable, identifiable 
economic factors. The prospective return potential of each asset class may be assessed on the basis 
of these appropriate  factors.  
13.  The WTOPP will maintain adequate diversification because expected returns on asset classes 
may take a long time to materialize and because the non -correlation of different assets helps dampen 
volatility and hence help avoid ill -considered decisio ns. 
14.  Asset classes and financial structures that do not produce income, lack transparency or use 
significant leverage are not appropriate for WTOPP. Commodities, hedge funds, venture capital, as 
well as structured products are therefore excluded from WTOPP' s investment universe.  
15.  The WTOPP seeks to avoid changes in asset allocation based on short -term views and forecasts: 
all too often such changes only result in increasing costs. Changes in asset allocation are only 
warranted when justified by significant ch anges in the measurable characteristics of the Plan's 
investments allocated to an asset category or by fundamental changes in the Plan's liabilities or 
structure.  
Style of management  
 
16.  The objective of the implementation process is to execute the investment  strategy as closely as 
possible while minimizing costs and avoiding unwanted implementation risks.  
17.  The Management Board implements the WTOPP's strategic allocation predominantly through 
indexed vehicles or portfolios.1 Indices will be selected with utmost care, so that they truly represent 
the asset class in which the WTOPP's strategy intended to invest.  
18.  The choice of passive management is motivated by the observation that, over time, active 
management has performed les s well, is less diversified, less predictable and more costly. Moreover, 
active management tends to be based, in most cases, on short -term views.  
19.  The WTOPP may use active management when passive management is not feasible or when 
tangible and clearly ident ifiable reasons lead to the belief that active management represents a 
better path.  
20.  Overall, the Plan will strive to minimize risks related to the implementation of the investment 
strategy. These risks include, but are not limited to, active management ris k, unwanted credit risk 
and legal structure risk.  
Rebalancing  
 
21.  The WTOPP adopts a counter -cyclical approach through a systematic annual rebalancing 
mechanism whose function is to maintain the weight of the assets aligned with the strategic 
allocation.  Rebalancing exercises are undertaken at least annually, normally in February.  Since a 
Board decision in 2020, a rebalancing will also be triggered by changes on financial markets causing 
the weight of equities in the portfolio to deviate by more than 10% from the strategic allocation . 
22.  The systematic rebalancing is an effective way for the Plan to maintain a stable exposure to the 
market while taking advantage of market volatility.  
 
1 Indexed vehicles aim to generate returns that are equal to those of a market index.  WT/L/ 1111 
 
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  Cost and conflicts of interest  
 
23.  Cost sensitivity is an integral part of the inves tment strategy. Costs should be maintained as 
low as possible without hindering the Plan's capacity to achieve its targets.  
24.  The supply of investment services or products is primarily driven by the financial interests of 
providers rather than by investors. The Management Board will therefore be particularly vigilant in 
choosing investment solutions that fit in its strategy and targets. The WTOPP will avoid investment 
vehicles in which the investment manager is paid a performance -based fee.2 
25.  The i nvestment guidelines adopted by the Management Board are intended to generate 
sustainable returns over time and promote sound decisions even in times of economic stress and 
uncertainty. The guidelines are periodically reviewed to ensure they remain appropr iate to the 
structure and circumstances of the Plan.  
__________  
 
2 Such arrangements are unfair for investors because of the asymmetry of risk and reward