RESTRICTED  
  
WT/BFA/W/637  
WT/L/1168  
 
12 June 2023  
(23-3924) Page: 1/15 
Committee on Budget, Finance and Administration  
General Council  
24-25 July 2023  Original: French  
 
  
WTO PENSION PLAN  
REPORT OF THE INDEPENDENT EXTERNAL AUDITOR  ON THE AUDIT  OF THE  
FINANCIAL STATEMENTS OF THE  WORLD TRADE ORGANIZATION  
PENSION PLAN  FOR THE FINANCIAL YEAR  
ENDED 31  DECEMBER  2022  
The report of the independent External Auditor on the audit of the Financial Statements of the 
WTO Pension Plan for 2022 is attached.  
 
_______________  
 
 WT/BFA/W/637 • WT/L/1168  
- 1 - 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
EXTERNAL AUDIT OF  
THE WORLD TRADE 
ORGANIZATION  
PENSION PLAN  
 
AUDIT REPORT  
 
FINANCIAL STATEMENTS OF THE  
WORLD TRADE ORGANIZATION 
PENSION PLAN  
FOR THE FINANCIAL YEAR ENDED  
31 DECEMBER 2022  
 
 
REFERENCE OF THE COUR DES COMPTES: OMC -2023 -2   
 
 
 
 
 
 
 
 
 
 
 
 
REFERENCE OF THE COUR DES COMPTES: OMC 2022 -XX 
 WT/BFA/W/637 • WT/L/1168  
- 2 - 
 
  
 
WT/BFA/W/637 • WT/L/1168  
- 3 - 
   
TABLE OF CONTENTS  
 
 
I. OBJECTIVES AND SCOPE OF THE AUDIT  ................................ ................................ ............  5 
II. LIST OF RECOMMENDATIONS  ................................ ................................ ..........................  6 
III. FOLLOW -UP TO PREVIOUS RECOMMENDATIONS  ................................ ...............................  7 
IV. OBSERVATIONS AND RECOMMENDATIONS  ................................ ................................ ....... 9 
1. Corrections to the accounts  ................................ ................................ ..........................  9 
2. Overview  of the financial position of the Pension Plan  ................................ .......................  9 
2.1 Presentation of the simplified financial position statement  ................................ ...............  9 
2.2  Presentation of the simplified income and expenditure statement  ................................ ... 10 
3. Accounting  standard applicable to the presentation of the accounts of the Plan  ....................  11 
4. Long-term balance of the Pension Plan  ................................ ................................ ..........  11 
V. ACKNOWLEDGEMENTS  ................................ ................................ ................................  13 
ANNEX: AUDIT ADJUSTMENTS  ................................ ................................ .............................  14 
 
 
 
 WT/BFA/W/637 • WT/L/1168  
- 4 - 
   
 
SUMMARY  
The Pension  Plan provides retirement, death, disability and related benefits for the staff of the 
World Trade Organization (WTO). These benefits are funded through contributions received 
from WTO Members and staff. The surplus resulting from the  contributi ons received less the 
benefits paid is invested by the Plan. The Plan's investments amounted to assets of 
CHF 639.6 million at the end of 2022.  
The Pension  Plan's financial position has deteriorated, with a net asset  value  down by 
CHF 97 million compared to the amount at the end of 2021, owing to financial losses incurred 
on financial investments. These losses amounted to CHF  94 million in 2022, despite the Plan 
recording a profit on financial investments of CHF  75 million in 2021.  
Beyond the cyclical fluc tuations in investment returns , the Plan's long -term balance is not 
assured. The latest actuarial valuation highlighted that the contribution rate actually applied is 
10.5% lower than the theoretical contribution rate required to cover future pensions.  
The Pension Plan Management Board spent most of 2022 developing a reform proposal 
aimed at bringing the Plan  back to a sustainable position . If no action is taken, the funding gap 
will increase.  
The reform proposal , which was still under discussion at the t ime of the audit, seeks to take 
action on a combination of several parameters, mainly an increase in contribution rates for 
WTO Members and participants, an increase in the retirement age from 65 to 68  years  for 
future staff members, a downward adjustment of the benefits calculation for future staff 
members and a capital infusion from WTO Members.  
The External Auditor has issued an unqualified opinion on the Financial Statements of the 
Pension Plan for the financial year ended 31  December  2022. The opinion includes an 
Emphasis of Matter paragraph on the limit ations  of financial statements presented in 
accordance with a specific  basis of  accounting.  
 
  WT/BFA/W/637 • WT/L/1168  
- 5 - 
  I.  OBJECTIVES AND SCO PE OF THE AUDIT  
1. In accordance with the engagement letter dated 24  November  2020 and with our 
notifications of 5  October  2022 and 28  March  2023, a team of seven auditors conducted the 
audit of the financial statements of the World Trade Organization (WTO) a nd its Pension  Plan 
for the financial year ended 31  December  2022. The audit work was carried out at the 
WTO  headquarters in Geneva in two phases:  
- an interim audit mission from 7 to 18  November  2022 ; 
- a final audit mission from 24  April to 12 May 2023 . 
2. The audit was carried out in accordance with the provisions of the financial and 
administrative regulations of the WTO Pension Plan, the International Standards of Auditing 
(ISAs) and the International Standards of Supreme Audit Institutions ( ISSAIs) on financial 
audits.  
3. The purpose of the audit was to determine, with reasonable assurance, whether the 
financial statements fairly present, in all material respects, the Pension Plan's financial position 
as at 31  December  2022 and the results of tr ansactions recorded during the financial year, in 
accordance with the Plan's  Regulations and Rules of Procedure.  
4. The financial statements for the financial year ended 31  December  2022 were submitted 
to the External Auditor on 3  May 2023.  
5. Each observation a nd recommendation was discussed with the relevant officials. Senior 
management received the External Auditor's interim report on 26  May 2023 and their written 
comments have been fully taken into account in this report.  
6. The External Auditor has issued an unqualified opinion  on the Financial Statements of 
the Pension  Plan for the financial year ended 31  December  2022, including an emphasis of 
matter paragraph  on the limit ation s of financial statements presented in accordance with a 
specific basis of accountin g. WT/BFA/W/637 • WT/L/1168  
- 6 - 
  II.  LIST OF RECOMMENDATIONS  
7. The recommendations made are assigned a priority level, decided by the External Auditor:  
• Priority 1:  fundamental issue requiring management's immediate attention. Indicates 
the existence of a high level of risk for the management's objectives . 
•  Priority 2:  less urgent control issue to be addressed by management. Indicates an 
intermediate level of risk.  
•  Priority 3:  issue for which controls could be improved and to which management's 
attention is drawn. Indicates a moderate level of risk.  
 
8. The External  Auditor is not issuing any new recommendations as part of its financial audit 
of the Pension Plan's accounts.  
 
  WT/BFA/W/637 • WT/L/1168  
- 7 - 
  III.  FOLLOW -UP TO PREVIOUS RECOMMENDATIONS  
9. The status of the recommendations depends on the extent to which t hey have been 
implemented:  
-  Closed:  the recommendation was fully implemented under the same 
conditions as which it was made and in line with its intended objective;    
-  Ongoing:  implementation has started in the recommended direction, but 
actions are yet to be finalized;   
-  Open:  implementation has not started (for whatever reason);   
-  Lapsed:  an old, unimplemented recommendation, whose implementation 
would prove unsuitable for  the new management conditions, may lapse or be 
superseded by a new recommendation that better meets the reference quality 
criteria.   
10. The External Auditor had previously made two priority 2 recommendations  in support of 
its audit of the  WTO  Pension Plan Financial Statements for the financial year ended 
31 December  2021.  
Table 1: Summary of the implementation of recommendations  
Issue  Implemented  Ongoing  Open  Lapsed  Total  Year / 
Observation 
No. 
       Clarify, with objective and quantitative 
criteria, what is expected in terms of 
the long -term balance of the Pension 
Plan and set a deadline for the 
achievement of this balance.   X   
 4.3/2021  
(1) 
Communicate to employees, 
beneficiaries and members of the 
Management Board the actuarial 
information produced by the actuary 
EY, as well as the actuarial 
information produced by the 
consulting actuary c-alm, and explain 
the differences and purposes.   X   
 4.4/2021  
(2) 
11. The first recommendation is in follow -up to the consulting actuary's 2021 interim actuarial 
valuation report, which indicated the long-term cost of the Pension Plan was equivalent to a 
contribution rate of 33.1% at year-end 2021 , but the actual contribution rate was 23.7%, i.e. 
an actuarial gap of 9.4%.  
12. The External Auditor had also recommended clarifying, with objective and quantitative 
criteria, what type of long -term balance the Pension Plan should aim to achieve and setting a 
deadline for the achievement of this balance.  
13. The Secretariat asked the Pension  Plan's consulting actuary to give its opinion on how to 
respond to this recommendation and make the Plan's actuaria l communications simpler and 
more transparent. The consulting actuary analysed three quantitative criteria, namely the 
required contribution rate, the underfund ing/overfund ing amount , and the funding ratio. The 
consulting actuary suggested that the funding  ratio (defined as the ratio of existing assets plus 
future contributions to future benefits plus administrative costs) might be the most appropriate 
quantitative criterion to measure the funding of the Pension Plan in the future.  WT/BFA/W/637 • WT/L/1168  
- 8 - 
  14. On acceptable deviations and time frames for correcting a deficit, the consulting actuary 
advises that the Pension Plan is considered fully funded when a funding ratio of 100% is 
achieved. Owing to the volatility of the asset s market and the uncertainty of  actuarial 
assumptions, the Pension Plan could be considered as balanced when a funding ratio of 
between 90% and 110% is achieved. If the funding ratio is below  90% in a given year (based 
on the actuary report), the Management Board should take measures to bring the funding ratio 
within a range of 95% to 105% within five to seven years. If the funding ratio is below  80%, 
the Management Board should launch a proce ss that aims to move the funding ratio back 
within a range of 95% to 105% within three to five years.  
15. At its 145th meeting held on 14  February  2023, the Pension Plan Management Board 
acknowledged that it was  importan t to carefully defin e acceptable deviati ons from the actuarial 
balance, but noted that the implementation of this recommendation went hand in hand with 
the ongoing reform aimed at restoring the long-term viability of the Plan (see Section  4). In the 
meantime, the Management Board suggested that it would be useful to investigate what other 
international organizations use as indicators and criteria for their actuarial position. This item 
will be discussed again this year.  
16. As a result, the External  Auditor considers that the recommendation is ongoin g.  
17. The second recommendation is to communicate to employees, beneficiaries and 
members of the Management Board the actuarial information produced by the WTO's actuary 
(as part of the preparation of the IPSAS financial statements) in the same way as the ac tuarial 
information produced by the Plan's consulting actuary, and to explain the differences and 
purposes.  
18. This recommendation is taken into account in Statement 2 (balance sheet) of the Pension 
Plan's Financial Statements, in which explanations are provi ded on the differences between 
the open -group valuation of the Plan's consulting actuary and the WTO actuary's termination 
valuation. In addition, the Plan's consulting actuary will henceforth now include the results of 
the WTO IPSAS valuation in all the a ctuarial valuation reports that it produces for the Pension 
Plan, and explain the differences between the two valuations.  
19. As a result, the External  Auditor concludes that this recommendation is ongoing and will 
be implemented once the final report of the c onsulting actuary has been issued.  
  WT/BFA/W/637 • WT/L/1168  
- 9 - 
  IV.  OBSERVATIONS AND RECOMMENDATIONS  
1. Corrections to the accounts  
20. In the course of its audit, the External Auditor did not identify any misstatement that would 
have required the Plan to modify the financial statements for the financial year 2022.    
2. Overview  of the financial position of the Pension Plan  
2.1 Presentation of th e simplified financial position statement  
Table 2: Simplified financial position statement  of the WTO  Pension Plan 
(in CHF)  
 31/12/2022  31/12/2021  
Non-current assets    
Investments  639,621,203  737,347,289  
Current assets    
Withholding taxes to be recovered  1,693,786  1,775,026  
Total non -current assets    
TOTAL ASSETS  641,314,989  739,122,315  
Current liabilities    
Accrued expenses  89,004  540,004  
Capital    
Capital as at 1 January  738,582,311  665,585,646  
Profit / Loss  -97,356,326  72,996,664  
TOTAL LIABILITIES  641,314,989  739,122,315  
Source: Financial Statements of the WTO Pension Plan  (rounded amounts) . 
21. The Pension  Plan provides retirement, death, invalidity and related benefits for WTO staff. 
These benefits are funded through contributions received from WTO Members and staff. The 
surplus resulting from the contributions received less the benefits paid is  invested by the Plan. 
The Financial Statements of the Pension Plan  set out these operations.  
22. The simplified financial position statement  of the WTO  Pension Plan, given above, shows 
a deteriorating financial structure, with a net asset value of CHF  641 million at the end of 2022, 
down CHF 97 million compared to the amount at the close of 2021 given in the previous 
Financial Statements, due to the investment losses suffered by the Plan. 
23. The other receivables  amounting to CHF 1.7 million relate to recoverable  tax refunds 
resulting from withholding taxes on dividend payments and coupons received. The other 
receivables  have remained stable in relation to the previous year.  
24. Accrued expenses amounted to CHF  0.1 million, down from CHF  0.4 million, but the 
figure i s consistent with that of 31  December  2020. The increase seen in 2021 was due to the 
late reimbursement to the WTO of health insurance contributions for the fourth quarter of 2021 
(payment received on 8 February 2022). Reimbursement payments were not late in 2022.  WT/BFA/W/637 • WT/L/1168  
- 10 - 
  2.2  Presentation of the simplified income and expenditure statement  
Table 3: Simplified income and expenditure statement of the WTO  Pension Plan 
(in CHF)  
 2022  2021  
Income    
Investment income  0 75,371,340  
Organization, contributions  19,770,060  19,486,923  
Participants, contributions  9,928,018  9,778,321  
Other income  1,078,671  169,180  
Reimbursements of insurance claims  657,535  645,051  
Total income  31,434,285  105,450,815  
Expenditure    
Periodic benefits  28,768,133  27,146,847  
Lump sum benefits  4,978,090  3,368,145  
Participants' death and disability coverage  0 707,813  
Loss on investment  94,016,030  200,913  
Administrative expenses  1,028,358  1,030,433  
Total expenditure  128,790,611  32,454,151  
Profit / Loss for the period  -97,356,326  72,996,664  
Source: Financial Statements of the WTO Pension Plan  (rounded amounts) . 
25. The Pension Plan  has registered a financial loss on investments  of CHF  94 million in 
2022, after making a profit of CHF  75 million in 2021. The investment portfolio had a nominal 
return of -12.9% in 2022, compared to the -12.2% benchmark index of the Pension Plan. As 
inflation for 2022 in Switzerland was close to 2.8% , the portfolio's real rate of return was 
therefore -15.7% for the year.  
26. Contributions grew by 4.6%, from CHF  29.3 million in 2021 to CHF  30.8 million in 2022, 
while periodic benefits increased by 6.0%, from CHF  27.1 million in 2021 to CHF  28.8 million 
in 2022.  Lump sum benefits reached CHF  5.0 million in 2022, compared to CHF  3.4 million in 
2021. These variations, in terms of contributions, are mainly the result of staff arriving from 
other international organizations, who are entitled to transfer their pension rights, in recognition 
of which the first organization transfers the contributions collected. In terms of periodic 
benefits, the variations are largely due to changes in the number of Plan beneficiaries.  
Table 4: Number of participants and beneficiar ies as at 31 December  
 2022  2021  2020  
Participants  705 716 709 
Beneficiaries  446 427 408 
Source: Financial Statements of the WTO Pension Plan.  
27. Thus, in both 2022 and 2021, while contributions were sufficient to cover periodic benefit 
payments, they did not cover lump sum benefit payments.  
28. Lastly, administrative expenses reached CHF  1.0 million and remained stable in relation 
to 2021.  
29. Furthermore , it should be noted that, since 2022, the Pension Plan covers disability 
benefits, which were previously covered by an insurance policy. That policy was terminated at 
the end of 2021. The expenditure recorded in 2021 for CHF  0.7 million was therefore not 
incurred again in 2022. Although this insurance policy has been cancelled, the Pension Plan 
continues to receive reimbursements linked to disability cases that predated the termination 
of the contract (CHF  0.7 million in 2022).  WT/BFA/W/637 • WT/L/1168  
- 11 - 
  3. Accounting  standard applica ble to the presentation of the accounts of the Plan  
30. The Pension Plan of the World Trade Organisation is not a separate legal entity but a 
component of the WTO.  
31. Article 5(d) of the Regulations of the WTO Pension Plan (as amended on 26 July 2017) 
provides th at its Management Board present a report each year to the WTO General Council, 
giving various pieces of information and in particular (i) an account of the financial transactions 
during the year, (ii) the balance sheet, [...] (vi) any other decisions taken  in connection with 
the administration of the Plan.  
32. The financial statements presented by the Pension Plan and submitted to the External 
Auditor specifically meet the obligations provided for in this Article. According to the principles 
and definitions of the International Standard on Auditing (ISA), they are "special purpose 
financial statements".  
33. Article 5(e) of the Regulations of the WTO Pension Plan provides that its accounts are 
audited by the External Auditors [of the WTO] in a manner agreed with the Management 
Committee. Since no agreement relating to the external audit of the accounts of the Pension 
Plan had been concluded, the accounts were audited in accordance with ISA  800 (Special 
Considerations - Audits of Financial Statements Prepared in Accord ance with Special Purpose 
Frameworks).  
34. As part of the audit procedures, in accordance with the requirements under ISA 800, the 
External Auditor first sought to obtain from the Plan managers the description of the 
accounting principles and policies used to  produce their accounts.  
35. Nevertheless, pursuant to the provisions of ISA 800, paragraph 14, the opinion of the 
External Auditor includes an Emphasis of Matter paragraph "alerting users [i.e the Plan's 
beneficiaries] that the financial statements are prepa red in accordance with a special purpose 
framework and that, as a result, the financial statements may not be suitable for another 
purpose" .  
4. Long -term balance of the Pension Plan  
36. The last full actuarial valuation of the Pension Plan1, based on data as at  
31 December  2020, identified an actuarial gap of 10.5% (expressed as a percentage of the 
contribution rate) resulting from the difference between the theoretical contribution rate 
needed to cover future pensions and the contribution rate actually applied.  As a means of 
illustration, this gap could be closed by an increase of 10.5% in the actual pension contribution 
rate (from 23.7% to 34.2%, which is referred to as the "required contribution rate" or RCR), or 
by an increase in the Plan's assets by CHF  380 million with a capital infusion  from Members.  
37. The Pension Plan Management Board has been working for most of 2022 to develop a 
reform proposal that aims to bring the Plan back to a sustainable position. But there should 
be no doubt that if no action is taken, the actuarial position of the Plan will co ntinue to 
deteriorate, in other words, the funding gap will increase.  
 
1 11 February 2022.  WT/BFA/W/637 • WT/L/1168  
- 12 - 
  38. The Plan's reform proposal was submitted to the Committee on Budget, Finance and 
Administration on 2 November 2022 (WT/BFA/W/613). The proposal is guided by various 
principles, includin g the principle of fairness regarding the burden sharing among 
stakeholders, and the use of the contribution rate as the element that contributes most to 
reducing the funding gap (while respecting the 1/3 - 2/3 allocation between participants and 
WTO Membe rs). 
39. The reform proposal submitted addresses several parameters, the main ones being:  
- Raising contribution rates from 15.8% to 19.2% for WTO Members and from 
7.9% to 9.6% for participants.  
- Increasing the retirement age from 65 to 68 years for future s taff. 
- Reducing the accumulation rate for the purpose of the benefit calculation for 
future staff: currently, for each year of service for the first 30 years, staff are 
entitled to a pension accumulation equivalent to 2% of final average 
remuneration for each year of service, and then 1% for year 31 to year 40. This 
rate would be revised to 1.5% for year 1 to 5, 1.75% for year 6 to 10, 2% for 
year 11 to year 32, and then 1% per year after year 32, with total accumulation 
capped at 70%.   
- A capital infusio n of CHF  68.77 million from WTO Members.  
40. The impact on the actuarial gap of changing these parameters is set out below:  
Table 5: Actuarial impact of the changes envisaged in the reform proposal  
 Actuarial impact  
Contribution rate increase  5.1%  
Retirement age increase for future staff members  2.0%  
Accumulation rate reduction for future staff members  1.2%  
Capital infusion of CHF  68.77  million by WTO Members  1.9%  
Other measures  0.3%  
TOTAL  10.5%  
Source: WTO Pension Plan (update given to the CBFA at the meeting of 8  November  2022).  
41. To date, the draft reform of the Plan remains under discussion.  
  WT/BFA/W/637 • WT/L/1168  
- 13 - 
  V. ACKNOWLEDGEMENTS  
42. The External Auditor extends its thanks to all the teams of the WTO Pension Plan for the 
assistance provided during the audit.  
 
 
 
 
 
 
End of audit observations.  
 
_______________  
 
 
  WT/BFA/W/637 • WT/L/1168  
- 14 - 
  ANNEX: AUDIT ADJUSTMENTS  
The work of the External Auditor has not identified any audit adjustments, whether due to 
errors or judgmental differences.  
Audit adjustments  Impact on the statement of financial position  Impact on the 
statement of 
financial 
performance  Current 
assets  Non-
current 
assets  Current 
liabilities  Non-
current 
liabilities  Net 
position  
NONE  NONE  NONE  NONE  NONE  NONE  NONE  
Source:  External Auditor  
 
 
__________