RESTRICTED  
  
WT/L/1035  
 
25 June 2018  
(18-3961) Page: 1/10 
 Original: English  
 
 
 
WTO PENSION PLAN  
 
REPORT OF THE INDEPENDENT EXTERNAL AUDITOR ON THE AUDIT OF THE FINANCIAL 
STATEMENTS OF THE WORLD TRADE ORGANIZATION PENSION PLAN (WTOPP)  
FOR THE YEAR ENDED 31 DECEMBER  2017 
Contents  
1  EXECUTIVE SUMMARY  ................................ ................................ ................................ .. 2 
2  SCOPE AND APPROACH OF THE AUDIT  ................................ ................................ .........  3 
2.1  Scope of the Audit  ................................ ................................ ................................ ........  3 
2.2  Audit Objective and Approach  ................................ ................................ ........................  4 
2.3  Audit Conclusion  ................................ ................................ ................................ ...........  4 
3  COMMENTS / AUDIT FINDINGS  ................................ ................................ ....................  4 
3.1  General Overview of the Plan's Financial Situation  ................................ ............................  4 
3.2  Investment Policy  ................................ ................................ ................................ .........  6 
3.3  Withdrawal settlement  ................................ ................................ ................................ .. 6 
3.4  Administrative costs ................................ ................................ ................................ ...... 7 
3.5  Internal Auditor's Comment  ................................ ................................ ...........................  8 
4  ACKNOWLEDGEMENT  ................................ ................................ ................................ ... 8 
ANNEX: LIST OF RECOMMENDATIONS  ................................ ................................ ..............  9 
 
 WT/L/1035  
 
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  1  EXECUTIVE SUMMARY  
My team and I have audited the financial statements of the WTO Pension Plan  
1.  My team and I have audited the financial statements of the World Trade Organization 
(hereinafter “WTO”) Pension Plan for the financial period from 1  January to 31  December  2017.  
Responsibility of Management  
2.  The Management  Board of the WTO Pension Plan is responsible for preparing the financial 
statements in accordance with the Financial Regulations of the Plan.  
Responsibility of the External Auditor  
3.  My responsibility is to express an opinion on these financial statements b ased on my audit . 
Scope of the audit  
4.  The audit included the examination of evidence supporting the amounts and disclosures in the 
financial statements . It also included an assessment of the underlying accounting principles and 
significant estimates made by  the Management Board.  
I conducted my audit in conformity with the International Standards on Auditing  
5.  I conducted my audit in conformity with the International Standards on Auditing (ISAs) as 
adopted and amended by the International Organization of Supre me Audit Institutions (INTOSAI) 
and issued as International Standards for Supreme Audit Institutions (ISSAI). These standards 
oblige me to comply with ethical requirements and to plan and carry out the audit to obtain 
reasonable assurance that the financia l statements are free from material misstatement.  
The financial statements present fairly the financial position  
6.  As a result of my audit, I am of the opinion that the financial statements present fairly, in all 
material respects, the financial position as  of 31 December  2017.  
I placed an unqualified opinion on the financial statements  
7.  The audit revealed no weaknesses or errors which I considered material to the accuracy, 
completeness and validity of the financial statements as a whole. I have placed an unq ualified 
audit opinion on the financial statements of the WTO Pension Plan for the year ended 
31 December  2017.  
Areas covered by this report  
8.  My report includes observations and recommendations intended to contribute to the 
improvement of financial manageme nt. For 201 7, my audit work has mainly covered the areas 
described in the following paragraphs.  
Acknowledgement  
9.  I wish to convey my appreciation for the cooperation and assistance extended by the 
Management Board, Management and staff of the Secretariat. I  am very grateful for their 
assistance during the entire external audit process.  WT/L/1035  
 
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  2  SCOPE AND APPROACH OF THE AUDIT  
2.1  Scope of the Audit  
Principles governing my audit  
10.  My staff and I have audited the financial statements of the WTO Pension Plan for the financia l 
period from 1  January to 31  December  2017. We also examined the related financial accounts and 
transactions in WTO Headquarters in Geneva.  
Responsibility of Management  
11.  The Management Board of the WTO Pension Plan is responsible for the preparation and fa ir 
presentation of these financial statements in accordance with the Financial Regulations of the Plan, 
and with such internal controls as Management determines are necessary to permit the 
preparation of financial statements that are free from material mis statement, whether due to fraud 
or error.  
Responsibility of the External Auditor  
12.  My objectives are to obtain reasonable assurance about whether the financial statements as a 
whole are free from material misstatements, whether due to fraud or error, and to issue an 
auditor’s report with audit opinion. Reasonable assurance is a high level of assurance, but is not a 
guarantee that an audit conducted in accordance with ISAs will always detect each and every 
material misstatement. Misstatements can arise from fr aud or error and are considered material if, 
individually or in the aggregate, they could reasonably be expected to influence the economic 
decisions of users taken on the basis of these financial statements.  
As part of an audit in accordance with ISAs, I e xercise professional judgement and maintain 
professional scepticism throughout the audit . 
I also:  
 
 identify and assess the risks of material misstatement of the financial statements, 
whether due to fraud or error, design and perform audit procedures respon sive to those 
risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for 
our opinion. The risk of not detecting a material misstatement resulting from fraud is 
higher than for one resulting from error, as fraud may involve c ollusion, forgery, 
intentional omissions, misrepresentations, or the override of internal control;  
 
 obtain an understanding of internal control relevant to the audit in order to design audit 
procedures that are appropriate in the circumstances, but not fo r the purpose of 
expressing an opinion on the effectiveness of WTOPP’s internal control;  
 
 evaluate the appropriateness of underlying accounting policies and the reasonableness of 
accounting estimates and related disclosures made by Management;  
 
 evaluate t he overall presentation, structure and content of the financial statements, 
including the disclosures, and whether the financial statements represent the underlying 
transactions and events in conformity with the principles of fair presentation.  
 
 My team c ommunicated with those charged with governance the planned scope and 
timing of the audit and significant audit findings, including any significant deficiencies in 
internal control that we identify during our audit.  
Audit of the financial statements  
13.  The financial statements of the WTO Pension Plan, together with my audit report and the audit 
opinion, were discussed with the Management Board. It took note of the contents of my report . WT/L/1035  
 
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  2.2  Audit Objective and Approach  
Objective of financial audit : Forming the audi t opinion  
14.  The objective of the audit was to enable me to form an opinion on whether the expenditures 
recorded for the year had been incurred for the purposes approved, whether expenses were 
properly categorized and recorded in accordance with Financial Reg ulations; and whether the 
financial statements present fairly the financial position as of 31  December  2017. 
Testing convinced me of the correctness of the financial statements  
15.  My audit opinion is based on the testing of transactions recorded in the financ ial statements. 
The examination was carried out to ensure that the financial statements accurately reflect the 
accounting records and present fairly the financial situation of the WTO Pension Plan.  
2.3  Audit Conclusion  
I found no material weaknesses . I placed an unqualified opinion on the financial 
statements  
16.  Notwithstanding the observations in this report, my examination revealed no weaknesses or 
errors which I considered material to the accuracy, completeness and validity of the financial 
statements as a whol e. In accordance with normal practice, my team reported additional findings 
to the Management of the Secretariat in the course of the audit. I have placed an unqualified audit 
opinion on the financial statements of the WTO Pension Plan for the year ended 
31 December  2017.  
3  COMMENTS / AUDIT FINDINGS  
3.1  General Overview of the Plan 's Financial Situation  
The excess of income over expenditure as at 31  December  2017 is CHF  61.0 million  
17.  The Income and Expenditure Statement shows a surplus (excess of income over expenditure) 
of CHF  61.0 million as at 31  December  2017 (2016: CHF 39.6  million), thus an increase of 
CHF 21.4 million.  
This is a result of an increase in profit on securities in 2017 to CHF  60.1 million. In 2017, the total 
income increased to CHF  90.3 million (2016: CHF  65.0 million), an increase of CHF  25.3 million.  
However, income from contributions slightly decreased to CHF  29.0 million ( - CHF 1.7 million). The 
regular contrib utions by the organization and by participants amount to CHF  28.6 million  
Periodic benefits in 2017: CHF  21.5 million  
18.  Benefits paid out consist of periodic benefits (2017; CHF  21.5 million, mostly retirement and 
early retirement benefits) and lump sum ben efits (2017:  CHF 5.9 million, mostly for 
commutations).  
Total expenditure increased to CHF  29.3 million  
19.  The total expenditure in 2017 increased to CHF  29.3 million (2016: CHF  25.4 million) and 
were almost covered by the contributions (2017: CHF  29.0 millio n).  
Negative interests totalled CHF  106,247 in 2017  
20.  CHF 106,247 losses on investment incurred due to negative credit interests, owing to the 
policy of the Swiss National Bank (SNB). This loss is outreached by a profit of CHF  60.1 million 
registered on sec urities . WT/L/1035  
 
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  Administrative expenses slightly increased to CHF  840,662  
21.  Investment and other administrative expenses increased to a total of CHF  840,662 (2016: 
CHF 782,385).  
Securities increased by CHF 49.4 million  
22.  Total assets increased from CHF  535.5  million (as at 31  December  2016) to CHF  596.2  million 
(as at 31  December  2017) mainly due to the increase in securities by CHF  49.4 million . 
As at 31  December  2017 the Plan served 352 beneficiaries  
23.  As at 31  December  2017, the Plan served 352 beneficiaries and acc ounted for 699 active 
participants.  
24.  These 352 beneficiaries comprise 154 retirees, 118 persons who took early retirement, 15 
beneficiaries of survivor’s pensions, 18 children of beneficiaries and orphans, and 25 deferred 
retirements.  
Audit findings and rec ommendations  
25.  The following paragraphs contain audit findings and recommendations and provide further 
background  information . 
Actuarial rate of return: 10.39  per cent 
26.  The actuarial rate of return on investment, net of inflation (10.39  per cent) was positive  
Table 1: Calculation of the actuarial rate of return, net of inflation (in CHF)  
Actuarial rate of 
return  2013 2014 2015 2016 2017 
a. Value of assets as of 
1 January  396,539,355 440,342,527 486,697,204 495,898,233 535,529,801 
b, Value of assets as of 
31 December  440,342,527 486,697,204 495,898,233 535,529,801 596,165,379 
i, Adjusted1 Investment 
income  33,480,802 36,486,230 -930,196 33,792,675 59,947,702 
Average assets =  
(a+b -i)/2 401,700,540 445,276,751 491,762,817 498,817,680 535,873,739 
Actuarial rate of return in 
nominal terms = 
i/average assets  8.33%  8.19%  -0.19%  6.77%  11.19%  
Consumer Price Index for 
Switzerland2 0.10%  -0.30%  -1.30%  0.00%  0.80%  
Actuarial rate of 
return, net of inflation  8.23%  8.49%  1.11%  6.77%  10.39%  
Source :  External Auditor, on the basis of information provided by the WTOPP Secretariat.  
Table 2: Trend in actuarial rates of return in nominal terms (%) 
2009 2010 2011  2012  2013  2014  2015  2016  2017  
+21.29%  +3.52%  -1.10%  +9.70%  +8.33%  +8.19%  -0.19%  +6.77%  +11.19%  
Source : External Auditor, on the basis of information provided by the WTOPP Secretariat.  
                                                
1 Investment income according to the Income and Expenditure Statement minus management fees and 
bank charges.  
2 Rate of variation in the Consumer Price Index (CPI) for December compared to December of the 
previous year, as reported by the Swiss Federal Office of Statistics.  WT/L/1035  
 
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  3.2  Investment Policy  
Management Board defined an investment policy for asset allocation  
27.  Asset allocation is the main source of portfolio returns. Therefore, WTOPP’s Management 
Board defined and implemented an investment policy for the Plan . 
Asset allocation: equities, CHF bonds, real estate and cash   
28.  The Management Board of WTOPP adopted the following portfolio breakdown:  
 equities : 40 per cent (of which 32  per cent in developed market securities and 8  per cent 
in emerging market securities);  
 CHF bonds: 36  per cent (bonds hedged in CHF);  
 real estate: 20  per cent; 
 cash: 4 per cent.  
Allocation as of 31  December  2017 is close to the targets  
29.  Asset allocation as of 31  December  2017 of the Plan’s portfolio is close to the targets: 
42.5 per cent in equities (of which 33.7  per cent in developed markets and 8.8  per cent in 
emerging markets), 33.7  per cent in CHF bonds; 18  per cent in real estate, and 5.8  per cent in 
cash.  
Table 3: Breakdown of assets and investment performance (in nominal terms) of the 
classes of assets in 201 7 
Assets  Value  of assets 
end of 201 7 
(CHF  millions)  Asset allocation  
(strategy)  Performance  
(in nominal 
terms over 1 
year) Performance  
(in nominal terms 
over 3 years ) 
Equities  253.1 (42.5%)  40% 21.3%  8.8%  
Developed markets  200.5 (33.7%)  32% 18.8%   
Emerging markets  52.6 (8.8%)  8% 31.3%   
CHF bonds  200.5 (33.7%)  36% 3.8%  2.1%  
Investment grade bonds US$  76.3 (12.8%)  14% 1.1%   
Emerging countries bonds  80.2 (13.5%)  14% 7.9%   
Senior loans  44.1 (7.4%)  8% 1.3%   
Real estate  107.2 (18.0%)  20% 6.5%  7.8%  
Cash  34.6 (5.8%)  4%   
Total  595.4 (100%)   11.2%  5.9%  
Source :  External Auditor, on the basis of information provided by the WTOPP Secretariat.  
 
3.3  With drawal  settlement  
Each participant shall pay a contribution deducted from the monthly salary and 
transferred directly to the Pension Plan  
30.  Every member of the staff of the WTO shall become a participant of the Pension Plan upon 
taking up a contract for six month or longer, or upon completing six month of service without a 
significant interruption (Art. 15 Participation, WTO Pension Plan Regulations).  
Each participant shall pay a contribution deducted from the monthly salary and t ransferred directly 
to the Pension Plan. For periods of contributory service prior to 1 January 2010, the contribution of 
the participant and of the WTO shall correspond to 7.5% (participant) and 15% (WTO) of 
pensionable remuneration, respectively. For per iods of contributory service as from 1 January 
2010, the contribution of the participant and of the WTO shall correspond to 7.9% and 15.8% of 
pensionable remuneration, respectively (Art. 20 Contributions, WTO Pension Plan Regulations) . WT/L/1035  
 
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  Participants of the plan, who are not entitled to a retirement benefit, shall be paid a 
withdrawal settlement  
 
31.  Participants of the plan whose age on separation is less than the normal retirement age, or 
who are at the normal retirement age or more on separation but who are no t entitled to a 
retirement benefit, shall be paid a withdrawal settlement. This settlement shall consist of 10% of 
their Final average remuneration (FAR) for each of the first 20 years of service (Art. 26 Withdrawal 
settlement, WTO Pension Plan Regulations ). 
Participants, whose contributory service was shorter than five years, are not entitled to 
a retirement benefit  
 
32.  Participants, whose contributory service was shorter than five years, are not entitled to a 
retirement benefit (Art. 23 Retirement benefit, WTO Pension Plan Regulations).  
According to publicly available sources the United Nations Joint Staff Pension Fund (UNJSPF) pays 
back the amount of the contributions of the participant, as long as this person is not entitled to get 
a pension. That applies to all, who have not paid contributions for at least five years . 
The WTOPP pays back more than the amount of the contribution paid by the participants  
 
33.  The result of the regulation of the current Withdrawal settlement is that the WTOPP pays back 
amounts th at are higher than the contributions paid by the participants, by about 2% of their FAR. 
That means that the WTOPP in total pays back about 25% more than the WTOPP has received 
before as contributions from the participants. I see no convincing reason why t he WTOPP pays 
back much more than comparable organisations.  
I recommend that the WTO should review its Pension Plan Regulations regarding the 
Withdrawal settlement  
 
34.  I recommend that the WTO should review its Pension Plan Regulations regarding the 
Withdrawal settlement for staff which is not entitled to benefit from the Pension Plan (less than 
five years). In this context the WTOPP should compare the regulations regarding all repayments 
from the Pension Plan as part of a benchmarking . 
3.4  Administrative  costs  
Expenditure and other administrative expenses: cost for Trianon and other 
administrative cost CHF 206,382  
35.  In the Income and Expenditure statement the WTOPP shows under Expenditure/Investments 
and other administrative expenses: cost for Trianon and o ther administrative cost CHF 206,382. 
This includes the cost for external accounting (Trianon) as well as other administrative cost. The 
WTOPP explains that the administrative cost incurred in the general administration of the Pension 
Plan. 
Costs incurred by the WTO in providing a Secretariat in support of the Plan shall be 
excluded  
36.  They do not include the costs for the Plan’s Secretariat, which are borne by the WTO (Article 
5(f) of the Plan Regulations). Pursuant to Article 5 (f) of the Regulations the co sts incurred by the 
WTO in providing a Secretariat in support of the Plan are excluded. This treatment of costs was 
clarified in an amendment to the Regulations in November 2015. All other expenses incurred in 
administering the Plan, investing Plan assets,  and employing the services of provisional advisers 
shall be borne by the Plan. Each element of the expenses borne by the Plan shall be separately 
identified in the annual report.  WT/L/1035  
 
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  In total the costs of providing a Secretariat might be approximately CHF 685 ,000 per 
year  
37.  In 2017 the WTO funded 3.5 staff positions to manage the Pension Plan as well as to control 
external service provider and consultants supporting the Pension Plan in accounting, advisory and 
actuary services and providing client services to s taff and retirees of the WTO. The remuneration 
for these 3.5 staff including the employer charges added up to CHF 594,950 in 2017; for office, 
equipment, trainings and other support you could add 15 per cent additionally costs. In total the 
WTO bears costs  of approximately CHF 685,000 per year for service provided by the Pension Plan 
Secretariat.  
3.5  Internal Auditor's Comment  
No internal auditor’s comments in 2017  
38.  The WTO’s internal audit service has not conducted an audit of the WTOPP in 2017.  
4  ACKNOWLEDGEMENT  
I am grateful for the support received during the audit  
39.  I wish to express my appreciation for the cooperation and assistance extended by the 
Secretariat of the Pension Plan, the Management and staff of the WTO. I am very grateful for their 
assistance duri ng the entire external audit process .  
  WT/L/1035  
 
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ANNEX:  LIST OF RECOMMENDATIONS  
No. Issue  Reference: 
Chapter, Year  Recommendation  WTO's Comment / Implementation  Status  
1 Value of pension 
commitments  3.2 / 2014  I recommend that the financial statements of the WTOPP  
include the value of pension commitments (liabilities) as 
this is an essential element in assessing the situation of a 
pension plan.  The WTOPP Secretariat accepted the 
recommendation and amended the notes 
and added a footnote.  done 
2 Reserve / provision for 
operating costs  3.3 / 2014  I recommend that some further detail on the WTO costs 
be provided and a more up -to-date estimate be made. 
Further I recommend that the regulations be reviewed 
with the intention of clarifying the situation and, if 
necessary, specifying a procedure for settlement or 
waiver.  In November 2015, the General Council 
adopted revised regulations for the Pension 
Plan where it is clarified that the expenses 
borne by the Plan exclude "costs incurred by 
the WTO in providing a Secretariat in 
support of the Plan".  done 
3 Reimbursement of 
withholding tax  3.4 / 2014 and 3.4 
/ 2015  I reiterate the recommendation that the Secretariat 
should make further efforts to recover the debts related to 
withholding tax not reimbursed by the tax authorities of 
the countries concerned.  Efforts to recover withholding taxes are 
ongoing.  
A follow -up table of the process for 
recovering such taxes is available.  
In recent years, the Plan’s investments have 
not been subjected to further unrecoverable 
withholding taxes.  ongoing  
4 Market value / securities  3.3 / 2015  We noted that the current market value of one position was 
approx. CHF0.5  million higher than stated.  
The Secretariat agreed and amended the financial 
statements during our audit.  
I recommend reviewing and updating the reporting and 
documenting process between WTO and Funds to avoid 
misunderstandings or different results concerning market 
value of positions in the financial statements.  The financial statements were corrected to 
take into accoun t the most recent valuation 
of the position concerned.  
Most of the other WTOPP assets are 
invested in funds for which market 
valuations are promptly available at year 
end: they are less likely to be affected by 
similar discrepancies.  
 done  
  WT/L/1035  
 
- 10 - No. Issue  Reference: 
Chapter, Year  Recommendation  WTO's Comment / Implementation  Status  
Nonetheless, the Secr etariat will reinforce 
its verification of reports produced by the 
WTOPP’s service providers against reports 
received directly from fund managers.  
5 Withholding taxes  3.3 / 2016  The 2016 financial statements of the WTO Pension Plan 
include a position “Withholding taxes to be recorded” with 
an amount of CHF 615,662 as “Current Assets”. On the 
liability side WTOPP shows as “Reserves” a position 
“Unrecoverable withholding taxes” with  an amount of CHF 
396,000.  
Related to my recommendation concerning withholding 
taxes before I recommend a write off of the positions 
“Withholding taxes to be recorded” and “Unrecoverable 
withholding taxes” with the same amount of CHF 396,000. 
Possible tax refunds by political means or other 
agreements shall be considered as miscellaneous income 
in the respective year of the effective payment.  The WTOPP Secretariat accepted the 
recommendation and implemented it in its 
2017 financial statements.  Done 
6 Withd rawal settlement  3.3 / 2017  I recommend that the WTO should review its Pension Plan 
Regulations regarding the Withdrawal settlement for staff 
which is not entitled to benefit from the Pension Plan (less 
than five years). In this context the WTOPP  should 
compare the regulations regarding all repayments from 
the Pension Plan as part of a benchmarking.  The WTOPP Secretariat will review other 
international organization's provisions for 
similar benefits and report its findings to the 
Management Board.  ongoing  
 
 
__________