RESTRICTED  
  
WT/BFA/W /420 
12 June 2017 
(17-3133) Page: 1/3 
Committee on Budget, Finance and Administration   
 
  
WTO PENSION PLAN  REPORT  
 
1  MANAGEMENT BOARD REN EWAL  
1.1.  The 3-year term of the Management Board of the WTO Pension Plan (WTOPP) is now due for 
renewal . Therefore, there will be an opportunity for individuals  who may be interested in serving 
on the Management Board to participate in the renewal process.  
1.2.  For members and alternates elected by the General Council, a consultation process was 
announced to he ads of delegations by fax in June 2017 . For members and alternates appointed by 
the Director General, h alf are appointed directly and half based on the recommendations of 
participants in the Pension Plan. The nomination process for participants was launche d on 2 June 
2017.   
2  MANAGEMENT BOARD ACT IVITIES  
2.1.  The Management Board held five meetings in 2016. These took place on 27 January, 22 April, 
24 June, 30 September and 25 November. As ongoing items, the agendas for all these meetings 
included the presentation of the investment situation and a report by the Secretariat on matters 
arising since the previous meeting of the Management Board. Additionally, the Working Groups of 
the Management Board met eight times to address specific points on governance, investment  and 
actuarial issues.  
2.2.  In particular, the Management Board approved a revision of the Administrative Rules and of 
the Rules of Procedure of the Plan, and proposed the revised Rules for adoption by the General 
Council.  Primary changes sought to enhance the governance of the disability review processes and 
clarify the respective roles of the WTO medical adviser and a separate WTOPP medical adviser. 
They also addressed the medical examination of new Plan participants by clarifying and codifying 
the current pra ctice of the WTO Occupational Health Service in this regard.  
2.3.  These changes were approved on 7  December 2016. In light of that, the Pension Plan 
Secretariat updated the Guide to the WTO Pension Plan.  
2.4.  Finally, the Management Board during its last meeting dec ided to recommend that the 
definition of spouse in WTOPP Regulations and Rules should be aligned with the policies of the 
WTO.  A review of other International Organizations practices showed a clear trend towards the 
recognition of civil partnership s for pe nsion benefits . In addition,  the actuar y has indicated that the 
actuarial cost to the Pension Plan  would be immaterial. To align the definition of spouse with that 
used by the WTO , a definition will be added to Article 2 of the WTOPP Regulations clarifying  how 
the terms spouse and marriage are to be understood in the context of the regulations. This change 
will be proposed to the General Council for its approval  in July . 
3  ACTUARIAL POSITION O F THE PENSION PLAN  
3.1.  Preliminary results of the 2017 triennial actuarial valuation have been shared with the Board. 
The official report is still being finalized, but we are pleased to share key points identified by the 
valuation study.  
3.2.  Following amendments to the Plan regulat ions implemented in 2016 to address an actuarial 
imbalance and a careful review of the assumptions to be used in the valuation study, the actuaries WT/BFA/W/420  
 
- 2 - 
 
  have concluded that the current long term contribution rate is sustainable. Therefore, the actuary 
does not recommend that any action be taken at this time. Nonetheless, the report will flag two 
aspects related to the sustainability of the Plan that should be monitored.   
 First, and as always, the long term viability will depend on achieving the target investmen t 
returns. Economic uncertainty and low interest rates could make achieving the target 
return more difficult in the coming years.  
 
 Second , changes in staffing and recruitment which reduce the number of active 
participants in the Plan would disrupt the  actuarial balance of the Plan. A key assumption is 
that the total number of active participants will remain stable over time. If, for example, 
there were to be a persistent structural decrease in the number of employees, an actuarial 
deficit would emerge that would have to be addressed by the Management Board.  
 
4  HIGHLIGHTS FROM THE UPCOMING 2016 ANNUAL  REPORT  
4.1  Evolution of the Pension Plan Demographics  
4.1.  The number of participants has remained largely stable. On 31 December 2016, there were 
703 participants, d own from 712 on 31 December 2015. On the other hand, the number of 
beneficiaries is steadily growing and increased from 284 to 328 over the same period1. 
Chart  1 Demographics  
 
 
4.2  Investments Returns  
4.2.  The investment portfolio had a nominal return of +6.8% (n et of fees) in 2016, compared to 
+7.2% for the Pension Plan’s benchmark. Swiss inflation for 2016 was effectively 0%. Hence, the 
portfolio’s real return was the same as the nominal return for the year, and amounted to +6.8% 
(net of fees). This was 3.3% abo ve the plan’s long -term target return. Assets under management 
increased from CHF 495.9 million at end 2015 to CHF 535.5 million at end 2016.  
4.3.  However, there is a strong sentiment among investment professionals that earning high 
returns in the current low i nterest rate environment will be more difficult in the next few years. In 
other words, higher than expected returns are normally followed by lower than expected returns, 
but this is normal. Investment returns are not linear. The following chart shows the v olatility of 
returns that the Pension Plan portfolio has experienced over the years2.  
                                                
1 The number of participants  is based on the number at 31 December, and varies depending on how 
many vacant posts may be pending on that date.  
2 Diversification is a traditional way of protecting the Plan’s portfolio against volatility.  
WT/BFA/W/420  
 
- 3 - 
 
  Chart 2 Real rate of return: best, worst and last 5 years  
 
* Best year   
**  Worst year  
Real return calculated net of inflation and fees  
 
Table 1 Asset Allocation and Investment Performance  
Assets and Investments as of 31 December 2016  
Asset Category  Million CHF  Strategic Allocation  Current Weightings  Performance*  
Global Equities  223.6  40.0%  41.8%  8.2%  
Bonds and Cash  206.2  40.0%  38.5%  5.7%  
Real Estate  105.2  20.0%  19.7%  7.2%  
Total  535.0  100.0%  100.0%  6.8%  
*  Annual % change  
 
4.3  Statement of Income and Expenditure s 
4.4.  Recent developments in income and expenditures of the Pension Plan are shown in table 2. 
As implied by the demographic information above, contributions remain relatively stable while 
benefit payments are increasing. Investment income can vary considerably from year to year.  
Table 2 Income and Expenditures  
 2014  2015  2016  
Contributions  29.6 31.3 30.7 
Investment income / loss  36.9 -0.6 34.2 
Periodic benefits  -15.2 -16.7 -19.2 
Lump -sum benefits  -2.6 -3.0 -4.3 
Operating costs, fees and others  -1.8 -1.6 -1.8 
Balance  46.8 9.5 39.6 
 
4.4  New and Im proved Employee Benefits Center  
4.5.  The Pension Plan Secretariat announce d that the Employee Benefit Center (EBC ) platform has 
migrated to a more user -friendly version 2.0 at the end of April 2017. Participant s and 
beneficiaries have been  encourage d to have a look at the new version and provide  their feedback.  
 
__________  24.8%  
-37.2%  10.4%  8.3%  8.4%  
1.2%  6.8%  
-50.0%-40.0%-30.0%-20.0%-10.0%0.0%10.0%20.0%30.0%
2005* 2008** 2012 2013 2014 2015 2016