WORLD TRADE  
ORGANIZATION   
WT/L/863 
27 September 2012 
 
 (12-5210) 
General Council 
3-4 October 2012  
 
 
    
 
WTO PENSION PLAN 
 
  
ANNUAL REPORT OF TH E MANAGEMENT BOARD 
 
AND REPORT OF THE EXTERNAL AUDITOR 
 
THEREON FOR THE YEAR ENDING 
 
31 DECEMBER 2011
 WT/L/863 
Page 2  
 
  Message from the Chairman of the Management Board 
 
  As you read this Annual Report, you will note that 2011 was a relatively quiet year for the 
Management Board with five meetings in all.  Following the intensive activity of transitioning the 
Pension Plan to a new investment advisor and a ne w investment strategy in 2010, the Management 
Board turned to the more r outine responsibilities of governing the Pension Plan.   
  Under the guidance of the new investment advi sor, the new investment strategy beat its 
benchmark by 0.2%.  Nonetheless, a difficult year in the financial markets resulted in a real rate of 
return of -0.3% (versus -0.5% for the benchmark). 
   WT/L/863 
Page 3 
 
 
  TABLE OF CONTENTS 
  Page 
 
I. INTRODUCTION 4 
II. STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2011 4 
III. MEETINGS OF THE MANAGEMENT BOARD 5 
IV. PARTICIPATION IN THE PENSION PLAN 7 
V. ACCOUNTS 8 
VI. ACTUARIAL POSITION OF THE PLAN 8 
Report of the External Auditor on the Accounts of the WTO Pension  9 
Plan for the Year Ending 31 December 2011 
Opinion of the External Auditor on the Accounts of the WTO Pension 10 
Plan for the Year Ending 31 December 2011 
STATEMENT 1 11 
 Income and Expenditure Statement for the Period 1 January - 31 December 2011 
STATEMENT 2 12  Surplus Account as of 31 December 2011 STATEMENT 3 13  Balance Sheet as of 31 December 2011 
SCHEDULE A 14 
 Source and Application of Funds for the Period 1 January - 31 December 2011 SCHEDULE B 16 
 Investment Mandate Overview as of 31 December 2011 SCHEDULE C 17 
 Asset Allocation as of 31 December 2011 
SCHEDULE D 18 
 Investment Performance SCHEDULE E 19 
 Investment Performance History, since inception to 31 December 2011 SCHEDULE F 20 
 Exchange Rates Used for Closing on 31 December 2011 
 Currency Breakdown as of 31 December 2011, after hedging 
SCHEDULE G 21 
 Structure of the WTO Pension Plan SCHEDULE H 22 
 Glossary of Terms 
 WT/L/863 
Page 4  
 
  I. INTRODUCTION 
1. The WTO Pension Plan was established on 1 January 1999 following the decision by the 
General Council on 16 October 1998 (WT/L/282) to te rminate the membership of ICITO in the 
United Nations Joint Staff Pension Fund on 31 Dece mber 1998 and to adopt the Regulations and 
Administrative Rules of the Plan. 
2. The Management Board of the Plan was duly constituted by the General Council in 
accordance with Article 4 of the Regulations on 26 March 1999. 
3. The General Council approved the Rules of Procedure of the Management Board on 
8 May 2001 (WT/L/402). 
4. The present report for the period from 1 January 2011 to 31 December 2011 has been 
prepared by the Management Board in accordance with  Article 5 of the Regulations of the Plan for 
presentation to the General Council and to Plan participants.   
II. STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2011 
(a) Management Board 
 The Management Board was composed as follows on 31 December 2011: 
 
Mr. Nicholas Niggli, Chairman 
Mr. Ken Schagrin 
Members elected 
by the General 
Council Mr. John Breckenridge 
Members appointed 
by the 
Director-General Mr. Philip Tissot Mr. Richard Eglin 
Mr. Marhijn Visser Mr. Anthony Mistri 
Ms Trudy Witbreuk  Ms Paulette Planchette 
Mr. Jaime Ho 
Alternates elected 
by the General 
Council Mr. Rolf Adlung 
Alternates 
appointed by the 
Director-General Mr. Jean-Marc Mignon Ms. Susanne Auer 
Mr. Ahmad Muktar Mr. Hubert Escaith 
Ms Annie Ouellet Ms Gabrielle Marceau 
Mr. Claude Mercier Observer on behalf of the beneficiaries 
Mr. Paul Rolian Alternate observer on behalf of the beneficiaries 
 
(b) Secretariat 
 Robert Luther, Secretary1 
 Jean-Pierre Helary, Assistant Secretary  Christine Figuigui, Administrative Assistant  Virginie Guirado, Clerk  
- Outsourced support services 
  Trianon S.A., Lausanne  
                                                      
1 Robert Luther resigned on 17 January 2012 and has been replaced by John Breckenr idge, appointed 
as Secretary of the WTO Pension Plan on 1 May 2012. WT/L/863 
Page 5 
 
 
  (c) Consulting Actuary 
 Cameron Hannah (Mercer HR Consulting S.A.) 
 (d) Medical Adviser 
Dr Nasser Madi 
 
(e) Investment Analyst/Consultant 
MBS Capital Advice SA  
 (f) Global Custodians 
 The Northern Trust Company 
 Pictet Asset Management S.A.  (g) Fund Managers 
 Bluebay (euro high yield bonds portfolio) 
 Comgest (emerging market equities portfolio) 
 Crédit Suisse (Swiss real estate portfolio) 
 GMO (emerging market bonds portfolio hedged in CHF) 
 HSBC (emerging market bonds portfolio hedged in CHF) 
 Lombard Odier (euro government bonds portfolio) 
 MFS (emerging market bonds portfolio hedged in CHF) 
 Pictet (global equities indexed portfo lio and Swiss bonds indexed portfolio) 
 Warburg Henderson (European real estate portfolio) 
 (h) External Auditor 
 French Court of Audit. 
 
5. An organizational chart is reproduced in Schedule G. 
III. MEETINGS OF THE MANAGEMENT BOARD 
6. The Management Board held five meetings  in 2011.  These took place on 21 February, 1 
June, 1 July, 6 October and 31 October (special s ession).  The agendas included as standing items the 
review of investment performance and a report by the Secretary on matters arising since the previous 
meeting of the Management Board. 
7. Regular progress reports were made available to the Plan participants and beneficiaries.  The 
remainder of this section of the Annual Report is de voted to a summary of th e main items of business 
dealt with by the Management Board in 2011. 
(a) Selection of consulting actuary 
8. Following the initiation of a competitive tender process for actuarial services in 2010, the 
final evaluations of the offers and deliberations occurred at th e 21 February 2011 meeting of the 
Management Board.  Three bidders were evaluated based on lump-sum offers for a package of services over a three year period and the Management Board decided to continue its relationship with 
Mercer. WT/L/863 
Page 6  
 
  (b) Review of investment strategy 
9. The investment portfolio had a nominal net return of -1.0% in 2011. Given that Swiss 
inflation was -0.7% for the year, the real net return  for 2011 was -0.3%. This was 0.2% better than the 
pension plan’s benchmark which had a no minal return of -1.2% for the year.2  
10. Equity investments, which represent 40% of the pension plan’s assets, had a return of -7.3% 
against -8.8% for the benchmark. The outperform ance occurred in January and was caused by the 
timing of the transition to the new strategy. It shou ld be noted that although equity prices declined in 
2011, earnings and dividends grew significantly. The dividend yield of the Pension Plan’s equity 
portfolio stood at 3.2% at the end of 2011 vs. 2.4% at the beginning of the year. 
11. The fixed income investments (40% of the Pens ion Plan’s assets) returned 3.0% against 3.6% 
for the benchmark. The underperformance occurred in  January, caused by the timing of the transition 
to the new strategy. Fixed income returns were supported by good returns in Emerging Countries’ 
Bonds as well as in Swiss Confederation Bonds. In vestments in Euro Government bonds had been 
limited to AAA issuers. This invest ment had a return of 2.8% despite the decline of -2.9 of the Euro. 
Restricting the exposure to AAA countries added more  than 2% to the return in this asset class. 
12. Real Estate Funds represent 20% of the assets. Th e return on these investments was 2.8% in 
2011. There is no relevant benchmark for this po rtion of the portfolio. The SXI Index, which 
measures the return of Swiss quoted real estate funds, rose by 6.8% in 2011. 
13. The new Pension Plan strategy, approved by th e board in 2010, was implemented in January. 
In comparison to the previous strategy, the new stra tegy has a lower exposure to equity markets and a 
more diversified exposure to fixed income assets. The fixed income portion is now invested in Swiss 
and Euro government bonds, in bonds issued by emerging countries government as well as corporate 
bonds. 
(c) Recovery of withholding tax on Plan investments 
14. The Management Board continued to monitor the recovery of withholding tax on Plan 
investments from national tax authorities.  The Board noted that the situation was generally 
satisfactory, with the exception of Canada, France a nd Italy where, despite c ontinuing efforts by the 
Secretariat, significant amounts still remained to be  recovered and where the deadline for recovery of 
certain sums had already passed.  The tax-exempt st atus of the Pension Plan has been recognized in 
principle by France although no amounts were recovered in 2011.  
(d) Pension Plan operating costs and draft budget 
15. The Management Board continued to review the situation with regard to the operating costs 
of the plan and deliberated on the issue at three meetings (including once in a dedicated session) in 
2011.  They have considered vari ous courses of action in order to respond to the recommendation of 
the external auditors in their last report and ag reed to raise the issue with the WTO's Committee on 
Budget and Finance. 
                                                      
2 Following the selection of a new investment manager and a new investment strategy, the Pension Plan 
has decided to also report investment returns in real terms, net of fees.  To maintain consistency with the 
historical data that cannot be  accurately updated to reflect this alternativ e view, the relevant schedules at the end 
of this report will continue to reflect nominal net return s.  New historical real ne t returns will be accumulated 
and also reported separately going forward.  See th e Glossary for more information on rates of return. WT/L/863 
Page 7 
 
 
  IV. PARTICIPATION IN THE PENSION PLAN 
16. The following table shows the trends in the numb ers of participants and beneficiaries in the 
Pension Plan in the course of 2011. 
 2011 2010 
Active Members  740 733 
Pensioners  205 186 
 
Participants in the Pension Plan in 2011 
 
 
Total number on 1 January 2011 
 Movements in 2011  
 - Entries 
 - Re-entries under the terms of Art. 15(b) of the 
Regulations 
 - Separations   
733 
 
  
53 
2 
 
48 
 Total number on 31 December 2011  
 
Breakdown of separations in 2011   - retirement  - early retirement 
 - deferred retirement 
 - withdrawal settlement  - transfer to UNJSPF  - deferment of decision  - death  - disability 
 
Total separations   
740 
 
  
5 8 
2 
18 
0 
14 
0 1 
 
48 
 Benefits paid by the Pension Plan 
 
Type of benefit At 31 December 2010 New benefits 
in 2011 Benefits ended 
 in 2011 At 31 December 
2011 
Retirement 82 5 2 85 
Early retirement 53 9 0 62 
Deferred retirement 9 2 1 10 
Surviving spouse's benefit 7 0 0 7 
Partial /total disability 
benefit 14 2 0 16 
Child’s benefit 21 5 1 25 
Total benefits 186 23 4 205 
 WT/L/863 
Page 8  
 
  V. ACCOUNTS 
17. A statement of significant accounting policies is reproduced in Annex 2. 
18. The income and expenditure statement fo r the period 1 January-31 December 2011 and 
surplus account as at 31 December 2011 are reproduced in Statements 1
3 and 2, respectively. 
19. The balance sheet as at 31 December 2011 is reproduced in Statement 3. 
20. The source and application of funds for the period 1 January-31 December 2011 is 
reproduced in Schedule A. 
21. Details of the exchange rates used for closing the accounts on 31 December 2011 and the 
currency breakdown as of 31 December 2011, after hedging, are provided in Schedule F. 
22. A glossary of terms to facilitate an understandi ng of the tables is reproduced in Schedule H. 
VI. ACTUARIAL POSITION OF THE PLAN 
23. Effective 31 December 2011, the Consulting Actuary completed an interim actuarial 
valuation.   The most recent formal valua tion was completed effective 31 December 2010. The 
Consulting Actuary recommended that no amendments be made to actuarial assumptions, benefit provisions or contributions payable at that valuation.  The participant contribution rate is 7.9% and the 
Organisation contribution rate 15.8% giving a total c ontribution rate of 23.7%. The long-term cost of 
the Plan as at 31 December 2011, excluding any allowance for expenses was 26.3%, compared with 
25.6% at 31 December 2010. The increase in the long-te rm cost is mostly due to the fact that the 
investments of the Plan underperformed relative to the actuarial assumptions.  
24. We do not recommend any amendment to the cash contribution rate at this interim actuarial 
valuation. We do, however, recommend that the Bo ard continue to monitor the position on an annual 
basis. 
 
   
 
     
 
      ___________________________ __________________________   Nicholas Niggli John Breckenridge   Chairman Secretary 
  WTOPP Management Board WTO Pension Plan 
                                                      
3 The sum of CHF 185,375 reported as "Organization, additional contributions" on statement 1, 
corresponds to the reimbursement by th e WTO of the actuarial cost for one case of the early retirement plan in 
2008. WT/L/863 
Page 9 
 
 
   
Report of the External Auditor on the Accounts of the WTO Pension Plan 
for the Year Ended 31 December 2011 
 
 
 The report of the External Auditor on the A ccounts of the WTO Pension Plan for the year 
ended 31 December 2011 is reproduced in Annex 3.   WT/L/863 
Page 10  
 
  Opinion of the External Auditor on the Accounts of the WTO Pension Plan 
for the Year Ended 31 December 2011 
 
 
 We have examined the financial statements of the WTO Pension Plan for the year ended 
31 December 2011, which comprise the income and expenditure statement, the surplus account, the 
balance sheet and the annexed tables.  These fi nancial statements were prepared under the 
responsibility of the Secretariat of the WTO Pension Plan Management Board.  It falls to us, on the 
basis of our audit, to express an opinion on the financial statements. 
 
 We conducted our audit in accordance w ith international auditing standards ( International 
Standards on Auditing  - ISA).  These standards require that our work be organized and implemented 
in such a way as to obtain a reasonable assurance th at the financial statements contain no significant 
inaccuracy.  An audit consists, inter alia , in randomly reviewing the documents submitted in support 
of the amounts and other data shown in the financ ial statements.  It also involves evaluating the 
accounting principles applied and the significant es timates made by the management, and assessing 
the overall presentation of the financial statements.  We consider that the audit that we have 
conducted constitutes a reas onable foundation on which to base our opinion. 
 
 Our opinion is that the financial statements  present fairly the financial position of the 
WTO Pension Plan as at 31 December 2011 and its fi nancial performances, changes in the yield from 
investments and cash flows for the financial year en ded on that date, in accordance with international 
accounting standards.  These standards were a pplied in the same manner as in the preceding 
financial year. 
 
   
 
    
 
  
 
________________________________ 
Didier Migaud 
PRESIDENT OF THE FRENCH COURT OF AUDIT 
 WT/L/863 
Page 11 
 
 
   STATEMENT 1 
 Income and Expenditure Statement 
(Expressed in Swiss francs)  
Expenditure at 
31.12.2011 at 
31.12.2010 Income at 
31.12.2011 at 
31.12.2010 
Benefits 
 
 
Lump sum 
 Withdrawal settlement – 
Art. 26 
Commutation – Art.23(c), Art. 
24(c) & 25(c) 
 
Transfer to other organizations 
Interest on transfers  
 
 
 
 
864,237  
 
 
4,815,409  
 
- 
-  
 
 
 
 
441,679  
 
 
1,715,163  
 
566,703  
20,410  Contributions 
 
Participants, regular 
contributions 
 
Organization, regular 
contributions 
Organization, additional 
contributions 
 
Interest on validations 
 
Restorations – Article 18 
Interest on restorations  
 
 
9,999,440  
 
 
19,998,902 
 
185,375 
 
229  
 
13,784 
1,473   
 
 
9,863,997  
 
 
19,728,000 
 
 - 
 
1,336 
 
14,659 
1,044 
 5,679,646  2,743,955   30,199,203 29,609,036 
Periodic benefits 
 
Retirement benefit – Art. 23 
Early retirement benefit – 
Art. 24 
Surviving spouse benefit – 
Art. 29 
Child benefit – Art. 30 
Disability benefit – Art. 28 
  
 
6,135,785 
 
3,547,539 
 
330,241  
109,492 
786,417   
 
5,744,319  
 
3,190,793  
 
331,394 
89,822 
677,215  Transfer values 
 
 
Transfer from other 
organizations  
 
 
 
272,107 
  
 
 
 
26,478 
 
  
 10,909,474 10,033,543  
 
 272,107 26,478  
In-service death and 
disability coverage 
 1,214,293  200,096 Other Income 
 
 - 
 64 
 
 
Investment and Other 
Admin. expenses 
 
Loss on securities 
Currency revaluation 
Bank charges 
Audit costs 
Management fees (see 
Schedule A for breakdown) 
Consultancy fees 
Actuarial expenses 
Legal fees 
Administrative costs 
 1,214,293  
 
 
 
3,367,022 
32,656 
7,916  
1,874  
 
397,258 
96,000 
40,375 
20,061 
178,420  200,096
 
 
- 
693,764 
7,599 
2,320 
 
1,344,212 
40,000 
46,450 
- 
178,757  
Investment Income 
 
Profit on securities 
Credit interest - 
 
 
- 
9,193 
 64 
 
 
13,312,296 
12,480 
 
 
 4,141,582 2,313,102    9,193 13,324,776 
Excess income over 
expenditure 
  
8,535,508   
27,669,658    
 30,480,503  42,960,354  30,480,503  42,960,354  
 
___________________________________ 
Nicholas, Niggli 
Chairman, WTOPP Management Board  
___________________________________ 
John Breckenridge 
Secretary, WTO Pension Plan WT/L/863 
Page 12  
 
   
  STATEMENT 2  
 
Surplus Account 
(expressed in Swiss francs)  
Debit at 31.12.2011 at 31.12.2010 Credit at 31.12.2011 at 31.12.2010 
   Excess income over expenditure   8,535,508 27,669,658 
    
    
    
    
    
Profit 8,535,508 27,669,658 Loss  
     
 8,535,508 27,669,658  8,535,508  27,669,658 
 
 
 
 
___________________________________ 
Nicholas Niggli 
Chairman, WTOPP Management Board  
 
 
 
___________________________________ 
John Breckenridge 
Secretary, WTO Pension Plan 
 WT/L/863 
Page 13 
 
 
    STATEMENT 3 
 
Balance Sheet 
(expressed in Swiss francs)  
Assets 31.12.2011 at 31.12.2010 Liabilities at 31.12.2011 at 31.12.2010 
    
Securities  341,766,355 330,947,770 Capital 1.1   339,015,106 311,345,449 
Current accounts   5,231,424  9,024,530    
  346,997,779 339,972,300    
  Reserve funds    
  Operating cost 
Unrecoverable withholding 
taxes 250,000 
 
747,000 250,000 
 
- 
   997,000 250,000 
Current assets 
   Current liabilities   
Withholding taxes to be 
recovered  1,720,856 4,369 Accrued expenses  252,402 722,968 
Transitional Assets 
Contributions receivable 73,522 
 - - 
 462    
Validation amounts 
receivable  7,859  10,944    
  1,802,237 15,775    
      
      
   Profit / Loss (-)  8,535,508 27,669,658 
  348,800,016  339,988,075   348,800,016 339,988,075 
 
 
 
  
___________________________________ 
Nicholas Niggli 
Chairman, WTOPP Management Board  
 
 
 
___________________________________ 
John Breckenridge 
Secretary, WTO Pension Plan WT/L/863 
Page 14  
 
    SCHEDULE A 
 
Source and Application of Funds 
 (expressed in Swiss francs)  
Source 1.1.2011-31.12.2011 1.1.2010-31.12.2010 
   
Funds as at 1.1  339,988,075   312,228,322  
Receipt of contributions  30,199,203  29,609,036  
Transfer values 272,107 26,478 
Profit on securities - 12,631,012 
Increase in current liabilities - 90,095 
Other income 
Transfer to reserve funds - 
747,000 64 
- 
 371,206,385 354,585,007 
Less:   
Application   
   
Settlement of benefits 16,589,120 12,777,498 
In-service death and disability coverage 
Losses on investment 1,214,293 
3,390,485  
 200,096 
- 
Expenditure 
Reduction in short term commitments 741,904  
470,567 
 1,619,338 
- 
 22,406,369 14,596,932 
Funds as at 31 December 348,800,016 339,988,075 
 WT/L/863 
Page 15 
 
 
   
Breakdown of expenditures4: 
 
Management fees 
Lombard Odier 54,649 
MFS 64,487 
Northern Trust 111,755 
Pictet - International Equities 
Pictet - Swiss Bonds 120,287 
46,080 
 
Total: 397,258 
 
Consultancy fees  
MBS Capital Advice 96,000 
 
Actuarial expenses 
Mercer 40,375 
 
Administrative costs 
Trianon 161,491 
 
Legal fees 
Lenz & Staehlin 20,061 
Other Expenses 
(including bank charges, travel costs, exte rnal audit and miscellaneous charges) 26,719 
 
Grand Total: 741,904 
 
   
 
     
 
    
 
    
                                                      
4 Management fees for mutual fund inve stment vehicles are frequently imbedded in the reported value of the holdings. 
 These fees are not presented separately in the statement of expenditure and total CHF 869,835 for 2011  WT/L/863 
Page 16  
 
   
 SCHEDULE B  
 
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 Comgest 
SA MSCI Emerging  
Markets Free 6% - 9% January 2011 Paris, France comgest.com 
Swiss Bonds Pictet & Cie SBI Domestic Gov.  
3-7Y Indexed January 2011 Geneva,  
Switzerland pictet.com 
Emerging 
Market 
Bonds HSBC JP Morgan EMBI 2%-3% January 2011 London,  
England hsbc.com 
Emerging 
Market Bonds MFS JP Morgan EMBI 2%-3% January 2011 Boston,  
United States mfs.com 
Emerging 
Market 
Bonds GMO JP Morgan EMBI 3%-5% January 2011 Boston,  
United States gmo.com 
Euro Bonds Lombard  
Odier Citigroup Euro  
GBI 3-7Y Indexed January 2011 Geneva,  
Switzerland lombardodier.com 
Euro High 
Yield Bluebay BarCap Euro High  
Yield ex Financials 3%-5% January 2011 London,  
United Kingdom bluebayinvest.com 
European 
Real Estate Warburg  
Henderson 6.5% p.a. -- December 2006Hamburg,  
Germany warburg- 
henderson.com 
Swiss Real 
Estate Credit  
Suisse SWX Immofonds -- November 
2008 Zürich,  
Switzerland credit-suisse.com 
 WT/L/863 
Page 17 
 
 
   SCHEDULE C  
 
Asset Allocation as of 31 December 2011 
Assets Mio. 
CHF Current 
Weights Strategy Deviation from 
the strategy 
      
Global Equities 132.5 38.2% 40.0% -1.8% 
  Developed markets 107.6 31.0% 32.0% -1.0% 
   Emerging. Markets 24.9 7.2% 8.0% -0.8% 
CHF Bonds 73.6 21.2% 20.0% 1.2% 
  Swiss Confederation Bonds 36.4 10.5% 10.0% 0.5% 
  Emerging Countries Bonds 37.2 10.7% 10.0% 0.7% 
Euro Bonds 70.1 20.2% 20.0% 0.2% 
  Euro Government Bonds 53.6 15.4% 15.0% 0.4% 
  Euro High Yield Bonds 16.6 4.8% 5.0% -0.2% 
Real Estate 66.0 19.0% 20.0% -1.0% 
  Warburg Henderson 32.9 9.5% 10.0% -0.5% 
  Credit Suisse 33.0 9.5% 10.0% -0.5% 
Cash 5.2 1.5% 0.0% 1.5% 
Total 347.5 100% 100.0% 0.0% WT/L/863 
Page 18  
 
   SCHEDULE D 
 
Investment Performance  
(expressed in nominal terms) 
 Over 1 year p.a. Over 3 years p.a. Since 
inception TE IR 
TOTAL      
      
Consolidated Securities -1.0% 8.0% 0.3% 2.5% 0.0 
Added value +0.2% +0.1% +0.1%   
      
EQUITY      
      
Consolidated Equities -7.3% 9.0% -1.6% 2.4% 0.8 
Added value +1.5% +1.9% -0.2%   
      
Developed Markets5 -9.6%     
Added value -0.2%     
      
Emerging Markets5 -16.9%     
Added value -0.3%     
      
FIXED INCOME      
      
Consolidated Fixed Income 3.0% 3.4% 3.1% 1.2% 0.8 
Added value -0.6% +1.1% 0.0%   
      
Swiss Bonds5 6.3%     
 0.0%     
      
Emerging Countries Bonds5 6.7%     
 +0.4%     
      
Euro Government Bonds5 1.2%     
 0.0%     
      
Euro High Yield Bonds5 -7.5%     
 +1.7%     
      
REAL ESTATE      
      
Consolidated Real Estate 2.8% 8.3% 2.4%6 --- --- 
Added value -4.3% -1.5% -6.7%   
      
Warburg Henderson 1.2% -1.0% -2.0%7 --- --- 
Added value8      
      
Credit Suisse 2.8% 8.5% 6.9%9 --- --- 
Added value -4.1% -2.0% -3.8%   
      
TE = tracking erro r over 3 years 
IR = information ratio over 3 years 
                                                      
5 The portfolio was created in Janu ary 2011. The displayed track record covers the period from January 
31, 2011 to December 31, 2011. 
6 Inception in February 2005 
7 Inception in December 2006 
8 There is no formal benchmark for this investment 
9 Inception in November 2008 WT/L/863 
Page 19 
 
 
   
 
 SCHEDULE E 
 
 
Investment Performance History, Since Inception to 31 December 2011  
 
  
 
 
 
        
         
        
        
        
        
        
        
        
        
        
 
  
 
WT/L/863 
Page 20  
 
   
  
SCHEDULE F 
 
 
Exchange rates used for closing on 31 December 2011  
 
Currency Exchange rates 
(indirect quotation) 
EUR 1.214 
USD 0.935 
JPY 82.280 
GBP 1.453 
AUD 0.959 
CAD 0.918 
HKD 8.306 
 
 
Currency Breakdown as of 31 December 2011, after hedging 
 
Currency Breakdown  as of 31 December  2011
CHF; 31%
EUR; 35%Rest; 3%USD; 22%
GBP; 4%JPY; 4%
 WT/L/863 
Page 21 
 
 
  SCHEDULE G 
 
Structure of the WTO Pension Plan 
 
 
 
    
 
    
 
     
 
    
 
     
 
    
 
   DIRECTOR-GENERAL PARTICIPANTS GENERAL COUNCIL 
ADMINISTRATIVE 
SERVICES 
CONSULTING ACTUARY 
MEDICAL ADVISER 
FRIENDS OF THE BOARD 
INVESTMENT 
ANALYST/CONSULTANT  
MANAGEMENT BOARD 
ASSET 
MANAGEMENT SERVICES EXTERNAL AUDITOR WT/L/863 
Page 22  
 
  SCHEDULE H 
 
GLOSSARY OF TERMS 
 
 
Accrued expenses  includes expenses incurred but not paid in the current financial year. 
 Active Investment Management is a form of portfolio manageme nt whereby the portfolio manager 
invests the assets in a manner different from the benc hmark 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 chance to significantly underperform the 
benchmark.  Actuarial expenses  includes expenses charged by the consultin g actuary for the provision of actuarial 
services. 
 
Administrative costs  includes costs incurred in the general administration of the Pension Plan. 
 Audit costs  includes costs (travel, per diem) incurred by the External Auditor in connection with the 
audit of the 2011 accounts.  
Consultancy fees  includes the fees charged by the investment analyst/consultant. 
 Contributions receivable  refers to contributions due in respect of contributory service in 2011 but 
received after 31 December 2011.  
Currency revaluation  represents exchange rate losses. 
 Indexed management  is a form of portfolio management that  attempts to deliver the returns of the 
underlying benchmark by replicating exactly or by getting as close to the composition of the 
benchmark as possible at any point in time. It diffe rs from active management in that it is significantly 
less costly and does not reflect the views, forecasts or opinions of the investment manager. 
 
Information Ratio is defined as the outperformance of the investment manager above the index 
divided by the portfolio's tracking error.  The inform ation ratio is used to represent a manager's skill.  
Generally, any ratio over 0.30 is  thought of as having skill. 
 
Interest on validations  refers to interest payments made unde r Article 20(d) of the Plan Regulations. 
 Management fees  includes fees paid for the management of WTO portfolios. 
 Organization, additional contributions  refers to the additional contributions paid by the 
Organization to compensate for the additional actua rial cost generated by the early separation of 
participants in the context of restructuring exercises. 
 Provision for operating costs refers to the reserve established to cover operating costs not currently 
charged to the Plan.  
Rate of return is the percentage 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 ra te of return is the financial return of the assets 
and is before inflation (measured on the basis of th e 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 WT/L/863 
Page 23 
 
 
  nominal rate of return. 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 lo ng-term real rate of return that the Plan needs to 
achieve in order to meet its liabilities. 
 
Regulations and Administrative Rules  refers to the Regulations and Administrative Rules adopted 
by the General Council on 16 October 1998.  Time-weighted return  is a measure of compound return.  It reduces the distorting effect of inflows 
and outflows and is used to compare the return s of investment managers and their respective 
benchmarks.  The time-weighted return is ve ry similar to the geometric mean return. 
 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.  A 
tracking error for a passive mandate would be low—dependent upon the mandate, usually less than 
0.8.  Anything above this would be considered active.  Withholding taxes to be recovered  includes amounts of withholding tax levied by the Swiss 
authorities and subject to recovery after 31 December 2011. 
 WT/L/863 
Page 24  
 
  ANNEX 1 
 
Investment Principles 
  
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 responsib le for the secure investment of all Plan assets, 
the formulation of investment policies after taking appropriate professional advice, and the 
appointment of investment manage rs to implement that policy. 
 
2. The investment strategy of the Plan is based  on an asset allocation designed to ensure the 
adequate funding of the Plan's liabilities over the long term.  A careful balance is drawn between 
maximization of returns on the assets of the Plan an d the maintenance of a reasonable level of risk.  
The strategy is geared to achieve a target rate of r eal return of 3.5 per cent, which is the assumption on 
which the feasibility study and contribution rates of the Plan were originally based. 
 
3. The WTOPP's three asset classes are defined by  differences in their expected response to 
economic conditions, such as price inflation or cha nges in interest rates and are weighted in the 
portfolio by considering their expect ed returns, risk and correlations. 
 4. Derivatives may be used within the globa l hedged fixed income mandate for hedging 
purposes, where they provide the opportunities to ach ieve 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 cu rrency contracts, futures, covered bond options and 
interest rate options.  Leverage and net short positions are not allowed. 
 
 
     __________________________ ________________________ 
 Nicholas Niggli John Breckenridge 
 Chairman Secretary  WTOPP Management Board WTO Pension Plan WT/L/863 
Page 25 
 
 
  ANNEX 2 
 
Statement of Significant Accounting Policies 
  
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 re asons, the current United Nations operational rates of 
exchange are used for the conversion of other currenc ies into the Swiss franc, except in the case of the 
investment portfolios where the rates shown in Schedule C 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 ba lance 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 Plan sh all 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 a udit") of the WTO Financial 
Regulations shall apply mutatis mutandis  to the audit. 
 
  
 
   ___________________________ ___________________________  Nicholas Niggli John Breckenridge 
 Chairman Secretary 
 WTOPP Management Board WTO Pension Plan  WT/L/863 
Page 26  
 
   
 
 
ANNEX 3 
  
 Auditors of the 
World Trade 
Organization WTO 
WTO PENSION PLAN 
RÉGIME DES PENSIONS DE L'OMC PLAN DE PENSIONES DE LA OMC 
 
    
 
    
 
    
LETTER OF FINAL COMMENTS ON THE 
FINANCIAL STATEMENTS OF THE 
WTO'S PENSION PLAN FOR THE 
FINANCIAL YEAR ENDED 
31 DECEMBER 2011 
 WT/L/863 
Page 27 
 
 
  CONTENTS 
 
 
Page 
 
I.  OBJECTIVES AND SCOPE OF THE AUDIT  ................................................................... 28  
II. LIST OF RECOMMENDATIONS ....................................................................................... 28 
III. COMMENTS AND RECOMMENDATIONS  ..................................................................... 28  
A. F OLLOW -UP TO PREVIOUS RECOMMENDATIONS  ....................................................................... 28  
1. Recommendations of the auditor ........................................................................................... 2 8 
2. Internal audit's comments .................................................................................................. .... 30 
B. P RESENTATION OF THE FINANCIAL STATEMENTS  ..................................................................... 30 
C. B RIEF PRESENTATION OF THE 2011  ACCOUNTS  ........................................................................ 32 
D. A CTUARIAL ANALYSES OF THE PLAN ....................................................................................... 33 
E. R ESERVE FUND FOR OPERATING COSTS  .................................................................................... 35 
F. R EIMBURSEMENT OF WITHHOLDING TAX  ................................................................................. 35 
G. I NVESTMENT POLICY  ................................................................................................................. 38 
IV.  ACKNOWLEDGEMENTS  ................................................................................................... 40  
V.  CONCLUSION  ....................................................................................................................... 40  
VI. ANNEX:  INTRODUCTION TO  THE PENSION PLAN .................................................. 41 
A. B ACKGROUND  ........................................................................................................................... 41  
B. M ANAGEMENT PROCEDURES  .................................................................................................... 41 
C. T ECHNICAL CHARACTERISTICS OF THE PLAN ........................................................................... 42 WT/L/863 
Page 28  
 
  I. OBJECTIVES AND SCOPE OF THE AUDIT 
1. Pursuant to our notification dated 13 Februa ry 2012, an external auditor undertook an 
assignment at the Secretariat of the Management Board of the WTO Pension Plan (WTOPP)
10 
from 7 to 10 May 2012.  The purpose of this audit was to prepare the certification of the WTOPP's 
financial statements for the fina ncial year ended 31 December 2011. 
2. The audit was conducted in accordance w ith international auditing standards ( International 
Standards on Auditing - ISA) and with the Organization's financial regulations. 
3. Each comment and recommendation was discussed with the persons concerned.  The audit's 
closing meeting was held with Mr John Breckenridge , Secretary of the Pension Plan, on 10 May 2012.  
The Secretariat acknowledged the relevance of our remarks.  This letter takes fully into account its 
comments and replies. 
4. Our opinion on the financial statements of the WTOPP is given unreservedly. 
II. LIST OF RECOMMENDATIONS 
 Recommendation No. 1 . The annexes to the financ ial statements should be 
completed by notes explaining the main changes noted in the accounts from one year to another. 
 Recommendation No. 2. The Secretariat should request its actuary to provide a 
written explanation for the large gap exis ting between the estimates of the Pension 
Plan's commitments at 31 December 2011, wh ich he presented in his reports in April 
and May 2012 (the first of these reports is in accordance with IPSAS). 
 Recommendation No. 3. All the Pension Plan's operating costs borne by the 
Organization should be reimbursed annually to the WTO, in accordance with the latter's regulations (renewal of a recomme ndation made for the previous financial 
years). 
 Recommendation No. 4. The Secretariat should increase efforts to recover the 
amount due for withholding tax deducted but not reimbursed by the tax authorities in 
the countries concerned. 
 
III. COMMENTS AND RECOMMENDATIONS 
A F
OLLOW -UP TO PREVIOUS RECOMMENDATIONS  
1. Recommendations of the auditor 
5. Of the four recommendations made in 2011 re garding the 2010 accounts, three have been 
implemented and one is in the process of being implemented: 
                                                      
10 154 rue de Lausanne in Geneva. WT/L/863 
Page 29 
 
 
  Table 1:  Summary of implementation of the recommendations in our report on the  
WTOPP's financial statements for the financial year ended 31 December 2010 
Subject Implemented Being 
implemented Not 
implemented Total Paragraph 
nos. in the 
original report 
No. 1.  The external auditor 
should be presented with 
the full financial 
statements, including all the notes containing 
comments thereon. x   
 7 and 8 
No. 2.  The Secretariat 
should request its actuary to provide clear 
justification for the very 
large gap existing between the estimates of the Pension 
Plan's commitments 
presented by him in July 2010 and April 2011.   x  
 17-21 
No. 3.  All the Pension 
Plan's operating costs borne 
by the Organization should be reimbursed annually to 
the WTO, in accordance 
with the latter's regulations (renewal of a 
recommendation made for 
the previous financial 
years).  x  
 22-25 
No. 4.  It is recommended 
that:  (i) the amounts due for withholding tax and 
not reimbursed be recorded 
as assets in the Plan's balance sheet; 
(ii) reimbursement be 
sought beyond the time-limits, which are not 
binding if requests for 
reimbursement have been made within the 
time-limits and in the form 
prescribed by each national legislation;  and 
(iii) requests for 
reimbursement be given support through 
intervention by the Plan 
and/or the World Trade 
Organization. x   
 32-37 
Total number 2 2 0 4  
Percentage of total 50 50 0 100  WT/L/863 
Page 30  
 
  2. Internal audit's comments 
6. The WTO's internal audit service, set up recently with a limited number of staff, has not 
conducted an audit of the WTOPP. 
B. P
RESENTATION OF THE FINANCIAL STATEMENTS  
7. The WTOPP's financial statements have traditi onally been presented as part of the annual 
report by the Plan's Management Board.  They are supplemented by two annexes on, respectively, 
"Investment principles" and "Statement of significant accounting principles", and by eight appendices numbered A to H dealing, in particular, with the Plan's investments. 
8. At the time of the audit, the annexes and a ppendices had been prepared, in accordance with 
Recommendation No.1 in our report on the 2010 accounts, recalled in the table above. 
9. To make it easier for readers of the financia l statements to understand, these annexes should 
be completed by notes explaining the various changes noted in the accounts in comparison with the previous financial year (with the exception of ch anges caused solely by trends in the number of 
retirees or persons requesting that their pension be pa id in a lump sum).  These changes, particularly 
numerous in 2011, concern the entries shown in the following table. 
 
 
Table 2:  Main changes noted in the accounts between 2010 and 2011 (in CHF) 
 
Entry 2010 
amount 2011 
amount Reason for the change noted 
Statement of income and expenditure 
Insurance 
premiums 200,096 1,214,293 The premium paid for the "death-disability" insurance taken out 
in 2010 only concerned the last two months of 2010, whereas 
the premium paid in 2011 covers the whole of 2011.  The 
premium appearing in the accounts of the WTOPP only 
concerns the latter, whereas the contract, which covers both 
serving staff and retirees, is common to both the WTO and 
the WTOPP. 
Profits and 
losses on 
securities 13,312,296 (3,367,022) The change from a profit earned on securities to a loss is 
attributable to the trend in financial markets (see paragraphs 31 to 34). 
Monetary 
revaluation 693,764 32,656 Exchange rate losses de creased in 2011 becau se of the lower 
average amount in the Plan's euro account and a more stable 
Swiss franc/euro rate in 2011. 
Management 
costs 1,344,212 397,258 Asset management cost s fell in 2011 because the administrative 
costs for managing the common investment funds (CHF 869,835
11) are included in the la tters' balance sheets and a 
large part of the portfolio is now managed passively and no 
longer actively. 
                                                      
11 Swiss franc. WT/L/863 
Page 31 
 
 
  Entry 2010 
amount 2011 
amount Reason for the change noted 
Consultants' 
fees 40,000 96,000 Consultants' fees are those paid by the WTOPP to its investment 
consultant, the firm MBS, wh ich receives an annual fee of 
CHF 96,000 pro rata temporis in execution of a contract of 
4 October 2010.  In 2010, the Plan only paid the last four 
months of the year12. 
Legal fees 0 20,061 The legal fees indicated for 2011 are lawyers' fees paid to the 
firm Lenz & Staehelin, which helped to revise the contracts reached with the new asset manage rs selected by the Plan's  
Management Board in 2010 (see paragraphs 31 to 34).  
The invoices for this firm's fees for the work carried out at the end of 2010 and the beginning of 2011 were only forwarded at 
the end of March 2011. 
Organization, 
additional 
contributions 0 185,375 The amount of CHF 185,375 is to reimburse the WTO for the 
Pension Plan's actuarial costs caused by the early retirement 
scheme implemented by WTO in 2008.  This cost was 
calculated by the actuarial fi rm Mercer, common to both the 
WTO and its Pension Plan. 
Balance sheet 
Recoverable 
withholding 
tax 4,369 1,720,856 Pursuant to Recommendation No. 4 in our report on the 
WTOPP's 2010 accounts, the am ount of the WTO's claim for 
withholding tax has been indicated in full this year (including the amount to be reimbursed by Switzerland, which has always 
reimbursed the amounts due without any problem). 
Irrecoverable 
tax 0 747,000 The WTOPP Secretariat has made provisions for the amount of 
the claims owing from tax authorities for which payment is not 
assured (see paragraphs 25 to 30). 
Transitional 
assets 0 73,522 The transitional assets no ted in 2011 are the receivables 
corresponding to a rebate on the amount of fees during the 3
rd and 4th quarters of 2011, which has been granted by the fund 
manager BlueBay on the basis of a special contract negotiated 
with the Plan's  Secretariat. 
Source:  Court of Audit, on the basi s of WTOPP Secret ariat statistics. 
 
 
 
                                                      
12 The contract provided for payment of a trial period in August and September 2010. Recommendation No. 1.  The annexes to the fi nancial statements should be completed by 
notes explaining the main changes noted in  the accounts from one year to another. WT/L/863 
Page 32  
 
  C. B
RIEF PRESENTATION OF THE 2011  ACCOUNTS  
10. The operating account of the Pension Plan13 ("the statement of income and expenditure") 
shows a surplus of CHF 8,535,508, 69.15 per cent lower than that in 2010 (CHF 27,669,658). 
11. There are three main reasons for this trend: 
 - The CHF 0.20 million to CHF 1.21 million increase in the premium for the new 
"death-disability" insurance contract between 2010 and 2011; 
 - The increase from CHF 1.71 million to CHF 4.81 million for conver ting pensions into 
lump sums; 
 - The change from investment revenue of CHF 13.31 million in 2010 to a loss of 
CHF 3.36 million in 2011. 
 
12. The actuarial rate of return on investment (-0 .40 per cent) became negative, as had been the 
case in 2008;  it remains well below the Plan's objective (3.5 per cent, net of inflation).  
Table 3:  Calculation of the actuarial rate of return (in CHF) 
 
Actuarial rate of return 2009 2010 2011 
a.  Value of assets as at 1 January 243,261,420 312,228,322 339,988,075 
b.  Value of assets as at 31 December  312,228,322 339,988,075 348,800,016 
i.  Investment income 53,448,278 11,279,201 -3,795,659 
Average assets = (a+b-i)/2 251,020,732 320,468,598 346,291,875 
Actuarial rate of return in nominal terms = 
i/average assets 21.29% 3.52% -1.10% 
Consumer price index for Switzerland14 0.2% 0.5% -0.70% 
Actuarial rate of return, net of inflation 21.09% 3.02% -0.40% 
Source:  Court of Audit, on the basi s of WTOPP Secret ariat statistics. 
 
Table 4:  Trend in actuarial rates of return in nominal terms 
 
2004 2005 2006 2007 2008 2009 2010 2011 
+4.47% +23.71% +9.01% +3.48% -36.53% +21.29% +3.52% -1.10% 
Source:  Court of Audit, on the basi s of WTOPP Secret ariat statistics. 
 
13. The presentation of the Plan's balance sheet complies with Swiss regulations on pension 
plans:  the capital of CHF 339.01 million record ed in the balance's liabilities, an increase 
of 8.89 per cent, corresponds to the net assets in an IPSAS15-consistent statement of financial position.  
In addition to the surplus of CHF 8,535,508 menti oned above, the liabilities include accrued expenses 
at the end of the financial year (CHF 252,402) , a decrease compared to 2010, the reserves and 
                                                      
13 Annex A contains an updated version of the outline of the Pension Plan organization and parameters 
given in the external auditors' previous reports. 
14 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. 
15 International Public Sector Accounting Standards . WT/L/863 
Page 33 
 
 
  provisions mentioned below concern operating costs (CHF 250,000) and irrecoverable taxes 
(CHF 747,000). 
14. Assets (CHF 348.80 million) rose by 2.59 per cent in comparison with 2010, attributable to 
the 3.27 per cent rise in the value of the Plan's inve stments (partly offset by a 42 per cent decline in 
the current accounts) and inclusion of amounts outstanding for recoverable withholding tax. 
15. The increase in the value of the assets and net assets in  the balance sheet (its capital) is one of 
the positive trends, but this balance sheet is not consistent with IPSAS and does not mention the 
actuarial value of pension commitments, an essentia l element in assessing the situation of a pension 
plan. 
D. A CTUARIAL ANALYSES OF THE PLAN 
16. The latest interim report by the Plan's actuary (the firm Mercer ), dated 8 May 2012, covers 
the situation at 31 December 2011.  It  estimates the Plan's commitments16 at that date to be 
CHF 1,651 million, compared to CHF 1,606 million at 31 December 2010 and CHF 1,552 million at 31 December 2009. This increase does not call into qu estion the relevance of the long-term projection 
presented in the aforementioned actuary's report of 9 July 2010 on the situa tion at 31 December 2009, 
which indicated that the Plan's income and expend iture would balance out up to 2043 if the expected 
return on the Plan's assets (a gross rate of 6.5 pe r cent, including inflation) is in fact achieved .  It will, 
however, be necessary to request the actuary to  update this long-term projection in future 
years, particularly if the return on the Plan 's assets continues to be below the benchmark 
(see below ). 
17. At the meeting of the Management Board on 1 July 2011, the actuary's representative gave a 
preliminary succinct explanation of the gap betw een the actuarial estimates concerning pension 
commitments indicated in the firm's reports of July 2010 and April 2011
17, intended for the Plan and 
the WTO, respectively, in accordan ce with Recommendation No.2 in our report of last year.  These 
gaps can be attributed to two factors: 
 - The different discount rate taken into  account in the two reports, because IPSAS 
impose rates lower than those adopted under the Plan's investment policy18; 
 - The IPSAS-consistent report does not ta ke into account new contributors to the 
Pension Plan. 
 18. The latest reports by the actuary concerning the situation at 31 December 2011 confirm these 
gaps:  the report of 8 May 2012 mentioned above , intended for the WTOPP, estimates the Plan's 
commitments at CHF 1,651 million, the report of 20 April 2012, intended for the WTO, estimates 
them at CHF 845 million.  As the gap between thes e estimates is 100 per cent, it would be useful if 
the actuary supplemented its succinct explanation to the WTOPP Management Board of 1 July last by a written explanation providing precise figures, when it issues its next reports. 
                                                      
16 The "present value of total projected benefits". 
17 The report of 9 July 2010 intended for the Plan estimated pension commitments at 
31 December 2009 at CHF 1,552 million;  this estimate was updated to  CHF 1,606 million at 
31 December 2010 in the actuary's repo rt of 23 June 2011;  the report of  13 April 2011, intended for the WTO 
and consistent with IPSAS, estimated these commi tments at CHF 832 million at 1 January 2011. 
18 The IPSAS provide for very prudent rates of return  on assets to be taken into account (investments in 
the AAA or AA categories, whet her these are government bond s or shares in companies). WT/L/863 
Page 34  
 
  Recommendation No. 2.  The Secretariat should  request its actuary to provide a written 
explanation for the large gap existing betw een the estimates of the Pension Plan's 
commitments at 31 December 2011, which he pre sented in his reports in April and May 2012 
(the first of these re ports is in accordance with IPSAS ).WT/L/863 
Page 35 
 
 
  E. R ESERVE FUND FOR OPERATING COSTS  
19. The liability side of the balance sheet still in cludes a reserve of CHF 250,000 for operating 
costs (salaries, provision of office space, ancillary  costs) potentially invoiced by the WTO in respect 
of the staff made available to the Plan by the Organization.  This reserve, which was established 
pursuant to recommendations by the previous extern al auditors, has never been revalued, although the 
real value of the operating costs concerned exceed s CHF 500,000, and the WTO has never requested 
payment or posted a receivables entry in its accounts under this heading. 
20. The solution would be for the WTO to invoice th e Plan's real operating costs paid by the 
Organization each year, in accordance with Article  5(f) of the Regulations, which states that 
"All expenses incurred in administering the plan … sh all be borne by the Plan".  The reserve could be 
used to pay some of these costs.  This soluti on has not been implemented as yet because of the 
additional costs the Plan would incur. 
21. As indicated in our previous report, one positive step has been taken in this regard inasmuch 
as on 23 May 2011 the WTO Secretariat submitted a memorandum proposing that each year the WTOPP pay a WTO invoice for its operating costs.   This memorandum was examined by the 
WTOPP Management Board on 31 October 2011, when the WTO Secretariat proposed that all 
operating costs should be borne by the WTO, alt hough no decision was taken.  The resignation of the 
previous Secretary of the Plan on 18 January 2012 and the long interval that followed until he was replaced on 1 May 2012 meant that the situation is at a standstill. 
 
F. R
EIMBURSEMENT OF WITHHOLDING TAX  
22. Dividends earned from the WTOPP's securities are subject to fiscal levies at source and the 
Plan requests their reimbursement from the tax au thorities in the countries concerned because the 
WTO is exempt from tax pursuant to the 1994 Ma rrakesh Agreement, which established it, and 
the 1947 Convention on the Privileges and Imm unities of the United Nations and Specialized 
Agencies, which is referred to in the Marrakesh Agre ement.  Moreover, the Pension Plan is not legally 
independent of the WTO, even though it has a certain degree of autonomy.19 
23. In practice, the WTOPP authorizes the two banks that are the custodians of its investments, 
Northern Trust and Pictet20, to obtain reimbursement  of withholding taxes, but Northern Trust has 
not been able to obtain reimbursement from eight countries.  The following table shows all the Plan's 
claims in respect of withholding tax at 31 Dece mber 2011, including those for which reimbursement 
presents no problem. 
                                                      
19 This is why, during its transition to IPSAS, the WTO will not be able to treat its pension fund 
accounts in the same way as an independent pension fund. 
20 Pictet became a custodian bank in 2011 (see below). Recommendation No. 3.  All the Pension Plan 's operating costs borne by the Organization 
should be reimbursed annually to the WTO, in accordance with the latter's regulations 
(renewal of a recommendation made for the previous financial years). WT/L/863 
Page 36  
 
  Table 5:  The WTOPP's claims for reimbursement of withholding tax 
 
Debtor countr y Custodian bank concerned WTOPP claim (in CHF ) 
Austria Pictet 610.71
Belgium Pictet 4,068.86 
Canada Northern T rust 136,916.65
Denmark Pictet 
Northern Trust  170.54 
12,337.22 
France Pictet 
Northern Trust  6,648.03 
449,228.38 
Germany Pictet 41,975.64
Greece Northern Trust 1,947.10
Ireland Pictet 65.11
Israel Northern Trust 650.83
Italy Northern Trust 234,049.66
Luxembourg Northern Trust 3,910.26
Poland Northern Trust 7,488.53
Portugal Pictet 1,506.03
Spain Pictet 4,650.38
Switzerland Pictet 
Crédit suisse  167,481.50 
3,217.00 
Total  Pictet : 
Northern Trust : 
Northern Trust : 
Crédit Suisse : 
Overall total: 227,176.8021
846,528.63 
643,934.0022 
3,217.0023 
1,720,856.43 
Source:  Court of Audit, on the basi s of WTOPP Secret ariat statistics. 
 
                                                      
21 Pictet  has no problem in obtaining reimbursement of withholding tax on the securities it holds. 
22 Some of Northern Trust 's claims (CHF 643,934)  are not broken down by country.  They concern 
investment on which withholding tax is reimbursed without any problem. 
23 Crédit Suisse  is not a custodian bank.  The Plan has a modest claim with it and reimbursement does 
not raise any problem. WT/L/863 
Page 37 
 
 
   
24. Pursuant to Recommendation No.3 in our previous  report, the Secretariat has included in its 
balance sheet all the amounts outstanding in this respect, amounting to CHF 1,720,856.  It has 
included a "reserve fund" in the balance sheet liabilities amounting to CHF 747,000 corresponding to 
the part of this claim that may be irrecoverable.  The assessment of this risk is reasonable because the 
claims that may lapse pursuant to each nationa l legislation were considered as potentially 
irrecoverable24.  The amount of the potentially irr ecoverable claims should, however, be classified as 
a provision rather than a reserve fund because these su ms do in fact constitute a potential risk for the 
Plan whose amount can be reliably estimated. 
25. The Plan and its custodian banks should pursu e their efforts with debtor countries.  The BNP , 
delegated by Northern Trust , recovered some of the claim against France and, in accordance with our 
recommendation, direct intervention by the Plan's  Secretary with the French delegation to the 
WTO (which contacted the ministry responsible fo r the budget) enabled confirmation of the Plan's 
tax-free status, in January 2011, and a promise to reimburse the amounts owing since the deduction by 
the French tax authorities on 15 September 2006.  Preliminary contacts with the delegations of 
Canada and Italy to the WTO were not followed up by letters in order to try to recover the outstanding 
amounts owed to the Plan by these two countries and no efforts have been made with other debtors.  
It is therefore important for the Secretariat to  resume its efforts and to ask the mandated bank 
Northern Trust  to intensify its efforts to obtain satisfaction.  
26. As indicated in our previous report, the risk of a statutory limitation period should not put 
an end to attempts to recover debts : taxes should not be consid ered as time-barred, in 
implementation of general legal principles25 if their reimbursement was requested within the legal 
time-limit and if the fiscal service concerned is so lely responsible for the failure to reimburse.  
 
 
                                                      
24 If the claim lapses after two years in a particular country, provision is made in connection with the 
country for all claims owing for more than two years. 
25 Northern Trust  shares this opinion, according to information given by the Plan's Secretary to the 
Management Board on 12 October 2010, stating that Northern Trust  had indicated that it would be possible to 
obtain reimbursement of all the claims, including those for which the time-limit had expired. 
 Recommendation No. 4.  The Secretariat should  increase efforts to recover the amount due 
for withholding tax deducted but not reimburse d by the tax authorities in the countries 
concerned.  WT/L/863 
Page 38  
 
  G. I
NVESTMENT POLICY  
27. The Plan's investment policy, defined in  2004 and implemented from 2005 onwards, sought 
to achieve a high net rate of return of 3.5 per cen t by emphasizing equities, pegged at 70 per cent of 
the portfolio (with 10 per cent invested in emergi ng markets), in preference to bonds (20 per cent) and 
real estate (10 per cent). 
28. In 2008, at the height of the financial crisis, the Plan's Management Board decided to adjust 
this policy by decreasing the share of equities in  order to limit losses on these investments.  
On 14 October 2009, after having consulted five sp ecialist firms, the WTOPP's Management Board 
endorsed this more prudent  approach by adopting the following new portfolio breakdown, while at the 
same time maintaining the target of 3.5 per cent net rate of return, net of inflation: 
 - Equities:  40 per cent (one quarter of which in emerging market securities); 
 - bonds:  40 per cent;  - real estate securities:  20 per cent.  29. This modified asset allocation policy was only im plemented in January 2011, following a call 
for bids completed in 2010 in order to choose asset  managers.  The breakdown of the Plan's portfolio 
therefore changed radically between 2010 and 2011:   the share of real estate rose from 15 per cent 
to 19 per cent, that of bonds from 25.7 per cent to 41.4 per cent, while equities fell from 56.7 per cent 
to 38.2 per cent. 
30. Taking into account the trend in financial ma rkets in 2011, nominal performance was much 
lower than that for the previous year (-1 per cent as against 4.2 per cent for the portfolio as a whole), 
but was 0.2 per cent higher than the benchmark.  Th e performance of bonds and real estate, however 
(3 per cent and 2.8 per cent, respectively) was lower than the benchmark (by -0.6 per cent and -4.3 per 
cent).WT/L/863 
Page 39 
 
 
   
Table 6:  Trend in the breakdown of assets from 2010 to 2011 and  
comparative performance of the various classes of assets in 2011 
(in CHF millions, unless otherwise indicated) 
 
Asset 
managers Value of assets 
end of 2010 Value of assets end of 2011  2011 
performance 
(percentage) Difference 
compared to 
benchmark  
Shares 192.6 
(56.7%) 132.5 
(38.2%) -7.3% +1.5% 
Wellington26 
Intersection 92.1 
(27.1%) Developed 
markets 107.6 
(31.0%) -9.6% -0.2% 
Wellington 
Opportunities 73.3 
(21.5%) Emerging 
markets 24.9 
(7.2%) -16.9% -0.3% 
Pictet (emerging 
markets) 27.3 
(8.0%) 
 143.7 
(41.4%) 3.0% -0.6% 
Bonds 
Rogge  
87.4 
(25.7%) Swiss bonds 
in CHF 36.4 (10.5%) +6.3% 0.0% 
Emerging 
country bonds 
in CHF 37.2 (10.7%) +6.7% +0.4% 
Government 
bonds in € 53.6 (15.4%) +1.2% 0.0% 
High return 
bonds in € 16.6 (4.8%) -7.5% +1.7% 
Real estate 50.9 
(15.0%) 66.0 
(19%) 2.8% -4.3% 
Warburg 
Henderson 17.3 
(5.1%) Warburg 
Henderson  32.9 
(9.5%) 1.2%  
Crédit Suisse 33.6 
(9.9%) Crédit Suisse  33.0 
(9.5%) 2.8% -4.1% 
Cash 9 
(2.7%) 5.2 
(1.5%)   
Total 340 347.5 -1% +0.2% 
Source :  Court of Audit, based on indications  provided by the Plan's Secretariat. 
                                                      
26 The Plan's equity investments are made through two funds of the Wellington company:  Wellington 
Intersection  and Wellington Opportunities . WT/L/863 
Page 40  
 
  IV. ACKNOWLEDGEMENTS 
31. The external auditor wishes to thank sincerel y the Secretary of the Pension Plan and his 
collaborators for their welcome and for the preci se information that they supplied to him. 
V. CONCLUSION 
32. On the basis of the audit conducted, the exte rnal auditor certifies that, in his view, the 
accounts for the financial year 2011 present fairly th e financial position of the WTO Pension Plan as 
at 31 December 2011. 
 
 
End of audit comments. WT/L/863 
Page 41 
 
 
   
VI. ANNEX:  INTRODUCTION TO THE PENSION PLAN 
A. B ACKGROUND  
1. Both the informal international organiza tion which managed the General Agreement on 
Tariffs and Trade (GATT) 1947 and the WTO,  which succeeded it in 1995, entrusted the 
United Nations Joint Staff Pension Fund with provi ding retirement, death and disability benefits to 
their staff up until 31 December 1998. 
2. As from 1 January 1999, the WTO launched its  own Pension Plan and implemented an 
overall reform of its human resources management, including the adoption of a remuneration system 
different to that of the United Nations and more a dvantageous than the latter to some of its staff. 
B. M ANAGEMENT PROCEDURES  
3. The Plan is governed by Regulations adopted by the WTO General Council on 
16 October 1998.  It is supplemented by Administra tive Rules and by the Rules of Procedure of the 
Pension Plan Management Board, which were  adopted by the latter and approved by the 
WTO General Council. 
4. Article 5 of the Regulations entrusts manageme nt of the Pension Plan to the Management 
Board composed of a Chairman, four members and f our alternates appointed by the General Council, 
together with four members and four alternates appointed by the WTO Director-General (of whom 
two members and two alternates are appointed from a lis t drawn up by the "participants", i.e. by staff 
members of the WTO).  The "beneficiaries" of the Plan , that is the persons entitled to receive benefits 
under the Plan, may also appoint an observer and an alternate.  The presiding Chairman is a 
representative of the Swiss delegation, from the Swiss Ministry of the Economy.  His personal role is 
an important one. 
5. Management Board decisions are implemented by its Secretary, who orders its expenditure.  
The Secretary is appointed by the Director-General  of the WTO on the proposal of the Board.  The 
new incumbent is a member of the Administration and General Services Divisi on of the WTO, and is 
assisted by two full-time staff members, a grade 8 o fficial and a grade 4 secretary.  The administrative 
assistant of the Division also devotes part of her time to the requirements of the Plan. 
6. Under the responsibility of the Management Board,  the Secretariat directly managed the Plan 
for two and a half years, apart from asset manageme nt activities, which were originally entrusted to 
specialized bodies and then subsequently, by contr act of 1 June 2001, the administration and accounts 
management of the Plan were entrusted to Trianon S.A.27 (hereinafter Trianon ), a Swiss company 
specializing in pension scheme management, whose present headquarters are in Renens, a suburb of 
Lausanne in the canton of Vaud.  Since that date, th e Secretariat of the Plan has retained responsibility 
for the preparation and follow-up of Management Bo ard decisions and supervision of the activities of 
Trianon  and of the bodies managing the assets of the Plan  or monitoring such management.  It also 
plays a key role in relations with the Plan's participants and beneficiaries. 
                                                      
27 Trianon  manages supplementary pension schemes for Swiss companies, collective supplementary 
schemes for groups of companies and the pension schemes of three international organizations, namely the 
Olympic Committee, the International Air Tr ansport Association (IATA) and the WTO. WT/L/863 
Page 42  
 
    
7. In the aforementioned area of activity, the Management Board defines the policy for 
distributing funds accumulated thr ough pension contributions among different categories of securities 
(equities, emerging country equities, bonds and r eal estate securities) and selects bodies to manage 
those assets.  The London branch of the United States Bank Northern Trust and, since 2011, the 
Genevese bank Pictet, act as custodian banks and mon itor the operations of the management bodies.  
The company MBS Capital Advice , based in Geneva, has monito red the performance of these 
managers since October 2010 (when it replaced Watson Wyatt , in place up to December 2009).  
Trianon  is responsible for the general accounts of th e Plan and prepares the financial statements. 
C. T
ECHNICAL CHARACTERISTICS OF THE PLAN 
8. The Pension Plan is a defined benefit scheme with a reserve fund to supplement the yield 
from contributions.  Its operating rules are laid dow n by its Regulations and Administrative Rules, 
referred to above. 
9. The pension contribution rate since 1 January 2010 has stood at 23.7 per cent of the so-called 
"pensionable" remuneration28, 7.9 per cent of which is paid by the employees and 15.8 per cent by the 
Organization (Article 20 of the Regulations).  Retir ement may be taken by any staff member who has 
paid at least five years of contributions and has reached the "normal retirement age", set at 65 years 
(or 62 years for staff recruited before 2010 and 60 ye ars for staff who began working in the GATT or 
the WTO before 1990).  The amount of the retirement be nefit is established by reference to the "final 
average remuneration (FAR)" constituted by the 36 months of highest pensionable remuneration 
within the last five years of the staff member's career; it is obtained by multiplying the first 30 years 
of contributory service by 2 per cent of the FAR and the subsequent years (up to a maximum of 
ten years) by 1 per cent of the FAR (Article 23 of the Regulations). 
10. The benefit may be commuted, "at the request of the participant, into a lump sum not 
exceeding one third of the actuarial equivalent of the benefit or the amount of the participant's own 
contributions, whichever is the larg er" (Article 23 of the Regulations).   This option is used frequently 
by staff members at the time of retirement. 
11. An early retirement benefit may be claimed during the five years preceding the normal 
retirement age: it is reduced by 3 per cent during the years preceding that age; the rate of reduction is 
lowered to 1 per cent if the participant has completed at least 30 years of contributory service (Article 24 of the Regulations). 
12. The Plan is still young and faces no risk of financial imbalance in the short term: at 
31 December 2011, it only had 195 beneficiaries
29, compared to 740 contributors.  It has just raised 
the retirement age for new staff and the pension cont ribution rate in order to absorb the actuarial 
deficit noted by the actuary to the Plan between th e actuarial value of its l ong-term liabilities and that 
of its assets. 
__________ 
 
                                                      
28 The "pensionable" remuneration is the net salary of the staff member increased by a coefficient 
which differs according to the amount of the salary concerned and is calculated on the basis of the Geneva tax rate.  This increase is intended to offset the fact that retirees, unlike serving WTO st aff, are subject to income 
tax. 
29 These 195 beneficiaries include 85 retirees, 62 who took early retiremen t, 7 beneficiaries of 
survivor's pensions, 25 children under 21 years of age and 16 disabled persons.  To these must be added 
ten retirees whose deferred pensions will begin to be paid after 2011.