RESTRICTED  
  
WT/BFA/W/328  
 
20 June 2014  
(14-3456)  Page: 1/2  
Committee on Budget, Finance and Administration    
 
  
ACTUARIAL POSITION OF THE WTO PENSION PLAN 
NOTE BY THE CHAIRMAN OF THE WTOPP MANAGEMENT BOARD 
 
1  INTRODUCTION 
1.1.  In accordance with Article 9(a) of the Pl an Regulations, regular actuarial valuations are 
carried out by the consulting actuary of the Plan at three-yearly intervals. The last such valuation 
was carried out at 31 December 2010.   
1.2.  At its 90th meeting on 11 October 2012 the Management Board agreed in principle to 
establish a Working Group to review the actuarial assumptions and funding position of the Plan in 
advance of the next full actuarial valuation of the Plan that would be done no later than 2014 
(based on 31 December 2013 data).   
1.3.  At its 91st meeting on 13 December 2012 the Management Board discussed the possibility to 
accelerate the process by not necessarily waitin g for end-of-year 2013 data if the Working Group 
was ready to proceed with its review, analysis and recommendations at an earlier point.   
1.4.  At its 92nd meeting on 22 February 2013 the Management Board established the Actuarial 
Study Working Group (ASWG) to review the parameters that would be used in the 2013 full 
actuarial valuation. These parameters, used in the 2012 WTOPP interim actuarial review, had been the basis of the Plan's actuarial valuation since 2007, and were last reviewed in preparation for the 2010 full actuarial valuation. 
1.5.  The assumptions are used to generate long term projections of the cost of the Pension Plan 
on the basis of expectations about the economic  environment, the demographic profile of the 
Plan's participants and the policies of the WTO administration. While the actuarial review process 
does attempt to reflect long term anticipated trends that might impact the funding position of the 
plan (e.g. changes in life expectancy) it does not attempt to capture temporary deviations from the long term anticipated trends. The actuarial review cannot, by definition, reflect unanticipated 
trends or unforeseeable shocks to the system which can affect the long term costs of a pension 
plan. Nevertheless, the actuarial assumptions chosen for the actuarial review should be 
conservative enough to minimize the risk of negative outcomes. If and when large unanticipated or unexpected events occur, they affect positively or negatively the long term financial balance of the 
Fund and corrective measures may be called for. 
1.6.  The Management Board reaffirmed the principle that the WTO Pension Plan is an important 
part of the employment package offered to employ ees of the WTO. The Plan has to be consistent 
with the employment objectives of the WTO, be recognised by participants as a valuable part of 
their remuneration and should be soundly financed to protect the interests of the Plan participants and beneficiaries, the WTO and the Member States who provide financial support to the WTO. WT/BFA/W/328 
 
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  2  THE WORKING GROUP AGREED TO OR GANIZE ITS WORK INTO TWO STAGES: 
Stage 1: 
 Review for appropriateness, and where necessary, challenge the assumptions used by 
the consulting actuary in building the valuation model and recommend appropriate 
amendments to the Management Board. 
Stage 2: 
 Review the Plan in terms of the long term sustainability and the implementation of the 
model using any recommended amendments to the actuarial assumptions. 
 Recommend options, where necessary, to the Management Board, to maintain the 
actuarial balance of the Plan. 
2.1.  Stage 1 was completed in December 2013 and involved (i) developing a thorough 
understanding of the assumptions, findings and recommendations presented by the consulting 
actuary in the actuarial valuation reports since the inception of the WTOPP: (ii) researching the benchmarks/references/relevant policies forming the basis of the key assumptions; (iii) analysing 
available data to identify deviations of the assumptions from actual experience and/or future 
trends; (iv) reviewing WTO staff demographics, anticipated future staffing levels and trends in relevant employment policies; (v) reviewing the working group's findings with the consulting 
actuary; and (vi) objectively validating the continued use of each assumption or to proposing 
appropriate revisions. 
2.2.  The Working Group noted that since the overa ll objective is long term, short term fluctuations 
in some variables must be analysed with caution.  However, in all cases, the actuarial assumptions 
should be regularly reviewed and validated base d on the new information and trends that will 
emerge over time. 
2.3.  As a result of the recommendations of the ASWG, the Management Board asked the 
consulting actuary to amend three key assumptions under-pinning the plan. Two of the three 
assumptions dealt with internal WTO parameters (salary growth and career progression) while the 
third assumption related to external economic factors (inflation levels  in Switzerland). 
2.4.  The actuarial valuation at 31 December 2013 reflects those new assumptions. It will be 
submitted for review and approval by the Management Board at its 100
th meeting on 4 July 2014. 
2.5.  The new report indicates that the gap between  the projected long term cost of the Plan and 
the current level of contributions to fund the Plan  has narrowed since the formal valuation in 2010.  
Nonetheless, the fact that a gap has now persisted for two consecutive formal valuations has led 
the consulting actuary to recommend that the Management Board actively consider actions on how to bring the long term costs of the Plan in to balance with the cash contributions received to fund 
the Plan.  
2.6.  The Management Board is currently taking action and has instructed the ASWG to commence 
Phase 2 of its work with the objective to submit a report and recommendations to the Management 
Board at its November 2014 meeting. 
2.7.  Consistent with Article 9 of WTOPP Regulati ons, the Management Board will, on the basis of 
the ASWG report, recommend such actions as it deems desirable to the General Council through the Committee on Budget Finance and Administration. While the work at the ASWG group and 
Management Board levels continues, the Management Board will provide periodic updates to the 
CBFA until such time as formal recommendations can be presented. 
 
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