RESTRICTED  
  
WT/L/924  
11 July 2014  
(14-3996)  Page: 1/30  
 
  
 
  WTO PENSION PLAN 
 
ANNUAL REPORT OF THE MANAGEMENT BOARD 
AND REPORT OF THE EXTERNAL AUDITOR 
THEREON FOR THE YEAR ENDING 
31 DECEMBER 2013 
 WT/L/924 
 
- 2 - 
 
  MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD 
1.1.   The Management Board of the World Trade Organization Pension Plan (WTOPP) is pleased to 
present to you its 2013 Annual Report. 2013 was another good year for the WTOPP's investment portfolio. The Management Board's investment strategy followed closely its benchmark and 
delivered a real rate of return of 8.4% (v ersus 7.1% for the benchmark) which is above 
the long-term target rate of return of 3.5% used in the actuarial assumptions of the Plan. 
More information on the investment philosophy and strategies of the Management Board and 
details on the allocation of assets can be found in the report. 
1.2.  2013 was also a good year in terms of governance. You may recall from the 2012 Annual 
Report that the Management Board initiated a risk-based review of governance and actuarial issues as central to its work plan for 2013. In 2013 the Management Board met seven times in 
formal meetings, nine times in working group meetings and multiple times in informal sessions of 
these working groups. The working groups review ed and addressed risks related to actuarial 
governance, investment governance and genera l governance. For example, the work of the 
working groups led to the Board adopting new recommendations for the assumptions used in 
actuarial valuations, adopting a set of written inve stment guidelines for the Plan, and adopting new 
procedures for the management of disability claims. 
1.3.   The actuarial working group was focused on preparing for the upcoming full actuarial 
valuation of the Plan based on its position at the end of 2013. The eventual actuarial estimates 
that emerge from that valuation will serve as a basis for evaluating the long-term viability of the 
Plan in 2014. 
1.4.   As previewed in the 2012 Annual Report, the introduction of International Public Sector 
Accounting Standards (IPSAS) by the WTO brings new dimensions and increased interest from stakeholders in monitoring and evaluating the lo ng term viability of the Plan. IPSAS valuations 
make different assumptions than those used to ma nage the Plan on an on-going basis and thus 
provide a different perspective on the liabilities of  the Plan. In general, IPSAS assumptions lead to 
higher liability estimates. These different perspe ctives on the liabilities of the Plan provide 
additional information to stakeholders that, wh en well understood, can be useful. However, the 
introduction of the IPSAS also raises questions and poses challenges for both the Plan and the 
Organization. For example, the recommendation of the external auditors that the financial reporting of the WTOPP should be consolidated with the reporting of the WTO. This is a question 
that both the Management Board and the WTO's Committee on Budget, Finance and 
Administration will be considering in the coming year. 
1.5.   It is helpful to keep in mind that the WTOPP is a relatively young plan. It has a modest 
(but growing) number of beneficiaries claiming benefits from the Plan and continues to be in a 
solidly cash-flow positive position (meaning that the contributions to the Plan each month exceed the benefits paid out). This status means that the Plan can take a long-term view on managing its 
assets and estimated liabilities. Important decisions about the management of the Plan can be 
carefully deliberated and thoughtfully implemented. 
1.6.  The Management Board is fully engaged in ensuring the continued good governance of 
the WTO Pension Plan and is pleased to share this annual report with you. 
1.7.  The present report for the period from 1 January 2013 to 31 December 2013 has been 
prepared by the Management Board in accordance wi th Article 5 of the Regulations of the Plan for 
presentation to the General Council and to Plan participants. 
 
 
Krzysztof Trepczynski Chair of the Management Board WT/L/924 
 
- 3 - 
 
  Contents 
MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD ....................................... 2  
1  HIGHLIGHTS ................................................................................................................ 5 
1.1  Investment  Return ..................................................................................................... 5  
1.2  Asset Allocation .......................................................................................................... 5  
1.3  Participants and Beneficiarie s 2013 ............................................................................... 6  
2  SUMMARY OF MANAGEMENT BOARD ACTIVITIES ......................................................... 7  
3  REVIEW OF INVEST MENT STRATEGY ............................................................................ 8  
4  WORKING GROUPS ON GOVERNAN CE AND ACTUARIAL ISSUES ................................... 9  
5  RECOVERY OF WITHHOLDING TAX ON PLAN IN VESTMENTS ........................................ 9  
6  ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 
31 DECEMBER 2013 ........................................................................................................ 10  
7  ACCOUN TS ................................................................................................................. 1 1 
8  ACTUARIAL POSITION  OF THE PLAN .......................................................................... 11  
9  IPSAS ACCRUED LIABIL ITIES OF TH E PLAN ............................................................... 12  
10  EXTERNAL AUDITOR ................................................................................................. 12  
10.1  Report of the External Auditor on the Accounts of the WTO Pension Plan for 
the Year Ended 31 December 2013 ..................................................................................... 12 
10.2  Opinion of the External Auditor on the Accounts of the WTO Pension Plan for 
the Year Ended 31 December 2013 ..................................................................................... 12 
11  FINANCIAL ST ATEMENTS ......................................................................................... 14  
11.1  Management Letter of Representation ......................................................................... 14 
11.2  Statement 1 Income and Expenditure Statement .......................................................... 15 
11.3  Statement 2 Surplus A ccount .................................................................................... 16 
11.4  Statement 3 Balance Sheet ....................................................................................... 16 
11.5  Schedule A Source an d Application of Funds ................................................................ 16 
11.6  Schedule B Breakdown of Expenditures ....................................................................... 17 
11.7  Schedule B Investme nt Mandate Overview .................................................................. 18 
11.8  Schedule C Asset Allocati on as of 31 De cember 2013 .................................................... 19 
11.9  Schedule D Investment Perf ormance as of 31 December 2013 ....................................... 20 
11.10  Schedule E Investment Performance History, Since Inception to 
31 December  2013  .......................................................................................................... 21 
11.11  Schedule F Exchange Rates Used  for Closing on 31 December 2013 .............................. 21 
11.12  Schedule G Participat ion in the Pe nsion Plan .............................................................. 22 
11.13  Schedule H: Structure of the WTO Pension Plan .......................................................... 23 
11.14  Schedule I: Gl ossary of  Terms ................................................................................. 24 
12  ANNEX 1 NOTES TO THE FINANCIAL STAT EMENTS ................................................... 26  WT/L/924 
 
- 4 - 
 
  13  ANNEX 2 INVESTMENT  PRINCIPLES OF TH E PENSION PLAN .................................... 28  
14  ANNEX 3 SUMMARY OF INVESTMENT GUIDELINES OF THE PENSION PLAN .............. 29  
14.1  Summary of the WTO Pension Plan's .......................................................................... 29 
14.1.1  Approach to Investment ......................................................................................... 29 
 WT/L/924 
 
- 5 - 
 
  1  HIGHLIGHTS 
1.1  Investment Return 
Table 1 Investment Return 
 Net Real 
2013 8.4% 8.3% 
2012 10.0% 10.4% 
2011 -1.0% -0.3% 
Figure 1 Historical Returns Net of Inflation and Fees 
 
 
1.2  Asset Allocation 
Figure 2 Asset Allocation - Actual vs. Strategy 2013 
 
 WT/L/924 
 
- 6 - 
 
  Figure 3 Detailed 2013 Asset Allocation by Value (MCHF) 
 
1.3  Participants and Beneficiaries 2013 
Figure 4 Plan Membership by Type 
 
(1) including deferred retirement benefits WT/L/924 
 
- 7 - 
 
  Table 2 Plan Membership 
Membership Year 2012 Year 2013 
Number of Participants 728 731 
Number of Beneficiaries 218 245 
Table 3 Types of Benefits 
Types of benefits Total Number  Average Monthly Benefit 
Year 
2012 Year 
2013  Year 
2012 Year 
2013 
Retirement Benefits 93 109  CHF 6,300 CHF 6,400 
Early Retirement Benefits 65 72  CHF 5,000 CHF 4,900 
Disability Benefits 17 18  CHF 4,500 CHF 4,900 
Surviving Spouse's Benefits 8 8  CHF 3,600 CHF 3,500 
Child's Benefits 20 24  CHF 430 CHF 430 
Deferred Retirement Benefits 15 14  - - 
 
Figure 5 Contribution Income and Benefit Expenditure 
02,0004,0006,0008,00010,00012,00014,00016,00018,00020,00022,00024,00026,00028,00030,00032,00034,00036,00038,00040,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013Thousands
of Swiss Francs
Periodic Benefits
 Lump sum payments *
 Contributions received **
 
*   Including transfer values received from other Organizations 
**  Including transfer values paid to other Organizations 
 
2  SUMMARY OF MANAGEMENT  BOARD ACTIVITIES 
2.1.  The Management Board held seven meetings in 2013. These took place on 22 February, 
8 April, 29 April (Special Session), 24 May, 12 July, 27 September and 22 November. The agendas 
included as standing items the review of investme nt performance and a report by the Secretary on 
matters arising since the previous meeting of the Management Board. Additionally, working groups 
of the Management Board met nine times to address specific points on actuarial assumptions, 
investment guidelines and other general governance issues. 
2.2.  Members of the Management Board appointed by the Director-General reported 
to participants on two occasions and met regularly with members of the Staff Council. 
The WTOPP Secretariat published a "News from th e Pension Plan" document to update staff on 
relevant activities and development during the year. Retiree Observers to the Board also reported WT/L/924 
 
- 8 - 
 
  regularly to the beneficiaries. The WTOPP Secretariat participated in the Annual General Assembly 
of the Retiree's Association and a workshop for futu re retirees to help maintain good relationships 
with beneficiaries. 
2.3.  The remainder of this section of the Annual Report is devoted to a summary of the main 
items of business dealt with by the Management Board in 2013. 
3  REVIEW  OF INVESTMENT STRATEGY 
3.1.  The investment portfolio had a real return of 8.4% in 2013. This was 1.3% more than the 
pension plan's benchmark which had a nominal return of 7.1% for the year. Despite continued 
concern about economic fundamentals at the star t of the year, financial markets performed very 
well in 2013. With the exception of the emerging  markets, all major equity markets recorded 
double digit returns for the year. On the fundamen tal level, global corporate earnings grew by 
almost 2% and dividends increased by nearly 5%. Therefore, the increase in valuation explains 
nearly 20% of the return and consequently global dividend yields declined from 2.8% to 2.4% during 2013. 
3.2.  In bond markets, yields on "safe" assets rose, albeit by a small amount, generally translating 
into losses. Lower quality corporate bonds outperformed high quality bonds, which are more sensitive to rising interest rates. However, these positive returns pushed the spreads
1 of High Yield 
bonds to their lowest levels since the credit crisis. 
3.3.  The Plan's portfolio gained CHF 33.4 million, for which equity investments contributed 
for 85% of the gains.  
3.4.  Equity investments, which represent 40% of the pension plan's target asset allocation, had a 
return of 13.9% against 14.9% for the benchmarks. The underperformance came from the 
intentionally conservative positioning of the emer ging market equities portion of the portfolio. 
The dividend yield of the Pension Plan's equity po rtfolio stood at 3.0% at the end of 2013 vs. 3.2% 
at the beginning of the year. 
3.5.  The fixed income investments (40% of the Pension Plan's target asset allocation) 
returned 2.0% which compares favourably to glob al bond indices where returns were negative in 
2013.  The outperformance can be explained by posi tive returns in the High-Yield Bonds, Senior 
Loans and Peripheral European Government Bonds.  The portfolio continues to hold short term investments as substitutes for Swiss Confederation Bonds as these fixed income vehicles provided lower risk and no opportunity cost in terms of return.  Returns on Swiss Confederation Bonds were 
negative in 2013.  
3.6.  In general, the fixed-income investments portions of the portfolio are likely to see modest 
returns in the future. Effectively, recent gains in bonds were made at the expense of future yield. 
Low current yields make these investments more susceptible to the risk of potential rising default 
levels.  In this context, Emerging Market Sovereig n Debt is emerging as a more attractive segment 
of the market as yields are higher and risks of default lower than for High Yield Corporate bonds. 
3.7.  Real Estate Funds represent 20% of the target as set allocation. The return on this portion of 
the portfolio was modestly positive in 2013. The Swiss real estate fund had a return of 3.7% in 2013.  This compares favourably to the SXI Index which declined (-2.8%). The European portion of the real estate portfolio returned -0.6% in 2013.  There is no relevant benchmark for this 
portion of the portfolio. 
3.8.  The pension fund's portfolio has gained 19.2% in nominal terms over the last two years, 
while the Swiss inflation has been -0.5%. A signific ant part of these gains is due to higher asset 
valuations. However, other things being equal, higher valuations translate into lower potential 
returns in the future. Furthermore, massive central bank injections have dampened market volatility in the past 2 years. These liquidity injections will gradually be withdrawn. Facing the 
combination of higher valuations and lower liquidity, the Plan should be prepared for a period of 
relatively higher volatility and lower returns. 
                                               
1 Excess yield to compensate for credit risk. WT/L/924 
 
- 9 - 
 
  4  WORKING GROUPS ON GOVERNANCE AND ACTUARIAL ISSUES 
4.1.  The Management Board engaged in an on-going process of governance review in 2013. 
Pension plan governance is a topic that has received significant attention in recent years and this process is recognition of the fact that periodic reviews of governance issues will help to ensure 
conformity with a constantly evolving understanding of good practice in several important areas. 
4.2.  Following informal consultations in a working group format open to all Board members, the 
Board adopted a risk-oriented approach to review three key areas: actuarial governance (including 
a comprehensive review of actuarial assumptions) , investment governance (including investment 
strategy and guidelines), and general governance (including a review of disability case management). Work on areas actuarial and general governance issues will continue in 2014 with the priority being given to the review of the Plan 's actuarial sustainability as estimated based on 
the position of the Plan at the end of 2013. 
4.3.  The actuarial working group completed a comprehensive review of the actuarial assumptions 
used in estimating the long term sustainability of the Plan. Both factors internal and external to 
the Plan were examined. For example, intern al factors include assumptions about staff 
demographic and salary trends. External factors include assumptions about economic growth, rates of inflation and trends in mortality. Minor adjustments were recommended for both internal 
and external assumptions. The recommendations of the working group were endorsed by the 
Management Board and were used in the most recent formal actuarial evaluation of the Plan. 
4.4.  The investment working group focused on drafting a written set of investment strategy 
guidelines as such a consolidated statement of the Management Board's approach to investment 
had not existed previously.
2 Additionally, the working group recommended that consolidated 
record of investment related decisions taken by the Management Board be established. Both the 
investment guidelines and the investment decision log are intended to help ensure consistency and 
quality in the investment decision making process. These documents will also help new members 
of the Management Board to understand the investment approach and history of the Portfolio thus enabling them to more quickly feel comfortabl e actively engaging in Board deliberations. 
4.5.  The working group on general governance considered several issues focusing its outputs on a 
review of the disability case management processe s. The working group's efforts helped to clarify 
the information that is most relevant to the Management Board in disability determinations and establish improved processes for ensuring that the necessary information is available to the Board. 
This has enhanced the Board's level of confidence that it can take appropriately informed decisions 
on what are often difficult and complex cases. 
4.6.  The review of actual disability cases in 2013 allowed the Board to begin testing these new 
processes and they will continue to be vigilant with regard to this aspect of their responsibilities. It 
is worth noting that actuarially, the WTO Pension Plan has a lower level of disability cases than anticipated for a plan of its size. 
5  RECOVERY  OF WITHHOLDING TAX ON PLAN INVESTMENTS 
5.1.  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 and Italy where, despite continuing efforts by 
the Secretariat, significant amounts still remain ed to be recovered and where the deadline for 
recovery of certain sums had already passed. The tax-exempt status of the Pension Plan has been recognized in principle by France although no amounts from prior years have since been 
recovered. Discussions with both Canadian and French authorities continued in 2013. 
                                               
2 A summary of the Management Board's newly adopted investment guidelines is attached in Annex 3. WT/L/924 
 
- 10 - 
 
  6  ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2013 
6.1.  The Management Board of the Plan was duly cons tituted by the General Council in accordance 
with Article 4 of the Regulations on 26 March 1999. 
6.2.  The Regulations and Administrative Rules of the WTO Pension Plan were adopted by the 
General Council on 16 October 1998 (WT/L/282). The Regulations of the WTO Pension Plan were 
amended by the General Council on 1 December 2005, on 28 July 2009 and on 26 October 2011. 
6.3.  The General Council approved the Rules of Procedure of the Management Board 
on 8 May 2001 (WT/L/402). 
6.4.  Key components of the governance and administrative structure of the Pension Plan included 
the following on 31 December 2013. 
Management Board 
Mr. Krzysztof Trepczy ński, Chairman 
Ms Aiko Kimura  Members elected by 
the General Council Ms Mira Bacelj Members appointed by 
the Director-General Mr. Felipe Sandoval Mr Anthony Mistri 
Mr. Ken Schagrin Ms Paulette Planchette 
Mr. Marhijn Visser Mr. Antony Taubman 
Mr. James Baxter Alternates elected by 
the General Council Mr Rolf Adlung Alternates appointed by 
the Director-General Mr. Ken Chen Mr Hubert Escaith 
Ms Annie Ouellet Ms Marion Jansen 
Mr Johannes Rühl Ms Gabrielle Marceau 
Mr. Claude Mercier Observer on  behalf of the beneficiaries 
Mr. Paul Rolian Alternate observer on behalf of the beneficiaries 
  
  
Secretariat John Breckenridge, Secretary 
Jean-Pierre Helary, Assistant Secretary 
Virginie Guirado, Pension Specialist 
Outsourced support services 
Trianon S.A., Lausanne 
Consulting Actuary Cameron Hannah (Mercer HR Consulting S.A.) 
Medical Adviser Vacant 
Investment Analyst/Consultant MBS Capital Advice SA 
Global Custodians  The Northern Trust Company 
Pictet Asset Management S.A. 
Fund Managers Babson Capital (senio r loans portfolio hedged in CHF) 
Bluebay (euro high yield bonds portfolio) Comgest (emerging market equities portfolio) 
Crédit Suisse (Swiss real estate portfolio and senior loans 
portfolio hedged in CHF) GMO (emerging market bonds portfolio hedged in CHF) HSBC (emerging market bonds portfolio hedged in CHF) 
ING (senior loans portfolio hedged in CHF) 
Lombard Odier (euro government bonds portfolio) MFS (emerging market bonds portfolio hedged in CHF) 
Neuberger Berman (High Yield Bonds Fund CHF) 
Pictet (global equities indexed portfolio) Warburg Henderson (European real estate portfolio) 
External Auditor French Court of Audit 
 6.5.  An organizational chart is reproduced in Schedule H. WT/L/924 
 
- 11 - 
 
  7  ACCOUNTS 
7.1.  The financial statements and schedules are presented in Section 7 of this Report. The notes 
to the financial statements are found in Section 8 Annex 1 and include important additional explanations about the accounts. These notes are integral to understanding the accounts and the 
financial position of the Plan. 
7.2.  The income and expenditure statement for the period 1 January-31 December 2013 
and surplus account as at 31 December 2013 are reproduced in Statements 1 and 2, respectively. 
7.3.  The balance sheet as at 31 December 2013 is reproduced in Statement 3. 
7.4.  The source and application of funds for the period 1 January-31 December 2013 is 
reproduced in Schedule A. 
7.5.  Details of the exchange rates used for closing the accounts on 31 December 2013 and the 
currency breakdown as of 31 December 2013, af ter hedging, are provided in Schedule F. 
7.6.  A glossary of terms to facilitate an understanding  of the tables is repr oduced in Schedule H. 
7.7.  Explanations of significant events in the 2013 accounts can be found in the notes in Annex 1. 
8  ACTUARIAL POSITION OF THE PLAN 
8.1.  Effective 31 December 2013, the consulting actuary completed a formal actuarial valuation. 
The prior formal valuation was completed effective 31 December 2010. At that time, the consulting 
actuary recommended that no amendments be made to actuarial assumptions, benefit provisions 
or contributions payable. However, in the last interim valuation report from 2012 the actuary recommended that the Management Board be prepared to consider actions to ensure the long term actuarial balance of the Plan once the re sults of the 2013 formal valuation were known. 
8.2.  This most recent formal actuarial valuation report includes updated assumptions based on a 
comprehensive review of expected versus actual experience of the Plan and expectations for the 
future across the key variables in the actuarial model used to estimate the long-term costs of the 
Plan. 
8.3.  The participant contribution rate is 7.9% and th e Organization contribution rate 15.8% giving 
a total contribution rate of 23.7% of pensionable remuneration. The long-term cost of the Plan as 
at 31 December 2013, excluding any allowance for expenses was estimated to be 24.9%.  This 
compares with 27.2% at 31 December 2012 and 25.6% at the last formal valuation at 31 December 2010.  The changes in the estimated lo ng-term cost are due to two factors: changes 
in actuarial assumptions used in the valuation methodology and the actual investment and 
demographic experience of the Plan compared to expected experience.  Revisions to the actuarial 
assumptions included reducing the expected rate of inflation, reducing expected average salary growth and reducing the expected rate of promot ions.  The difference between actual experience 
and expected experience is mostly due to the de layed recognition of the investment return which 
is part of the asset smoothing method. The actual demographic experience is close to that expected. 
8.4.   In the light of the review of actuarial assumptions and subsequent full actuarial valuation 
report consistent with Article 9, the Consulting Actuary recommends that the Board actively considers actions on how to bring the long term co st of the plan and the total cash contribution 
rate into alignment. 
8.5.  The reason the Regulations of the Plan allow for a conservative approach to recommending 
amendments to the Plan when a potential actuarial imbalance emerges is that actuarial valuations are long-term, uncertain and susceptible to large variation as key variables change even modestly. 
Therefore, it is important to not over-react at ea ch instance when the estimated long-term costs of 
the plan deviate from the actual contribution rate. The Plan is still young and due to its positive cash flow situation a significant portion of future actuarial assets has not yet been invested. Even 
with the current estimated actuarial imbalance, the Pl an is projected to be able to continue to pay WT/L/924 
 
- 12 - 
 
  benefits without having to sell assets for 20 or more years. A few carefully considered adjustments 
to the trajectory of the Plan are preferable to fr equent reactions to short-term volatility that may 
not be well understood. 
9  IPSAS ACCRUED  LIABILITIES OF THE PLAN 
9.1.  In 2012, the WTO began reporting based on International Public Sector Accounting Standards 
(IPSAS). To conform to these standards the Organiza tion is obligated to report on its actuarially 
estimated accrued liabilities for employee benefits . The most significant among these are for the 
Pension Plan and for After-Service Health Insurance. As the WTO Pension Plan also produces 
an actuarially derived estimate of its long-term obligations and funding costs there are now two different actuarial reports, albeit based on different assumptions. 
9.2.  The purpose of these two valuations is different. Without trying to elaborate all the technical 
details of these valuations, it is important to put each in its context so as to help stakeholders 
reconcile and understand the relevance of each. 
9.3.  The purpose of the IPSAS valuation is to create a set of numbers for disclosure purposes in 
the accounts of the WTO. The intention of the IPSAS valuation is to provide a financial accounting 
entry for the financial statements showing the accrued actuarial position of the Plan at one point in time based on a closed group (only current participants and retirees). It also assumes the assets 
are invested exclusively in high-quality fixed income securities (for setting the discount rate). 
The specific actuarial method and assumption  setting process are dictated by IPSAS 25. 
9.4.  The purpose of the valuation prepared for the WTOPP Management Board is to assess 
the long-term cost of the Plan and whether the cash contribution rate is sufficient to ensure 
the long-term sustainability of the Plan. This valuation is fully reviewed and updated at least once 
every three years and unlike the IPSAS version takes into consideration past and future service accrual and assumes an open group. (That new entrants will come into the plan to replace those 
who depart due to retirement, death in service, pe rmanent disability or termination.) It also takes 
into consideration the investment strategy adopted by the Plan in setting the long-term assumed rate of return (for setting the discount rate). 
9.5.  It is principally the different discount rates, closed versus open group, and past versus future 
service assumptions that explain the different valuations. 
10  EXTERNAL AUDITOR 
10.1  Report of the External Auditor on the Accounts of the WTO Pension Plan for 
the Year Ended 31 December 2013 
10.1.  The report of the External Auditor on the A ccounts of the WTO Pension Plan for the year 
ended 31 December 2013 is produced separately from the Annual Report. 
10.2  Opinion of the External Auditor on the Accounts of the WTO Pension Plan for 
the Year Ended 31 December 2013 
OPINION
 OF THE EXTERNAL  AUDITOR  
 
We have examined the financial statements of the WTO Pension Plan for the year ended 31 December 2013, which comprise the income and expenditure statement, the surplus account, the balance sheet and the tables in annex. These financial statements were prepared under the 
responsibility of the Secretariat of the WTO Pe nsion 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 with 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 that 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 financial statements. It also involves evaluating the accounting principles applied and the significant estimates made by the Secretariat of the Plan, and assessing WT/L/924 
 
- 13 - 
 
  the overall presentation of the financial statements. We consider that the audit that we have 
conducted constitutes a reasonable found ation 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 2013 and its financial performances, changes in the yield 
from investments and cash flows for the financial year ended on that date, in accordance with the accounting standards of the WTO Pension Plan as defined in Regulations of the Plan 
and in its Rules of Procedure. These standards were applied in the same manner as in the 
preceding financial year.   
____________________ 
Didier Migaud 
PRESIDENT OF THE FRENCH COURT OF AUDIT WT/L/924 
 
- 14 - 
 
  11  FINANCIAL STATEMENTS 
11.1  Management Letter of Representation 
11.1.  The Management Board of the WTO Pension Plan is responsible for these financial 
statements, which have been prepared in accordance with the Plan's Regulations and Rules.  The 
financial disclosures in this report are intended to fairly present the Plan's financial results in a 
manner that is complete and understandable. 
11.2.  The Management Board is responsible for establishing and maintaining adequate internal 
control over financial reporting so as to provide reasonable assurance regarding the reliability of 
these financial statements for external purposes.  This includes policies and procedures that 1) provide for the maintenance of records that accurately and fairly reflect the transactions of the Plan, 2) provide reasonable assurance that transactions are authorized and recorded in compliance 
with the Plan's Regulations and Rules and 3)  provide reasonable assurance regarding the 
prevention or timely detection of unauthorized acquisition, use or disposition of the Plan's assets.  However, due to the inherent limitations of internal control over financial reporting, these controls 
may not prevent or detect all misstatements. 
11.3.  Based on the above, the Management Board has concluded that these financial statements 
present fairly the Plan's financial position and performance as of 31 December 2013. 
 
   
 
  
 
  
 
   
 
  
 
  
 
   
 
  
(signed) 
____________________ (signed) 
____________________ 
Krzysztof Trepczynski 
Chairman 
WTOPP Management Board John Breckenridge 
Secretary 
WTO Pension Plan 
 WT/L/924 
 
- 15 - 
 
  11.2  Statement 1 Income and Expenditure Statement 
INCOME AND EXPENDITURE STATEMENT 
(Expressed In Swiss Francs) 
Expenditure At 
31.12.2013 At 
31.12.2012  Income At 
31.12.2013 At 
31.12.2012  
      
Lump sum benefits   Contributions   
      
Withdrawal settlement - Art. 26 643,875 655,566
 Participants, regular 
contributions 9,997,447 10,000,475  
Commutation – 
Art. 23(c), Art. 24(c) 
and 25(c) 4,190,201 2,624,839  Organization, regular 
contributions 19,994,883 20,000,944  
Transfer to other 
organizations 419,616 26,211  Interest on validations 200 180  
Interest on transfers 15,073 765 Restorations – Article 18 142,704 - 
   Interest on restorations 2,740 -  
 5,268,765 3,307,381   30,137,974 30,001,599  
      
Periodic benefits   Transfer values   
      
Retirement 
benefit - Art. 23 7,605,839 6,903,418  Transfer from other 
organizations 313,138 163,722  
Early retirement benefit – 
Art. 24 4,141,082 3,830,915     
Surviving spouse 
benefit – Art. 29 344,609 345,866     
Child benefit – Art. 30 120,279 105,480     
Disability benefit - Art. 28 1,063,104 913,009     
 13,274,913 12,098,688   313,138 163,722  
      
In-service death and 
disability coverage  1,222,662 1,218,425  Other Income - -  
 1,222,662 1,218,425   - - 
      
Investment and Other 
Admin. expenses3   Investment Income    
Loss on securities - -  Profit on securities 33,794,604 34,825,063  
Currency revaluation - 10,893  Currency revaluation 1,717 - 
Bank charges 9,252 8,276  Credit interest 7,164 18,063  
Audit costs 3,231 1,779     
Management fees 313,431 334,333     
Consultancy fees 96,000 96,000     
Actuarial expenses 45,500 30,000     
Legal fees 9,833 -    
Administrative costs 183,821 183,276     
      
 661,068 664,557   33,803,485 34,843,126  
      
Excess income over 
expenditure 43,827,189 47,719,396     
 64,254,597 65,008,447   64,254,597 65,008,447  
 
                                               
3 See Schedule A for breakdown. WT/L/924 
 
- 16 - 
 
  11.3  Statement 2 Surplus Account 
Surplus Account 
(expressed in Swiss francs)  
Debit At 
31.12.2013 At 
31.12.2012 Credit At 
31.12.2013 At 
31.12.2012 
   Excess income over 
expenditure 43,827,189 47,119,396  
Profit 43,827,189 47,119,396  Loss - - 
 43,827,189 47,719,396   43,827,189 47,719,396  
 
11.4  Statement 3 Balance Sheet 
Balance Sheet 
(expressed in Swiss francs) 
Assets At  
31.12.2013 At  
31.12.2012 Liabilities At  
31.12.2013 At  
31.12.2012 
Securities 423,596,324 381,602,809  Capital as at 
1 January  395,270,010 347,550,614  
Current accounts  15,907,460 14,011,159     
 439,503,784 395,613,968     
   Reserve funds    
   Operating cost 250,000 250,000  
   Unrecoverable 
withholding taxes 698,000 712,000  
    948,000 962,000  
Current assets   Current liabilities   
Withholding taxes 
to be recovered 838,743 924,694  Accrued expenses 297,328 307,345  
Contributions 
receivable - 693     
 838,743 925,387     
   Profit / Loss (-) 43,827,189 47,719,396  
 440,342,527 396,539,355   440,342,527 396,539,355  
 
11.5  Schedule A Source and Application of Funds 
Source and Application of Funds 
(expressed in Swiss francs)  
 1.1.2013-31.12.2013 1.1.2012-31.12.2012 
Source    
Funds as at 1 January 396,539,355 348,800,016 
Receipt of contributions 30,137,974 30,001,599 
Transfer values 313,138 163,722 
Investment Income 33,803,485 34,832,233 
Increase in current liabilities - 54,943 
 460,793,952 413,852,513 
Less:   
Application    
Settlement of benefits 18,543,678 15,406,069 
In-service death and disability 
coverage 1,222,662 1,218,425 
Expenditure 661,068 653,664 
Reduction in short term commitments 10,017 - 
Changes in reserve fund 14,000 35,000 
 20,451,425 17,313,158 
   
Funds as at 31 December 440,342,527 396,539,355  
 
 WT/L/924 
 
- 17 - 
 
  11.6  Schedule B Breakdown of Expenditures4 
Management fees 
Lombard Odier 28,429 
MFS 75,075 
Northern Trust 64,100 
Pictet - International Equities 141,954 
Pictet - Swiss Bonds 3,873 
Total: 313,431 
Consultancy fees  
MBS Capital Advice 96,000 
Actuarial expenses 
Mercer 45,500 
Legal fees 
Lenz & Staehelin 9,832 
Administrative costs 
Trianon 164,308 
Other Expenses 
(including bank charges, travel costs, external audit and miscellaneous 
charges) 31,997 
Grand Total: 661,068 
 
                                               
4 Management fees for mutual fund  investment vehicles are frequently imbedded in  the reported value 
of the holdings. These fees are not presented sepa rately in the statement of expenditure and total 
CHF 1,325,163 for 2012. These increased expenses compared to 2011 partly result from additional allocations 
to mutual funds. This is also due to the fact th at the imbedded costs of th e Warburg Henderson fund 
(Real Estate) have not been taken into account in 2011 and that the cost of the Bluebay fund (International Bonds) were revised upward in 2012. WT/L/924 
 
- 18 - 
 
  11.7  Schedule B Investment Mandate Overview 
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  
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 
CHF High Yield Neuberger 
Berman BarCap USA 
High Yield hedged in CHF 3%-5%
 January  
2012 New York, 
United States nb.com 
CHF High Yield Bluebay BarCap USA 
High Yield 
hedged in CHF 3%-5%  January  
2012 London, 
United Kingdom bluebayinvest.com  
Senior Loans Babson Capital CS Loans index 
hedged in CHF 3%-5%  Octobe r 
2012 New York, 
United States babsoncapital.com  
Senior Loans Credit Suisse CS Loans index 
hedged in CHF 2%-4%  Octobe r 
2012 New York, 
United States credit-suisse.com  
Senior Loans ING  CS Loans index 
hedged in CHF 2%-4%  Octobe r 
2012 Phoenix, 
United States Inginvestment.com  
Euro Bonds Lombard Odie r Citigroup Euro GBI 
ex-AAA 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. - Decembe r 
2006 Hamburg, 
Germany warburg-henderson.com  
Swiss Real Estate Credit Suisse SWX Immofonds  - Novembe r 
2008 Zürich, 
Switzerland credit-suisse.com  
 WT/L/924 
 
- 19 - 
 
  11.8  Schedule C Asset Allocation  as of 31 December 2013 
Asset Allocation  
as of 31 December 2013 
Assets MCHF Current 
weightings Strategy Deviation from 
the strategy 
Global Equities 182.6 41.6% 40.0% +1.6% 
Developed markets 149.4 34.0% 32.0% +2.0% 
Emerging Markets 33.2 7.6% 8.0% -0.4% 
CHF Bonds5 117.6 26.8% 29.0% -2.2 % 
CHF Short term investments6 48.9 11.1% 12.0% -0.9% 
CHF High Yield Bonds 12.8 2.9% 3.0% -0.1% 
Emerging Countries Bonds 39.0 8.9% 10.0% -1.1% 
Senior Loans7 16.9 3.9% 4.0% -0.1% 
Euro Bonds 48.7 11.1% 11.0% +0.1% 
Euro Government Bonds 26.7 6.1% 6.0% +0.1% 
Euro High Yield Bonds 22.0 5.0% 5.0% 0.0% 
Real Estate 74.6 17.0% 20.0% -3.0% 
Warburg Henderson8 31.7 7.2% 10.0% -2.8% 
Credit Suisse 42.9 9.8% 10.0% -0.2% 
Cash 15.9 3.6% 0.0% +3.6% 
Total 439.5    
 
                                               
5 Bonds hedged in CHF. 
6 PostFinance cash account held in lieu of Swiss government bonds. In the current environment these 
bonds have lower yield and higher risk than holding cash . Hence there is no opportunity cost to substituting 
short-term cash for this  asset category pending a change in conditions. 
7 Senior Loans are floating rate fixed income inst ruments, granted to sub-in vestment grade borrowers, 
have the highest level of seniority in the capital structure of corporate issu ers and are secured by the assets of 
the borrowing company. 
8 Including 1.26 M in cash. WT/L/924 
 
- 20 - 
 
  11.9  Schedule D Investment Performa nce as of 31 December 2013 
Investment Performance as  of 31 December 2013 
(expressed in nominal terms) 
 Over 
1 year p.a. Over 
3 years p.a.  Since  
inception p.a. TE IR 
TOTAL      
Consolidated Securities 8.4%  5.7%  1.5%  0.9%  0.4 
Added value +1.3%  +0.4%  +0.2%    
EQUITY      
Consolidated Equities 18.9%  7.9%  0.7%  1.6%  0.6 
Added value +2.2%  +0.9%  -0.1%    
Developed Markets9 22.3%      
Added value -0.3%      
Emerging Markets10 4.9%      
Added value +10.2%      
FIXED INCOME      
Consolidated Fixed Income  2.0%  4.8%  3.4%  1.0%  -0.4 
Added value -0.3%  -0.4%  -0.1%    
CHF High Yield Bonds11 5.8     
Added value -1.4%      
Emerging Countries Bonds  -5.6     
Added value +0.3%      
Senior Loans  5.1     
Added value -0.8%      
Euro Government Bonds  8.6     
Added value -0.4%      
Euro High Yield Bonds  8.6     
Added value -2.2%      
REAL ESTATE      
Consolidated Real Estate 1.9%  2.1%  0.6%12 --- --- 
Added value13      
Warburg Henderson  -0.5%  0.1%  -1.4%14 --- --- 
Added value15      
Credit Suisse  3.7%  4.9%  6.6%16 --- --- 
Added value17 6.5%  2.7%  -1.5%    
TE = tracking error over 3 years 
IR = information ratio over 3 years 
 
                                               
9 Inception in January 2011. 
10 Inception in January 2011. 
11 Inception in January 2012. 
12 Inception in February 2005. 
13 There is no formal benc hmark for this investment. 
14 Inception in December 2006. Euro investment not he dged in CHF. Performance in euro is consistent 
with expectations. 
15 There is no formal benc hmark for this investment. 
16 Inception in November 2008. 
17 Benchmark: SXI Real Estate. WT/L/924 
 
- 21 - 
 
  11.10  Schedule E Investment Performanc e History, Since Inception to 
31 December 2013 
Total Portfolio
5060708090100110120130140150
01.199901.200101.2003 01.2005 01.2007 01.2009 01.2011 01.2013Total Portfolio BenchmarkEquities
5060708090100110120130140150
01.1999
01.200101.2003 01.2005
01.2007
01.2009
01.201101.2013Equities Benchmark
Fixed Income
5060708090100110120130140150160170
01.1999
01.2001
01.2003
01.2005
01.2007
01.2009 01.2011 01.2013Fixed income Benchmark Real Estate
5060708090100110120130140150160170180190200
01.1999
01.2001
01.2003
01.2005 01.2007
01.2009 01.2011
01.2013Real Estate
 
 
11.11  Schedule F Exchange Rates Used for Closing on 31 December 2013 
Currency Exchange rates 
EUR 1.2255 
USD 0.8893 
JPY 118.2033 
GBP 1.4730 
 
Figure 6 Currency Breakdown as of 31 December 2013, after Hedging 
CHF, 40.7%
EUR, 24.9%USD, 17.2%Emerging  
Markets, 7.6% Rest, 2.9%
GBP, 2.6%JPY, 4.2%
 WT/L/924 
 
- 22 - 
 
  11.12  Schedule G Participation in the Pension Plan 
The following table shows the trends in the numb ers of participants and beneficiaries in the 
Pension Plan in the course of 2013. 
Numbers of participants and beneficiaries in 2013 
 2013 2012 
Active Members 731 728 
Pensioners 245 218 
Participants in the Pension Plan in 2013 
Total number on 1 January 2013 728 
  
Movements in 2013  
- Entries 56 
- Re-entries under the terms of Art. 15(b) of the Regulations 3 
- Separations 56 
Total number on 31 December 2013 731 
  
Breakdown of separations in 2013   
- retirement 16 
- early retirement 6 
- deferred retirement 0 
- withdrawal settlement 16 
- transfer of pension rights 3 
- deferment of decision 13 
- death 0 
- disability 218 
Total separations 56 
Benefits Paid by the Pension Plan 
Type of benefit At 31/12 
2012 New 
benefits 
in 2013 Benefits 
ended in 
2013 At 31/12 
2013 
Retirement 93 16 0 109 
Early retirement 65 719 0 72 
Deferred retirement 15 0 1 14 
Surviving spouse's benefit 8 0 0 8 
Partial/total disability benefit 17 1 0 18 
Child's benefit 20 6 2 24 
Total benefits 218 30 3 245 
 
                                               
18 Including the separation of a participant after the gr ant of a second partial (50%) disability benefit in 
complement to a first partial disability benefit awarded in 2003. 
19 Including one participant who has opted for a de ferred retirement benefi t at the date of her 
separation in 2008 and subsequently chosen to commence payment of her benefit before reaching the normal retirement age. WT/L/924 
 
- 23 - 
 
  11.13  Schedule H: 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/924 
 
- 24 - 
 
  11.14  Schedule I: Glossary of Terms 
11.4.  Accrued expenses  include expenses incurred but not paid in the current financial year. 
11.5.  Active Investment Management is a form of portfolio management whereby the portfolio 
manager invests the assets in a manner different from the benchmark in an attempt to produce 
higher returns than the benchmark. The disa dvantages of such a management style are 
characterized by higher management fees, higher trading costs as well as the chance to significantly underperform the benchmark. 
11.6.  Actuarial expenses  include expenses charged by the consulting actuary for the provision 
of actuarial services. 
11.7.  Administrative costs  include costs incurred in the general administration of the Pension 
Plan. 
11.8.  Audit costs  include costs (travel, per diem) incurred by the External Auditor in connection 
with the audit of the 2013 accounts. 
11.9.  Consultancy fees  include the fees charged by the investment analyst/consultant. 
11.10.  Contributions receivable  refers to contributions due in respect of contributory service in 
2013 but received after 31 December 2013. 
11.11.  Currency revaluation  represents exchange rate losses. 
11.12.  Indexed management  is a form of portfolio management that attempts to deliver the 
returns of the underlying benchmark by replicat ing exactly or by getting as close to the 
composition of the benchmark as possible at any point in time. It differs from active management in that it is significantly less costly and does not reflect the views, forecasts or opinions of the 
investment manager. 
11.13.  Information Ratio is defined as the outperformance of the investment manager above 
the index divided by the portfolio's tracking error. The information ratio is used to represent a 
manager's skill. Generally, any ratio over 0.30 is thought of as having skill. 
11.14.  Interest on validations  refers to interest payments made under Article 20(d) of the Plan 
Regulations. 
11.15.  Management fees  include fees paid for the management of WTO portfolios. 
11.16.  Organization, additional contributions  refers to the additional contributions paid by the 
Organization to compensate for the additional actuarial cost generated by the early separation of participants in the context of restructuring exercises. 
11.17.  Provision for operating costs refers to the reserve established to cover operating costs 
not currently charged to the Plan. 
11.18.  Rate of return is the percentage of 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 rate of return is the financial 
return of the assets and is before inflation (mea sured on the basis of the 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 nominal rate of return. The term gross means that the return is 
calculated before the deduction of investment rela ted costs while the term net refers to the return 
including all investment related expenses. The target real rate of return is the long-term real rate 
of return that the Plan needs to achieve in order to meet its liabilities. 
11.19.  Regulations and Administrative Rules  refer to the Regulations and Administrative 
Rules adopted by the General Council on 16 October 1998. WT/L/924 
 
- 25 - 
 
  11.20.  Time-weighted return  is a measure of compound return. It reduces the distorting effect 
of inflows and outflows and is used to compare the returns of investment managers and their respective benchmarks. The time-weighted return is very similar to the geometric mean return. 
11.21.  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 passi ve mandate would be low-dependent upon the 
mandate, usually less than 0.8. Anything above this would be considered active. 
11.22.  Withholding taxes to be recovered  includes amounts of withholding tax levied by 
national tax authorities and subject to recovery after 31 December 2013. WT/L/924 
 
- 26 - 
 
  ANNEXES 
 
12  ANNEX 1 NOTES TO THE FINANCIAL STATEMENTS 
Statement of Significant Accounting Policies 
12.1.  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 reas ons, the current United Nations operational rates 
of exchange are used for the conversion of othe r currencies into the Swiss franc, except in the 
case of the investment portfolios where the rates shown in Schedule F were used for valuation 
purposes. 
12.2.  The accounting year is 1 January to 31 December. 
12.3.  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 balance and of financial controls and accounts. 
12.4.  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 shall be made annually by the External Auditor, 
namely the External Auditor of the WTO. The prov isions of Chapter XI ("External Audit") and the 
Appendix ("Additional terms of reference gove rning external audit") of the WTO Financial 
Regulations shall apply mutatis mutandis to the audit. 
Statement of Income and Expenditure 12.5.  The increase in benefit payments (lump sum and retirement benefits) is explained by the 
increase in retirements: 22 new separation cases in 2013 (normal and early retirements) against 
12 cases in 2012. 
12.6.  Restorations are the adjustment of prior contributory service and arise when benefits paid 
by the Plan are reimbursed.  In 2013 the amount  of CHF 142,704 corresponds to one case where 
contributory service restored was equal to 4 years and 4 months. 
12.7.  Transfers to and from other organizations reflect the flow of assets into and out of the Plan 
when new and departing plan participants transf er their pension rights from or to another 
organization with which the Plan has a transfer agreement.  The fluctuation in amounts represents 
years of service associated with the specific transfers in any given year more than the number of transfers. 
12.8.  Insurance premiums are paid for a "death-disability" insurance policy taken out jointly by 
the Plan and the WTO in 2010 to cover serving sta ff. The premium expense reported only concerns 
the Plan's share of the total premium. 
12.9.  Monetary revaluation resulted in a slight exchange rate gain in 2013 primarily due to 
movement in the Swiss franc/euro rate in 2013. 
12.10.  Consultant fees in 2013 are solely those paid by the Plan to its investment advisor, 
MBS Capital which receives an annual fee for its services. 
12.11.  Actuarial fees are those paid by the Plan to it s consulting actuary, Mercer. The increase in 
2013 corresponds to the flat fee of CHF 30,000 plus a dditional services provided by Mercer in 2013 
in connection with the review of actuarial assumptions. 
12.12.  Legal fees reflect payments made when the Pl an engages specialized external legal advice. 
12.13.  Administrative fees are primarily those paid by the Plan to its service provider, Trianon 
S.A. for administrative and accounting services. WT/L/924 
 
- 27 - 
 
  12.14.  The profit on securities is the result of: 
 a. the capital gain/loss realized on securities; 
 b. the profit arising from the distribution of dividends and interest received on 
investments; 
 c. the revaluation of securities at their market price at 31 December 2013 (unrealized 
profit or loss). 
Balance Sheet 
12.15.  Current accounts represent cash held for managing the operations of the Plan. In 2013, 
the amount is higher than the normal practice due to an accumulation of positive cash inflows at 
the end of the year in anticipation of the annual portfolio rebalancing exercise conducted in the first quarter 2013 and the pending finalization of investment in a new real estate fund. 
12.16.  Recoverable withholding tax reflects the Plan's  recognition as a tax-exempt entity due to 
its connection to the WTO. As an International Organization, the WTO is exempted from most national taxes such as value added tax (VAT), federal stamp duty and tax on the interest earned 
on investments. Annually the Plan files tax reimbursement claims to the Swiss and other 
authorities. Occasionally the Plan's tax-exempt status is not automatically recognized by some 
national jurisdictions in which case significant administrative and political intervention are often 
required to have this status fully recognized. Ho wever, the Plan continues to pursue the recovery 
of withholding tax on Plan investments from these national tax authorities. For example, the tax-exempt status of the Pension Plan has been recognized in principle by France although no 
amounts from prior years were yet recovered in 2013. (See following paragraph) 
12.17.  Irrecoverable tax reports primarily on situations where the Plan has had trouble having its 
tax-exempt status recognized and continues to pursue the recovery of withholding tax on Plan investments but the deadline for recovery may have  passed. For example, in the cases of Canada, 
France and Italy where, despite continuing efforts by the Secretariat, significant amounts still 
remained to be recovered and the deadline for reco very of certain sums had already passed some 
amounts may not be recovered. 
Source and Application of Funds 
12.18.  A reserve fund was set up in 2011 in order to cover the risk of possible non-reimbursement 
of tax reclaims that are out of statute. 
Events after the Reporting Date 
12.19.  The WTOPP's reporting date is 31 December 2013. The financial statements were 
authorised for issue on 9 May 2014, the date at wh ich they were submitted to the External Auditor 
by the Management Board. On the date of signin g these accounts, there have been no material 
events, favourable or unfavourable, incurred betw een the reporting date and the date when the 
financial statements were authorised for issue that would have impacted these statements.  WT/L/924 
 
- 28 - 
 
  13  ANNEX 2 INVESTMENT PRINCIPL ES OF THE PENSION PLAN 
13.1.  Pursuant to Article 13 of the Regulations of th e Pension Plan and Rule A.9 of the Rules of 
Procedure, the Management Board shall be responsible for the secure investment of all Plan assets, the formulation of investment policies after taking appropriate professional advice, and the 
appointment of investment managers to implement that policy. 
13.2.  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 Pl an and the maintenance of a reasonable level of 
risk. The strategy is geared to achieve a target  rate of real return of 3.5%, which is the 
assumption on which the feasibility study and contribution rates of the Plan were originally based. 
13.3.  The WTOPP's three asset classes are defined by differences in their expected response to 
economic conditions, such as price inflation or changes in interest rates and are weighted in the 
portfolio by considering their expect ed returns, risk and correlations. 
13.4.  Derivatives may be used within the global  hedged fixed income mandate for hedging 
purposes, where they provide the opportunities to achieve 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 currency contracts, futures, covered 
bond options and interest rate options. Leve rage and net short positions are not allowed. 
13.5.  In 2013 the Management Board approved a consolidated set of investment guidelines to 
more precisely articulate the Plan's approach to investment. A summary of these guidelines was shared with Plan participants and beneficiaries and can be found in Annex 3. 
 WT/L/924 
 
- 29 - 
 
  14  ANNEX 3 SUMMARY OF IN VESTMENT GUIDELINES OF THE PENSION PLAN 
14.1  Summary of the WTO Pension Plan's  
14.1.1  Approach to Investment 
The Management Board of the WTOPP has adopted a set of investment guidelines. The following is 
a summary of the key aspects considered by the Board when making investment decisions.  
 Long Term Investing 
14.1.  The WTOPP is a long term investor because its commitments are long term and because 
behavior and decisions made with a long term view are more likely to succeed. The long term focus is rooted in the belief – supported by hist orical analysis – that in the long run, market 
returns will tend to reflect the assets' economic achievements.  
14.2.  This long-term orientation enables the Management Board to efficiently deploy its time by 
focusing on investment decisions with significant impact on portfolio returns while avoiding time spent on issues where the outcome is random or where the long term impact is negligible. 
14.3.  Cognizant of the unreliable nature of short or medium term forecasts and the potential 
losses they may cause, the Management Board will  not engage in "timing" short-term market 
fluctuations.  Bets on the short or medium term evolution of financial markets may convert 
temporary losses into permanent impairment of capital.  
Investment Risk 14.4.  The WTOPP should be concerned with permanent capital impairment. Non-recoverable loss 
permanently reduces future earning power. For example, money lent to a borrower that cannot 
fully honor its debt will not only permanently impair capital but also its capacity to generate future 
earnings. 
14.5.  Price volatility is commonly considered as a measure of investment risk. However, volatility 
fails to measure long term investment risk and is only a threat to long-term investors if they 
misread its significance. For example, if a company' s share price quickly falls by 50%, its volatility 
will skyrocket. However, if the long term perspe ctive of the company has not changed, the risk for 
investors has been greatly reduced, not increased. Thus, investors should focus on the long term 
perspective not on market driven price volatility.  
14.6.  The valuation of an asset affects its future returns. Therefore, the valuation of assets is a 
risk that can produce damages similar to permanent capital loss. This is why it should be 
monitored on an on-going basis.  
14.7.  Monitoring the valuation does not constitute an attempt to predict the short term evolution 
of market prices, but to appraise the long term potential profitability of an investment given its 
current characteristics. 
Allocation of Assets 14.8.  Asset Allocation is the main source of portfolio returns. Particular attention will therefore be 
paid to the definition and implementation of WTOPP's "strategic asset allocation".  
14.9.  Each asset class in the portfolio must generate a measurable income and must contribute to 
increasing the value of the WTOPP's assets. This increase must be driven by reliable, identifiable economic factors. The prospective return potential of each asset class may be assessed on the 
basis of these appropriate factors.  
14.10.  The WTOPP will maintain adequate diversification because expected returns on asset 
classes may take a long time to materialize and because the correlation of different assets helps 
dampen volatility and hence help avoid kneejerk decisions.  WT/L/924 
 
- 30 - 
 
  14.11.  Asset classes and financial structures that do not produce income, lack transparency or use 
significant leverage are not appropriate for WTOPP. Commodities, hedge funds, venture capital, as well as structured products are therefore excluded from WTOPP's investment universe.    
14.12.  The WTOPP seeks to avoid changes in asset allocation based on short term views and 
forecasts: all too often such changes only result in increasing costs.  Changes in asset allocation 
are only warranted when justified by significant changes in the measurable characteristics of the Plan's investments allocated to an asset catego ry or by fundamental changes in the Plan's 
liabilities or structure.  
Style of Management  14.13.  The objective of the implementation process is to execute the investment strategy as 
closely as possible while minimizing costs an d avoiding unwanted implementation risks.  
14.14.  The Management Board implements the WTOPP's strategic allocation predominately 
through indexed vehicles or portfolios
20. Indices will be selected with utmost care, so that they 
truly represent the asset class in which th e WTOPP's strategy intended to invest.  
14.15.  The choice of passive management is motivated by the observation that, over time, active 
management has performed less well, is less diversified, less predictable and more costly. Moreover, active management tends to be base d, in most cases, on short-term views. 
14.16.  The WTOPP may use active management when passive management is not feasible or 
when tangible and clearly identifiable reasons lead to believe that active management represents a better path. 
14.17.  O v e r a l l ,  t h e  P l a n  w i l l  s t r i v e  t o  m i n i m i z e  risks related to the implementation of the 
investment strategy. These risks include, but are not limited to, active management risk, 
unwanted credit risk and legal structure risk. 
Rebalancing 
14.18.  The WTOPP adopts a counter-cyclical approach through a systematic annual rebalancing 
mechanism21 whose function is to maintain the weight of the assets aligned with the strategic allocation. 
14.19.  The systematic rebalancing is an effective way for the Plan to maintain a stable exposure 
to the market while taking advantage of market volatility.  
Cost & conflicts of interest 
14.20.  Cost sensitivity is an integral part of the investment strategy. Costs should be maintained 
as low as possible without hindering the Plan's capacity to achieve its targets.  
14.21.  The supply of investment services or products is primarily driven by the financial interests 
of providers rather than by investors. The Manageme nt Board will therefore be particularly vigilant 
in choosing investment solutions that fit in its strategy and targets. The WTOPP will avoid 
investment vehicles in which the investment manager is paid a performance based fee22. 
The investment guidelines adopted by the Ma nagement Board are intended to generate 
sustainable returns over time and promote sound decisions even in times of economic stress and 
uncertainty.  The guidelines are periodically revi ewed to ensure they remain appropriate to the 
structure and circumstances of the Plan. 
__________  
                                               
20 Indexed vehicles aim to gene rate returns that ar e equal to those of a market index.  
21 Rebalancing refers to the realignm ent of the allocation of the Plan 's portfolio with its strategy. A 
predefined process identifies the triggers and other op erational aspects (e.g. timing) of Rebalancing actions. 
The rules are approved by the Board and applied auto matically. This mechanism takes advantage of the 
inevitable excesses of financial markets. 
22 Such arrangements are unfair for investors be cause of the asymmetry of risk and reward.