WT/L/886  
15 July 2013  
(13-3765)  Page: 1/41  
  
 
  WTO PENSION PLAN 
 
ANNUAL REPORT OF THE MANAGEMENT BOARD 
AND REPORT OF THE EXTERNAL AUDITOR 
THEREON FOR THE YEAR ENDING 
31 DECEMBER 2012 
 WT/L/886 
- 2 - 
  MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD 
 As you read this Annual Report, you will note that 2012 was a busy year for 
the Management Board with nine meetings plus the initiation of working groups to undertake 
a risk-based review of governance and actuarial issues. The work of the Board included active 
management of the investment portfolio during a continuing period of significant global economic 
uncertainty and the selection of a new Secretary of the Pension Plan.  
 The initiation of an actuarial working group was related to preparing for the upcoming full 
actuarial valuation of the Plan in 2013. Significant wo rk is required in order to review and validate 
the actuarial assumptions to be used in the eventu al actuarial estimates that serve as a basis for 
evaluating the long-term viability of the Plan. 
 
 2012 introduced a new dimension to monitoring and evaluating the long-term viability of the Plan with the introduction of Internationa l Public Sector Accounting Standards (IPSAS) by 
the WTO. IPSAS valuations make different assumpti ons than those used to manage 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 li ability estimates. These different perspectives on the liabilities 
of the Plan provide additional information to stakeholders that, when well understood, can be 
useful. However, the introduction of the IPSAS pe rspective also raises many questions and will 
pose challenges for both the Plan and the Organization.  
 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. That is to say that the contributions to the Plan each month 
exceed the benefits paid out. This status mean s 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. 
 
 In 2012 the Management Board's investment strategy followed closely its benchmark and delivered a real rate of return of 10.4% (v ersus 10.9% 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.  
 In addition to the preparatory work related to the upcoming actuarial valuation, the 2013 
work plan of the Management Board includes a ri sk-based review of governance consistent with 
good practice and a review of the Plan Regulation s, Administrative Rules, and Rules of Procedure. 
Regular reviews of these aspects of the Plan are essential in the challenging environment pension 
plans now operate in. Stakeholders have high expectations, legitimate concerns and are watching more closely than ever the actions of the governance bodies charged with managing their plans.  
 The Management Board is fully engaged in ensuring the continued good governance of 
the WTO Pension Plan and is please to share this annual report with you.  
The present report for the period from 1 January 2012 to 31 December 2012 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. 
 
   
 
 
Nicholas Niggli 
Chair of the Management Board WT/L/886 
- 3 - 
  Contents 
1   HIGHLIGHTS ............................................................................................................... 4 
1.1   Investme nt Retu rn .................................................................................................... 4  
1.2   Asset Allocation ......................................................................................................... 4  
1.3   Participants an d Beneficiar ies 2012 .............................................................................. 5  
2   SUMMARY OF MANAGEME NT BOARD ACTIVITIES ........................................................ 7  
REVIEW OF INVESTME NT STRATEGY ................................................................................... 7  
SELECTION OF NEW SECRETARY OF THE PENSIO N PLAN ........................................................ 8  
ESTABLISHMENT OF A WORKING GROUP PROCESS ON GOVERNANCE AND ACTUARIAL 
ISSUES ........................................................................................................................ ... 8 
PENSION PLAN OPERATING CO STS AND DRAFT BUDGET ........................................................ 8  
RECOVERY OF WITHHOLDING TA X ON PLAN IN VESTMENTS .................................................... 8  
3   ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 
31 DECEMBER 2012 .......................................................................................................... 9  
4   ACCO UNTS ................................................................................................................ 1 0 
5   ACTUARIAL POSITI ON OF THE PLAN ......................................................................... 11  
IPSAS ACCRUED LIABILIT IES OF THE PLAN ......................................................................... 11 
6   EXTERNAL AUDITOR .................................................................................................. 13  
6.1   Report of the External Auditor on the Accounts of the WTO Pension Plan for the Year 
Ended 31 December 2012 ................................................................................................. 13 
6.2   Opinion of the External Auditor on the Accounts of the WTO Pension Plan for 
the Year Ended 31 December 2012 ..................................................................................... 13 
7   FINANCIAL STATEMENTS .......................................................................................... 14  
7.1   Management lette r of repres entation ........................................................................... 14 
7.2   Statement 1: Income and Expenditure Statement ......................................................... 15 
7.3   Statement 2:  Surplus Account .................................................................................... 16 
7.4   Statement 3: Balance Sheet ....................................................................................... 16 
7.5   Schedule A: Source and Application of Funds ................................................................ 17 
7.6   Schedule B: Invest ment Mandate Overview .................................................................. 18 
7.7   Schedule C: Asset Alloca tion as of 31 December  2012 ................................................... 19 
7.8   Schedule D: Investment Pe rformance as of 31 December 2012 ....................................... 20 
7.9   Schedule E: Investment Performance History, Since Inception to 31 December 2012 ......... 21 
7.10   Schedule F: Exchange Rates Us ed for Closing on 31 December 2012 .............................. 21 
7.11   Schedule G: Particip ation in the Pe nsion Plan .............................................................. 22 
7.12   Schedule H: Structur e of the WTO Pe nsion Plan .......................................................... 23 
7.13   Schedule I: Glossary of  Terms .................................................................................. 23 
8   ANNEXES ................................................................................................................... 25  
8.1   ANNEX 1 Notes to the Financial Statements .................................................................. 25 
8.2   ANNEX 2 Investment Prin ciples of the Pension Plan ....................................................... 27 
8.3   ANNEX 3 Report of the External Auditor on the Accounts of the WTO Pension Plan 
for the year ended 31 December 2012 ................................................................................ 28 
 WT/L/886 
- 4 - 
  1  HIGHLIGHTS 
1.1  Investment Return 
Table 1 Investment Return 
 Net Real 
2012 10.0% 10.4% 
2011 -1.0% -0.3% 
2010 4.2% 3.7% 
 
 
Figure 1 Historical Returns Net of Inflation and Fees 
‐40.0%‐30.0%‐20.0%‐10.0%0.0%10.0%20.0%30.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
 
 
 
1.2  Asset Allocation 
Figure 2 Asset Allocation - Actual vs. Strategy 2012 
0.00%5.00%10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%
Global
EquitiesCHF Bonds Euro  Bonds Real  Estate Cash
Strategy
Allocation
 WT/L/886 
- 5 - 
  Figure 3 Detailed 2012 Asset Allocation by Value (MCHF) 
International  
Equities, 123.8
Emerging  Markets 
Equities, 29.0
Swiss Confederation  
Bonds, 43.0Emerging  Countries  
Bonds, 41.2CHF High Yield 
Bonds, 11.0Senior Loans, 15.1Euro Government  
Bonds, 24.5Euro High Yield 
Bonds, 20.2Euro Real Estate, 
32.5Swiss Real Estate, 
41.3Cash, 14.0
 
 
1.3  Participants and Beneficiaries 2012  
Figure 4 Plan Membership by Type 
 
  
Participants  
78% 
Retirees (1)
19% 
Disability
2% 
Surviving spouses
1% 
 
 WT/L/886 
- 6 - 
  Table 2 
Number of Participants 728 
Number of Beneficiaries 218 
Table 3 
Types of Benefits Total Number Average Monthly 
Benefit 
Retirement Benefits 93 CHF 6,300 
Early Retirement Benefits 65 CHF 5,000 
Disability Benefits 17 CHF 4,500 
Surviving Spouse's Benefits 8 CHF 3,600 
Child's Benefits 20 CHF 430 
Deferred Retirement Benefits 15 - 
 WT/L/886 
- 7 - 
  2  SUMMARY OF MANAGEME NT BOARD ACTIVITIES 
2.1.  The Management Board held nine meetin gs in 2012. These took place on 7 February, 
5 March, 4 April (Special Session), 11 May, 19 July, 27 September, 5 and 11 October, 9 November (Special Session) and 13 December. 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. 
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 also produced a comprehensive Participants' Guide to the WTO Pension Plan to help participants to better understand their benefits and responsibilities under the Plan. Retiree Observers to the Board also reported regularly to the beneficiaries. The WTOPP Secretariat 
participated in the Annual General Assembly of th e Retiree's Association and a workshop for future 
retirees to help maintain good relationships with beneficiaries. 
2.3.  The remainder of this section of the Annua l Report is devoted to a summary of the main 
items of business dealt with by the Management Board in 2012. 
REVIEW  OF INVESTMENT STRATEGY 
2.4.  The investment portfolio had a nominal net return of 10.0% in 2012. Given that Swiss 
inflation was -0.4% for the year, the real net return for 2012 was 10.4%. This was -0.5% less 
than the pension plan's benchmark which had a nominal return of 10.5% for the year. Despite widespread scepticism at the outset, financial markets performed very well in 2012. With the exception of the Japanese market, all major eq uity market recorded double digit returns 
in 2012. On the fundamental level, global corporate earnings grew almost by 4% and dividends 
increased nearly by 7%. Global dividend yields declined slightly from 2.9% to 2.8% during 2012. 
2.5.  The Plan's portfolio gained CHF 34.3 million,  from which CHF 8.2 million were in the form of 
investment income and the rest due to price appreciation. Equity investments contributed for 54% 
of the gains while gains on bonds represented 39% of the total. 
2.6.  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 2012 vs. 3.2% 
at the beginning of the year. 
2.7.  The fixed income investments (40% of the Pension Plan's target asset allocation) 
returned 9.5% against 9.7% for the benchm ark. The underperformance came from the 
intentionally conservative positioning of the high-y ield bond portion of the portfolio. Fixed income 
returns were driven by excellent returns in Emerging Countries' Bonds as well as in high-yield 
bonds. Investments in Euro Government Bonds had a return of 6.8%. Following solid returns 
from Swiss Confederation Bonds in 2011, these bonds were liquidated when yields fell to 
effectively zero. Following the liquidation of the Swiss Confederation Bonds, most of the proceeds 
were held in short term investments as this provid ed lower risk and no opportunity cost in terms of 
return. A portion of this allocation (3.8%) was invested in fixed income vehicles known as Senior Secured Loans. 
2.8.  In general, high returns from fixed-income investments are not sustainable at this level. It is 
likely that this portion of the portfolio will see more modest returns in the future. Effectively, gains in bonds were made at the expense of future  yield which declined significantly in 2012. 
The allocation of the bond portfolio was gradually modified during the year. Bond categories where 
yields fell close to zero - interest rate risk becoming far greater than potential future gains - were sold and proceeds reinvested in higher yielding fixed income vehicles. This transition was done 
while maintaining the overall risk level of the portfolio broadly stable. The current yield on the 
bond portion of WTOPP's portfolio declined from near 4% to 3.4% over the course of the year. 
Without the strategic adjustments, the yield of the bond portfolio would be at 1.8% as of 31 December 2012. WT/L/886 
- 8 - 
  2.9.  Real Estate Funds represent 20% of the target asset allocation. The return on these 
investments was 4.1% in 2012. There is no releva nt benchmark for this portion of the portfolio. 
The SXI Index, which measures the return of Sw iss quoted real estate funds, rose by 6.3% 
in 2012. 
SELECTION OF NEW SECRETAR Y OF THE PENSION PLAN 
2.10.  The Management Board went through a process of review and selection to identify a 
replacement following the retirement of Mr Robert Luther as Secretary in January 2012. 
This included reviewing/redefining the role, respon sibilities and authority of the Secretary position; 
issuing a formal vacancy notice; and finally interviewing two short-listed internal candidates before making a recommendation to the Director General (consistent with Article 6 of the Plan Regulations). Effective 1 May 2012, Mr John Breckenridge was appointed to the role 
of Secretary for a term of two years. 
ESTABLISHMENT OF A WORKING GROUP PROCESS ON GOVERNANCE AND ACTUARIAL 
ISSUES 
2.11.  The Management Board began a process of governance review in the 4th quarter of 2012. 
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. 
Following informal consultations in a working group format open to all Board members, the Board decided to adopt a risk-oriented approach to review three key areas: general governance (including a review of the Plan Regulations, Administrative Rules and Rules of Procedure), 
investment governance (including investment policies and strategy), and actuarial governance 
(including a comprehensive review of actuarial assumptions). Work on these areas will continue in 2013 and contribute to the eventual review of the Plan's actuarial balance scheduled for the end 
of 2013. 
PENSION PLAN OPERATING COSTS AND DRAFT BUDGET 2.12.  The Management Board continued to review the situation with regard to the operating costs 
of the plan and deliberated on the issue at four me etings in 2012. The issue is that while the Plan 
bears all other costs associated with the activities of the Plan, the WTO has been bearing the direct and indirect costs of staff working in the WTOPP Secretariat. The Management Board have initiated 
informal discussions with Members of the WTO's Committee on Budget, Finance and Administration 
to resolve the concerns of the external auditors on this point. 
RECOVERY  OF WITHHOLDING TAX ON PLAN INVESTMENTS 
2.13.  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 Canada were reanimated in 2012. WT/L/886 
- 9 - 
  3  ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2012 
3.1.  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. 
3.2.  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. 
3.3.  The General Council approved the Rules of Procedure of the Management Board 
on 8 May 2001 (WT/L/402). 
3.4.  Key components of the governance and administrative structure of the Pension Plan included 
the following on 31 December 2012. 
Management Board 
Mr Nicholas Niggli, Chairman 
Mr Ken Schagrin 
Members elected by 
the General Council Ms Mira Bacelj 
Members appointed by 
the Director-General Mr Michael Stone Mr Richard Eglin 
Mr Philip Tissot Mr Anthony Mistri 
Mr Marhijn Visser Ms Paulette Planchette 
Mr James Baxter 
Alternates elected by 
the General Council Mr Rolf Adlung 
Alternates appointed by 
the Director-General Mr Ken Chen Ms Susanne Auer 
Ms Micong Klimes 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 
 
Secretariat John Breckenridge, Secretary 
Jean-Pierre Helary, Assistant Secretary 
Virginie Guirado, Clerk 
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 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) 
Neuberger Berman (High Yield Bonds Fund CHF) Pictet (global equities indexed portfolio and Swiss bonds indexed portfolio) 
Warburg Henderson (European real estate portfolio) 
External Auditor French Court of Audit 
3.5.  An organizational chart is reproduced in Schedule H. WT/L/886 
- 10 - 
  4  ACCOUNTS 
4.1.  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. 
4.2.  The income and expenditure statement for the period 1 January-31 December 2012 
and surplus account as at 31 December 2012 are reproduced in Statements 1 and 2, respectively. 
4.3.  The balance sheet as at 31 December 2012 is reproduced in Statement 3. 
4.4.  The source and application of funds for the period 1 January-31 December 2012 is 
reproduced in Schedule A. 
4.5.  Details of the exchange rates used for closing the accounts on 31 December 2012 and the 
currency breakdown as of 31 December 2012, af ter hedging, are provided in Schedule F. 
4.6.  A glossary of terms to facilitate an understan ding of the tables is re produced in Schedule H. 
4.7.  Explanations of significant events in the 2012 accounts can be found in the notes in Annex 1. WT/L/886 
- 11 - 
  5  ACTUARIAL POSITION OF THE PLAN 
5.1.  Effective 31 December 2012, the consulting actuary completed an interim actuarial valuation. 
the most recent formal full valuation was completed effective 31 December 2010. The consulting actuary recommended that no amendments be made to actuarial assumptions, benefit provisions 
or contributions payable following the 2010 valuation. 
5.2.  The participant contribution rate is 7.9% and the 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 2012, excluding any allowance for expenses was estimated to be 27.2%, 
compared with 26.3% at 31 December 2011. The change in the estimated long-term cost is due to the delayed recognition of investment gains achieved in the year - as part of the asset smoothing method - and the lower number of active contributors in the Plan at the end of 2012 in comparison 
to the previous year and lower than expected total pensionable earnings. Since the long-term 
contribution rate is set as a percentage of (pensionable) earnings, the cost is quite sensitive to the total earnings base which is directly linked to the number of contributors. 
5.3.  The next full actuarial valuation report will include updated assumptions based on a 
comprehensive review of expected versus actual ex perience of the Plan across the key variables in 
the actuarial model used to estimate the long-term costs of the Plan. This is what the actuarial 
working group will be focusing on during the first half of 2013. 
5.4.  In the light of the upcoming review of actuarial assumptions and subsequent full actuarial 
valuation report consistent with Article XX, the Consulting Actuary does not recommend any amendment to the cash contribution rate at this interim actuarial valuation. Any decision to 
recommend amendments will be based on the full  revised valuation expected at the end of 2013. 
5.5.  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 
benefits without having to sell assets for 30 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. 
IPSAS ACCRUED  LIABILITIES OF THE PLAN 
5.6.  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. 
5.7.  The purpose of these two valuations is diffe rent. 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. 
5.8.  The purpose of the IPSAS valuation is to cr eate 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. 
5.9.  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 WT/L/886 
- 12 - 
  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). 
5.10.  It is principally the different discount rates, closed versus open group, and past versus 
future service assumptions that explain the different valuations. WT/L/886 
- 13 - 
  6  EXTERNAL AUDITOR 
6.1  Report of the External Auditor on the Accounts of the WTO Pension Plan for the Year 
Ended 31 December 2012 
The report of the External Auditor on the Accounts of the WTO Pension Plan for the year 
ended 31 December 2012 is reproduced in Annex 3. 
6.2  Opinion of the External Auditor on the Accounts of the WTO Pension Plan for 
the Year Ended 31 December 2012 
We have examined the financial statements of the WTO Pension Plan for the year 
ended 31 December 2012, 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 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 with International Standards on Auditing (ISA). 
These standards require that our work be organize d 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 management, and assessing 
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 2012  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/886 
- 14 - 
  7  FINANCIAL STATEMENTS 
7.1  Management letter of representation 7.1.  The Management Board of the WTO Pension Plan is responsible for these financial 
statements, which have been prepared in accord ance 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. 
7.2.  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 accu rately and fairly reflect the transactions of the 
Organization, (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. 
7.3.  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 2012. 
 
   
 
  
 
  
 
   
 
  
 
  
 
   
 
  
(signed) 
____________________ (signed) 
____________________ 
Nicholas Niggli 
Chairman 
WTOPP Management Board John Breckenridge 
Secretary 
WTO Pension Plan 
 WT/L/886 
- 15 - 
  7.2  Statement 1: Income and Expenditure Statement 
Income and Expenditure Statement 
(Expressed in Swiss francs)  
Expenditure At 
31.12.2012 At 
31.12.2011 Income At 
31.12.2012 At 
31.12.2011 
      
Benefits   Contributions   
      
Lump sum 655,566 864,237 Participants, 
regular contributions 10,000,475 9,999,440
 
Withdrawal 
settlement - Art. 26 2,624,839 4,815,409 Organization, 
regular contributions 20,000,944 19,998,902
 
Commutation – 
Art. 23(c), Art. 24(c) and 25(c) 26,211 - Organization, 
additional contributions - 185,375
 
Transfer to other 
organizations 765 - Interest on 
validations 180 229  
Interest on transfers   Restorations – 
Article 18 - 13,784  
   Interest on 
restorations - 1,473  
 3,307,381 5,679,646  30,001,599 30,199,203  
      
Periodic benefits   Transfer 
values   
      
Retirement 
benefit - Art. 23 6,903,418 6,135,785 Transfer from 
other 
organizations 163,722 272,107  
Early retirement 
benefit – Art. 24 3,830,915 3,547,539    
Surviving spouse 
benefit – Art. 29 345,866 330,241    
Child benefit – 
Art. 30 105,480 109,492    
Disability 
benefit - Art. 28 913,009 786,417    
 12,098,688 10,909,474  163,722 272,107  
      
In-service death 
and disability coverage  1,218,425 1,214,293 Other Income  - -
 
Investment and 
Other Admin. expenses
1 1,218,425 1,214,293 Investment 
Income - -  
Loss on securities - 3,367,022 Profit on 
securities 34,825,063 -  
Currency revaluation 10,893 32,656 Credit interest 18,063 9,193  
Bank charges 8,276 7,916    
Audit costs 1,779 1,874    
Management fees 334,333 397,258    
Consultancy fees 96,000 96,000    
Actuarial expenses 30,000 40,375    
Legal fees - 20,061    
Administrative costs 183,276 178,420    
      
 664,557 4,141,582  34,843,126 9,193  
      
Excess income 
over expenditure 47,719,396 8,535,508     
 65,008,447 30,480,503   65,008,447 30,480,503  
                                               
1 See Schedule A for breakdown. WT/L/886 
- 16 - 
  7.3  Statement 2: Surplus Account 
Surplus Account 
(expressed in Swiss francs)  
Debit At 
31.12.2012 At  
31.12.2011 Credit At 
31.12.2012 At 
31.12.2011 
   Excess income over 
expenditure 47,119,396 8, 535,508 
Profit 47,119, 396 8, 535,508 Loss   
 47,719,396 8,535,508   47,719,396 8, 535,508 
7.4  Statement 3: Balance Sheet 
Balance Sheet 
(expressed in Swiss francs) 
Assets At  
31.12.2012 At  
31.12.2011 Liabilities  At  
31.12.2012 At  
31.12.2011 
Securities 381,602,809 341,766,355  Capital as at 
1 January  347,550,614 339,015,106  
Current accounts  14,011,159 5,231,424     
 395,613,968 346,997,779     
   Reserve funds    
   Operating cost  250,000 250,000  
   Unrecoverable 
withholding taxes 712,000 747,000  
    962,000 997,000  
Current assets   Current liabilities    
Withholding taxes 
to be recovered 924,694 1,720,856  Accrued expenses  307,345 252,402  
Transitional Assets - 73,522     
Contributions 
receivable 693 -     
Validation amounts 
receivable - 7,859     
 925,387 1,802,237     
   Profit / Loss (-)  47,719,396 8,535,508  
 396,539,355 348,800,016   396,539,355 348,800,016  
 WT/L/886 
- 17 - 
  7.5  Schedule A: Source and Application of Funds 
Balance Sheet (expressed in Swiss francs) 
 1.1.2012-31.12.2012 1.1.2011-31.12.2011 
Source    
Funds as at 1 January 348,800,016 339,988,075 
Receipt of contributions 30,001,599 30,199,203 
Transfer values 163,722 272,107 
Investment Income2 34,832,233 - 
Increase in current liabilities 54,943 - 
Other income - - 
Transfer to reserve funds - 747,000 
 413,852,513 371,206,385 
   
Less:   
Application    
Settlement of benefits 15,406,069 16,589,120 
In-service death and disability coverage 1,218,425 1,214,293 
Losses on investment - 3,390,485 
Expenditure3 653,664 741,904 
Reduction in short term commitments - 470,567 
Changes in reserve fund 35,000 - 
 17,313,158 22,406,369 
   
Funds as at 31 December 396,539,355  348,800,016 
Breakdown of Expenditures4: 
Management fees 
Lombard Odier 51,923 
MFS 73,992 
Northern Trust 72,103 
Pictet - International Equities 125,150 
Pictet - Swiss Bonds 10,232 
Pictet - Senior loans 933 
Total: 334,333 
Consultancy fees  
MBS Capital Advice 96,000 
Actuarial expenses 
Mercer 30,000 
Administrative costs 
Trianon 159,562 
Other Expenses 
(including bank charges, travel costs, external audit and miscellaneous charges) 33,769 
Grand Total: 653,664 
 
                                               
2 The currency revaluation (loss of CHF 10,893 in 2012) shown separately in the Income 
and Expenditure Statement, is included here in the Inve stment Income item in orde r to allow for the analysis 
of the flow of funds. 
3 Excluding currency revaluation (CHF 10,893). 
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/886 
- 18 - 
  7.6  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/886 
- 19 - 
  7.7  Schedule C: Asset Alloca tion as of 31 December 2012 
Asset Allocation  
as of 31 December 2012 
Assets MCHF Current 
weightings Strategy Deviation from 
the strategy 
Global Equities 152.8 38.6% 40.0% -1.4% 
Developed markets 123.8 31.3% 32.0% -0.7% 
Emerging Markets 29 7.3% 8.0% -0.7% 
CHF Bonds5 110.3 27.9% 29.0% -1.1% 
CHF Short term investments6 43.0 10.9% 12.0% -1.1% 
CHF High Yield Bonds 11.0 2.8% 3.0% -0.2% 
Emerging Countries Bonds 41.2 10.4% 10.0% +0.4% 
Senior Loans7 15.1 3.8% 4.0% -0.2% 
Euro Bonds 44.7 11.3% 11.0% +0.3% 
Euro Government Bonds 24.5 6.2% 6.0% +0.2% 
Euro High Yield Bonds 20.2 5.1% 5.0% +0.1% 
Real Estate 73.8 18.6% 20.0% -1.4% 
Warburg Henderson8 32.5 8.2% 10.0% -1.8% 
Credit Suisse 41.3 10.4% 10.0% +0.4% 
Cash 14.0 3.5% 0.0% +3.5% 
Total 395.6    
 
                                               
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 7.6 M invested in short term investment. Amount committed but not yet invested by 
the manager. WT/L/886 
- 20 - 
  7.8   Schedule D: Investment Perfor mance as of 31 December 2012 
Investment Performance as of 31 December 2012 
(expressed in nominal terms) 
 Over 
1 year p.a. Over 
3 years p.a. Since  
inception p.a. TE IR 
TOTAL      
Consolidated Securities 10.0%  4.3%  1.0% 2.2%  0.2 
Added value -0.5% 0.5% 0.1%   
EQUITY      
Consolidated Equities 13.9%  3.1%  -0.5% 2.2%  0.4 
Added value -1.1% 0.9% 0.2%   
Developed Markets9 14.5%      
Added value -0.2%     
Emerging Markets10 11.3%      
Added value -4.4%     
FIXED INCOME      
Consolidated Fixed Income  9.5%  5.7%  3.5% 1.1%  0.3 
Added value -0.2% +0.3% -0.1%   
CHF High Yield Bonds11 5.3     
Added value -3.4     
Emerging Countries Bonds  19.5     
Added value 3.0     
Euro Government Bonds  6.8     
Added value -0.1     
Euro High Yield Bonds  17.4     
Added value -5.1     
REAL ESTATE      
Consolidated Real Estate 3.6%  3.4%  0.5%12 --- --- 
Added value13      
Warburg Henderson  1.7%  -0.4%  -1.1%14 --- --- 
Added value15      
Credit Suisse  8.2%  7.3%  7.2%16 --- --- 
Added value17 2.0% 2.2% -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/886 
- 21 - 
  7.9   Schedule E: Investment Performance Hi story, Since Inception to 31 December 2012 
5060708090100110120130140150Total Portfolio Total Portfolio Benchmark
5060708090100110120130140150Equities Equities Benchmark
5060708090100110120130140150160170Fixed IncomeFixed income Benchmark
5060708090100110120130140150160170180190200Real Estate Real Estate
 
 
7.10  Schedule F: Exchange Rates Used for Closing on 31 December 2012 
Currency Exchange rates 
EUR 1.2068 
USD 0.9154 
JPY 94.3400 
GBP 1.4879 
 
Figure 5: Currency Breakdown as of 31 December 2012, after Hedging 
CHF, 41.0%
EUR, 25.2%GBP, 4.2%JPY, 3.7%USD, 14.8%Emerging  
Markets, 7.3%Rest, 3.6%
 
 WT/L/886 
- 22 - 
  7.11  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 2012. 
 2012 2011 
Active Members 728 740 
Pensioners 218 205 
Participants in the Pension Plan in 2012 
Total number on 1 January 2012 740 
  
Movements in 2012  
- Entries 40 
- Re-entries under the terms of Art. 15(b) of the Regulations 2 
- Separations 54 
  
  
Total number on 31 December 2012 728 
  
Breakdown of separations in 2011   
- retirement 9 
- early retirement 3 
- deferred retirement 4 
- withdrawal settlement 19 
- transfer to UNJSPF 1 
- deferment of decision 17 
- death 0 
- disability 1 
Total separations 54 
Benefits Paid by the Pension Plan 
Type of benefit At 
31 December 2011 New benefits 
in 2012 Benefits ended 
in 2012 At 
31 December 2012  
Retirement 85  9 1 93 
Early retirement 62  3 0 65 
Deferred retirement 10  518 0 15 
Surviving spouse's benefit 7  1 0 8 
Partial/total disability benefit 16  1 0 17 
Child's benefit 25  0 5 20 
Total benefits 205  19 6 218 
 
                                               
18 Including one participant who has opted for a defe rred retirement benefit af ter having differed his 
decision in 2011. WT/L/886 
- 23 - 
  7.12  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 
 
 
7.13  Schedule I: Glossary of Terms 
Accrued expenses  include expenses incurred but not paid in the current financial year. 
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. 
Actuarial expenses  include expenses charged by the consulting actuary for the provision of 
actuarial services. 
Administrative costs  include costs incurred in the general administration of the Pension Plan. 
Audit costs  include costs (travel, per diem) incurred by the External Auditor in connection with 
the audit of the 2012 accounts. 
Consultancy fees  include the fees charged by the investment analyst/consultant. 
Contributions receivable  refers to contributions due in respect of contributory service in 2012 
but received after 31 December 2012. 
Currency revaluation  represents exchange rate losses. WT/L/886 
- 24 - 
  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 differs 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 information 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 under Article 20(d) of the Plan 
Regulations. 
Management fees  include 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 actuarial 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 of change in value of th e 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 (measured on the basis of the annual movement of the consumer price index in Switzerland). The real rate of retu rn 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 related costs wh ile 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. 
Regulations and Administrative Rules  refer 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 returns of investment managers and their respective benchmarks. The time-weighted return is very 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 absolu te 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 mandat e 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 2012. WT/L/886 
- 25 - 
  8  ANNEXES 
8.1  ANNEX 1 Notes to the Financial Statements 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 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. 
2. The accounting year is 1 January to 31 December. 3. Pursuant to Article 13 of the Regulations of th e 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. 
4. Pursuant to Article 5(e) of the Regulation s 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 
5. Transfers to and from other organizations reflec t 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. 
6. 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. 
7. The change from loss to profit on securities reflects general trends in financial markets 
during 2012. 
8. Monetary revaluation resulted in reduced exchange rate losses in 2012 primarily due to a 
stable Swiss franc/euro rate in 2012. 
9. Management costs reduced in 2012 in part due to additional allocations to mutual funds 
where the fees are imbedded and not charged separately. 
10. Consultant fees in 2012 are solely those paid by the Plan to its investment advisor, 
MBS Capital which receives an annual fee for its services. 
11. Actuarial fees are those paid by the Plan to  its consulting actuary, Mercer. The reduction 
reflects the movement from a variable to a fixed rate contract in the course of 2011. 
12. Legal fees reflect payments made when the Plan engages specialized external legal advice. 
These types of services were not required in 2012. 
13. Administrative fees are primarily those paid by  the Plan to its service provider, Trianon S.A. 
for administrative and accounting services. 
14. Additional contributions from the Organiza tion are zero in 2012. In 2011, the WTO made a 
special payment related to the early retirement co sts on the Plan of a restructuring implemented 
in 2008. WT/L/886 
- 26 - 
  15. 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 2012 (unrealized 
profit or loss). 
Balance Sheet 
16. Current accounts represent cash held for managing the operations of the Plan. In 2012, the 
amount is higher than the normal practice an d higher than 2011 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. 
17. 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. However, th e 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 2012. (See following paragraph) 
18. 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. 
19. The transitional assets noted in 2011 were receivable corresponding to a rebate of fees 
granted following the negotiation of a special contract with a fund manager. There were no comparable events in 2012. 
Source and Application of Funds 
20. A reserve fund amounting to CHF 747,000 has be en set up in 2011 in order to cover the risk 
of possible non-reimbursement of tax reclaims th at are out of statute (see paragraph 18 above). 
The change in reserve fund of CHF 35,000 is expl ained by the reduction of the total amount of 
unrecoverable withholding taxes as reflected in the Balance Sheet. This reduction is related to the 
decision made by Northern Trust to pre-fund the amount of tax reclaims submitted on WTOPP's behalf in 2009 and in 2010. 
Events after the Reporting Date 
21. The WTOPP's reporting date is 31 December 2012. The financial statements were authorised 
for issue on 27 May 2013, the date at which they were submitted to the External Auditor by the 
Management Board. On the date of signing these accounts, there have been no material events, 
favourable or unfavourable, incurred between the reporting date and the date when the financial 
statements were authorised for issue that would have impacted these statements. WT/L/886 
- 27 - 
  8.2  ANNEX 2 Investment Prin ciples of the Pension Plan 
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 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. 
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. 
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. 
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. 
 WT/L/886 
- 28 - 
  8.3  ANNEX 3 Report of the External Audito r on the Accounts of the WTO Pension Plan 
for the year ended 31 December 2012 
 
 AUDITORS OF THE PENSION PLAN 
OF THE WORLD TRADE 
ORGANIZATION  
 WORLD TRADE 
ORGANIZATION  
ORGANISATION 
MONDIALE DU COMMERCE  
ORGANIZACIÓN MUNDIAL 
DEL COMERCIO  
 
LETTER OF FINAL COMMENTS ON THE FINANCIAL STATEMENTS 
OF THE WTO'S PENSION PLAN FOR 
THE FINANCIAL YEAR ENDED 
31 DECEMBER 2012 
Court of Audit reference: OMC-2013-2 WT/L/886 
- 29 - 
  Contents 
I. OBJECTIVES AND SCOPE OF THE AUDIT        30 
II. LIST OF RECOMMENDATIONS          30 
III. COMMENTS AND RECOMMENDATIONS         30 
1. Follow-up to previous recommendations       30 
1.1. Recommendations of the auditor        30 
1.2. Internal audit's comments         31 
2. Presentation of the financial statements       31 
3. Overview of the Plan's financial situation       32 
4. Actuarial analyses of the Plan         33 
5. Reserve fund for operation costs         35 
6. Reimbursement of withholding tax        36 
7. I n v e s t m e n t  p o l i c y            3 7  
IV. ACKNOWLEDGEMENTS          39 
V. OPINION             39 
VI. ANNEX: INTRODUCTION TO THE PENSION PLAN      40 
 WT/L/886 
- 30 - 
  I. OBJECTIVES AND SCOPE OF THE AUDIT 
1. Pursuant to our notification dated 3 Decemb er 2012, an external auditor undertook an 
assignment within the Secretariat of the Management Board of the WTO Pension Plan (WTOPP) from 27 to 30 May 2013. The audit's objective was to prepare the certification of the WTOPP's 
financial statements for the financial year ended 31 December 2012. 
2. The audit was conducted in accordance with international auditing standards ( International 
Standards on Auditing - ISA), the Regulations of the Pension Plan and its Administrative Rules. 
3. The purpose of the audit was to determine with reasonable certainty whether the financial 
statements as a whole did not contain any significant anomalies, either as a result of fraud or e r r o r s ,  s o  a s  t o  g i v e  a n  o p i n i o n  a s  t o  w h e t h e r  t h e y  h a v e  b e e n  d r a w n  u p ,  a s  f a r  a s  a l l  their important elements are concerned, in accordance with the accounting standards of 
the WTO Pension Plan as defined in the Regulati ons of the Plan and its Rules of Procedure. 
4. Each comment and recommendation was discusse d with the persons concerned. The audit's 
closing meeting was held with Mr John Breckenridge, Secretary of the Pension Plan, 
on 30 May 2013. The Secretariat acknowledged the relevance of our remarks. This letter takes 
fully into account its comments and replies. 
5. Our opinion on the financial statements of the WTOPP is given unreservedly. 
II. LIST OF RECOMMENDATIONS 
Recommendation No. 1. The WTO should take me asures to ensure the long-term viability 
of its Pension Plan, following the in-dep th studies recently initiated by the 
Management Board. 
Recommendation No. 2. It is recommended that the working groups on the Pension Plan 
should address the question of the Plan's Regu lations, paying particular attention to the 
need for separate financial statements for the Plan. 
Recommendation No. 3. It is recommended th at the Secretariat make further efforts 
to recover the debts due corresponding to withholding tax not reimbursed by the tax 
authorities of the countries concerned (c onfirmation of previous recommendation). 
III. COMMENTS AND RECOMMENDATIONS 
1. FOLLOW-UP TO PREVIOUS RECOMMENDATIONS 
1.1 Recommendations of the auditor 
6. Of the four recommendations made in 2012 regarding the 2011 accounts, three have been 
implemented and one is in the process of being implemented: the scope of the latter concerning 
the Plan's operating costs is, however, put into perspective by this report (see section 5 below).WT/L/886 
- 31 - 
   
Table 1.  Summary of implementation of the re commendations in our report on the 
WTOPP's financial statements for the fi nancial year ended 31 December 2011 
Subject Implemented Being 
implemented Not 
implemented  Total Paragraph nos.  
in the origina l 
repor t
No. 1. The financial statements should be completed by notes explaining the main changes noted 
in the accounts from one year to 
another. x    8—11 
No. 2. The actuary should be 
requested to provide written 
justification for the very large gap 
existing between the estimates of the Pension Plan's commitments at 31 December 2011, presented by him in his reports of April and May 2012 (the first of these reports applying IPSAS).  x   
 18—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. Further efforts should be 
made to recover the withholding tax due and not reimbursed by the tax authorities of the countries 
concerned.  x   
 26—31 
Total number 3 1 0 4  
Percentage of total 75 25 0 100  
 
1.2 Internal audit's comments 
7. The WTO's internal audit service has no t conducted an audit of the WTOPP. 
2. PRESENTATION OF TH E FINANCIAL STATEMENTS 
8. The WTOPP's financial statements have traditionally been presented as part of the annual 
report by the Plan's Management Board. They are supplemented by two annexes on, respectively, 
"Statement of significant accounting principles" and "Investment principles", and by eight appendices numbered A to H dealing, in particular, with the Plan's investments. 
9. At the time of the audit, the annexes and appe ndices had been drafted, in accordance with 
Recommendation No. 1 in our report on the 2010 accounts, and the annex on the statement of accounting principles had been prepared, in accordance with Recommendation No. 1 in our 
report on the 2011 accounts. Moreover, the accounts had been signed and submitted 
to the Plan's Management Board at its meeting held on 14 May 2013.  
10. The 2012 accounts contain fewer changes not immediately understandable for those reading 
the financial statements compared to the report for the previous financial year.  WT/L/886 
- 32 - 
  3. OVERVIEW OF THE PLAN'S FINANCIAL SITUATION 
11. The operating account of the Pension Plan19 ("the statement of income and expenditure") 
shows a surplus of CHF 47,719,00 0, five and a half times higher than that for 2011 
(CHF 8,536,000). 
12. There are four main reasons for this trend: 
 the year-by-year decrease in pensions paid in a lump sum, from CHF 4,815,000 
to CHF 2,625,00020; 
 the decrease in exchange losses from CHF 33,000 to CHF 11,000; 
 the absence of payment of lawyers' fees in 2012 (CHF 21,000 in 2011); 
 and, above all, the change from a loss of CHF 3,367,000 in investment income in 2011 
to a surplus of CHF 34,825,000 in 2012. 
13. The net actuarial rate of return on investme nt (10.10%) once again became positive and 
largely exceeds the Plan's target (3.5%, net of inflation). 
Table 2. Calculation of the actu arial rate of return (in CHF) 
Actuarial rate of return 2010 2011 2012 
a. Value of assets as at 1 January 312,228,322 339,988,075 348,800,016 
b. Value of assets as at 31 December 339,988,075 348,800,016 396,539,355 
i. Investment income 11,279,201 -3,795,659 34,489,624 
Average assets = (a+b-i)/2 320,468,598 346,291,875 355,424,874 
Actuarial rate of return in nominal terms = 
i/average assets 3.52% -1.10% 9.70% 
Consumer price index for Switzerland21  0.5% -0.70% -0.40% 
Actuarial rate of return, net of inflation 3.02% -0.40% 10.10% 
Source: External auditor, on the basis of in formation provided by the WTOPP Secretariat. 
Table 3.  Trend in actuarial rates of return in nominal terms (%) 
2005 2006 2007 2008 2009 2010 2011 2012 
+23.71% +9.01% +3.48% -36.53% +21.29% +3.52% -1.10% +9.70% 
Source: External auditor, on the ba sis of WTOPP Secretariat statistics. 
14. The presentation of the Plan's balance sheet is based on that for Swiss pension plans: the 
capital of CHF 347,551,000 recorded in the balance's liabilities, an increase of 2.52%, corresponds to the net assets in an IPSAS-consistent statement of financial position. 
15. The surplus in the balance sheet (CHF 396,539, 000) represents an increase of 13.69% in 
comparison with 2011 because of the 11.66% increase  in the value of the Plan's portfolio and the 
strong increase in its liquidity (from CHF 5,231,000 to CHF 14,011,000), as mentioned below. 
16. In addition to the aforementioned surplus of  CHF 47,719,000, the liabilities include accrued 
expenses at the end of the financial year (CHF 307,000), an increase compared to 2011, the 
reserves and provisions mentioned below concerning operating costs (CHF 250,000), and irrecoverable taxes (CHF 712,000). 
                                               
19 Annex A contains an updated version of the outline of the Pension Plan's orga nization and parameters 
given in the external auditors' previous reports. 
20 This reduction cannot be forese en: staff members retiring may decide to take up to a maximum 
of 33% of their pension in a lump sum. A varying number of them use this possibility each year. 
21 Rate of variation in the Consumer Price Inde x (CPI) for December compared to December of 
the previous year, as reported by th e Swiss Federal Office of Statistics. WT/L/886 
- 33 - 
  17. The increase in the value of the assets and net assets in the balance sheet (its capital) are a 
positive development, but this balance sheet is not consistent with IPSAS22 and does not mention 
the actuarial value of pension commitments, an essential element in assessing the situation of a pension plan. 
4. ACTUARIAL ANALYSES OF THE PLAN 
18. Pursuant to Recommendation No. 2 in our report  on the 2011 accounts, the Plan's actuary, 
the firm Mercer , explained the 100% gap
23 between the Pension Plan's commitments 
at 31 December 2011 estimated in its reports intended, respectively, for the Plan's 
Secretariat (6 May 2012) and that for the WTO (20 April 2012, in order to prepare the WTO's IPSAS-consistent financial statements). 
19. The note dated 17 May 2012 from the actuary to the Plan's Secretariat explains that 
these two estimates have fundamentally different objectives: the purpose of the report to 
the WTO Secretariat is to provide it with the figu res to be included in the financial statements 
in accordance with IPSAS-25. The latter prov ided for an estimate of commitments on 
the assumption that all a plan's assets are invested in high-quality fixed-income securities. 
Such an estimate furnishes an immediate pict ure of commitments at any given moment, not 
a long-term forecast of trends in a plan's charges. 
20. On the other hand, the purpose of the detailed projections appearing in the reports prepared 
every three years for the WTOPP's Management Board and the interim projections (such as that concerning commitments at the end of 2011) in the interim reports is to estimate a plan's charges over time and compare them to its resources in or der to ensure the plan's viability in the long 
term. These projections, for example, take into  a c c o u n t  t h e  r a t e  o f  r e t u r n  e x p e c t e d  f r o m  a  
plan's assets. 
21. The two types of projection include the parame ters indicated in the table below. Three of 
these, the discount rate, the projected trends in retail prices and in wages, differ considerably and 
explain the gaps noted. The rate of return expect ed by the Plan (6.5% net, including inflation), 
in particular, is much higher than the discount rate consistent with IPSAS-25 (2.8% per annum, 
including inflation, corresponding to the current  very low return on Swiss Government bonds). 
Furthermore, the aforementioned projection us es the so-called closed group method, with 
no future acquisition of pension rights, whereas the interim evaluation uses the open group method, which takes into account future contributors to the Plan. 
Table 4.  Comparison of actuarial assumptions taken into account in the reports 
forwarded to the Pension Plan and to the WTO 
 Report for the Plan Report for the WTO, 
IPSAS-consistent 
Financial assumptions 
Discount rate 6.5% per annum 2.8% per annum 
Retail price trend 3.0% per annum 1.1% per annum 
Wages trend 4.0% per annum 2.1% per annum 
Wages trend taking into account 
promotions Specific to the WTO Idem 
Demographic assumptions 
Mortality rate Improved EVK2000 Idem 
Disability rate EVK1990 Idem 
Retirement rate Specific to the WTO Idem 
Recruitment of new staff Specific to the WTO Not used 
Source : External auditor, based on the No te of 17 May 2012 from the firm Mercer . 
                                               
22 International Public Sector Accounting Standards. 
23 The amount of commitments was estimated to be CHF 1,645 million in the report intended for the 
Plan and CHF 845 million in that for the WTO and consistent with IPSAS. WT/L/886 
- 34 - 
  22. The actuary's two reports concerning the Plan's situation at 31 December 2012 contain the 
following data: 
 The interim evaluation report of May 2013 intended for the Plan's Secretariat estimated 
pension commitments to be CHF 1,654 million (rather than the CHF 1,645 million at the 
end of the 2011 financial year) and the market value of assets at CHF 397 million 
(instead of CHF 349 million); 
 The IPSAS-consistent report of 1 April 2013 intended for the WTO Secretariat estimated 
pension commitments to be CHF 945 million (rather than CHF 845 million) and the value 
of assets to be the same as the aforementioned report. 
23. The gap in the latter document between the estimated commitments in accordance 
with IPSAS in 2011 and 2012 (+11.83%) can be explained by the changes in the 
following parameters: the discount rate adopted is 2.1% instead of the 2.8% in 2011; the annual 
wage increase is estimated to be 1.6%24 rather than 2.0%, and that of pensions to be 0.6% rather 
than 1.0%. 
24. Moreover, there is an extremely interesting curv e in the interim evaluation report intended 
for the Plan showing that, on the assumption that th e rate of return on the Plan's assets meets the 
target set of 6.5% net (including inflation), th e annual cost of pensions would be covered by 
contributions alone up to 2022 and by contributions plus income from financial assets up to 2045. 
25. It also shows that the gap between commitments and assets is widening rapidly: it went 
from CHF 5 million in 1999 to CHF 405 million in 2012. 
26. These figures show that the sustainability of  the WTOPP needs to be examined so that 
remedial measures can be taken to bridge the widening gap between commitments and 
the financial assets needed to cover them. 
27. The panoply of possible measures is well known, but implies decisions that are difficult to 
take and lengthy negotiations between Members and the staff on raising contributions by the 
Organization and by the staff, introducing a supplementary contribution by Members to allow additional financial assets to be acquired over a specified period, as has been done by the OECD
25, 
stricter Pension Plan Rules for new staff, and changing the investment strategy. The Plan has the 
time to consider these matters in depth, together  with the reforms needed to ensure the Plan's 
long-term viability, but the longer it waits, the more difficult it will be to implement the reforms. 
28. The WTOPP's Management Board is fully aware of this situation and has just set up three 
working groups to consider, respectively, the Plan's actuarial parameters, the Plan's governance, 
and its investment policy. The task of these groups is to come up with solutions by the end of 2013, just before the new in-depth evaluation  of the Plan which the actuary has to submit 
in early 2014 on the situation of the Plan at 31 December 2013. 
29. This initiative is to be welcomed. The WTO should take all necessary measures to ensure 
the long-term viability of its Pension Plan, in the light of the detailed evaluations by its actuary, the 
conclusions of the working groups of the WTOPP' s Management Board and the experts who will be 
assisting the groups' work. 
Recommendation No. 1. The WTO should take measures to ensure the long-term 
viability of its Pension Plan, following the in-depth studies recently initiated by the 
Management Board. 
                                               
24 Actuarial report on the 2012 accounts. 
25 Organisation for Economic Cooperation and Development. WT/L/886 
- 35 - 
  5. RESERVE FUND FOR OPERATING COSTS 
30. The liability side of the balance sheet still includes a reserve of CHF 250,000 for operating 
costs potentially invoiced by the WTO in respec t of the staff made available to the Plan by 
the Organization. This reserve, which was established pursuant to recommendations by the 
previous external auditors, has never been revalu ed, although the actual value of the operating 
costs concerned would be CHF 537,000 (according to the latest estimate made on 14 May 201326). 
31. The solution, pursuant to Article 5(f) of the Regulations27, would be for the WTO to invoice 
the Plan's actual operating costs paid by the Or ganization each year. The aforementioned reserve 
could be used to pay some of these costs in the first year. 
32. In accordance with our recommendations for previous years, on 23 May 2011 
the WTO Secretariat submitted in vain a memorandum proposing that each year the WTOPP pay 
a WTO invoice for its operating costs. A new note dated 14 May 2013 proposed that only direct 
staff costs be paid (CHF 393,000) but not the relevant administrative costs, estimated to be a total of CHF 144,000 for 2.4 full-time equivalents: this  note has to be submitted to the WTOPP's 
Management Board and then to the WTO's Budget Committee. 
33. Delegates' reluctance to accept this reform can be explained, it would seem, by the fear of 
adding to the pension costs to be covered by em ployers' and employees' contributions and by the 
return on financial assets. This fear is in fact unf ounded in relation to the transition to IPSAS: the 
actuarial reports mentioned above estimate the Plan's pension commitments in accordance with IPSAS-25, which refers to pension costs withou t taking into account the cost of administering 
the pensions; IPSAS-25 is silent on this aspect; international organizations audited by the same 
auditor and applying IPSAS do not take these costs into account in their actuarial assumptions. 
34. Article 5(f) of the Regulations simply provides a common-sense rule on the division of costs 
between two bodies, the WTO as such and its Pension Plan, whose financial statements have 
hitherto been separate. 
35. The IPSAS which the WTO has decided to apply henceforward oblige the Organization to 
include the financial figures concerning its Pension Plan in its accounts and, in particular, its 
pension commitments and the value of its financial assets. In these circumstances, the 
presentation of separate financial statements for the Plan is no longer necessary and the division of costs between the two bodies and their respective accounts becomes a problem of 
lesser importance. 
36. To continue presenting separate financial statements for the WTOPP is, however, not 
contrary to IPSAS and can be useful in confirming to staff and retired staff that the Organization 
does not intend to use the financial assets for purposes other than to cover pension commitments. 
37. The OECD, for example, has chosen such a so lution for its oldest pension plan (which 
manages the smallest funds), the Staff Provident Fund. The financial data on the latter are included in the OECD's accounts, but financial statements specific to the Fund are still submitted 
and audited separately by the Organisation's auditor.  As provided in Article 21 of the Fund's Rules, 
"the administrative costs related to investments shall be reimbursed by the Fund to the OECD on 
the basis of the actual costs incurred and a reasonab le allocation of staff costs, including a share 
of overhead ".
28 
                                               
26 This figure is lower than the CHF 700,000 estimated in 2011, but some of the staff concerned 
have changed. 
27 Article 5(f) of the WTOPP's Regulations: " All expenses incurred in administering the plan […] shall be 
borne by the Plan ". 
28 Extract from the 2012 financial statements of the OECD's Staff Provident Fund. WT/L/886 
- 36 - 
  38. It is suggested that the working groups crea ted by the WTOPP's Management Board address 
this issue. There are two possible solutions: 
 Eliminate the obligation to present separate financial statements for the Pension Plan, 
which would logically remove the obligation on the WTO to invoice the Plan's operating 
costs each year; 
 Maintain separate financial statements for the Plan (even though these are now 
redundant with those of the WTO, which have to include all the financial data concerning 
pensions and financial assets, pursuant to IPSAS) and specify the list of operating costs 
to be invoiced to the Plan by the WTO each year. 
Recommendation No. 2. It is recommended that the working groups on the Pension 
Plan should address the question of the Plan 's Regulations, paying particular attention 
to the need for separate fina ncial statements for the Plan. 
 
6. REIMBURSEMENT OF WITHHOLDING TAX 
39. Dividends earned from the WTOPP's securities are subject to fiscal levies at source and 
the Plan requests their reimbursement from the tax authorities in the countries concerned 
because the WTO is exempt from tax pursuant to the 1994 Marrakesh Agreement, which 
established it, and the 1947 Convention on the Priv ileges and Immunities of the United Nations 
and Specialized Agencies, which is referred to in the Marrakesh Agreement. 
40. In practice, the WTOPP authorizes the two banks that are the custodians of its investments, 
Northern Trust and Pictet29, to obtain reimbursement of withholding taxes, but Northern Trust  has 
not been able to obtain long-outstanding reimbu rsement from eight countries. The following table 
shows all the Plan's claims in respect of withho lding tax at 31 December 2012, including those for 
which reimbursement presents no problem. 
Table 5. The WTOPP's claims for re imbursement of withholding tax  
at 31 December 2012 (in CHF) 
Debtor country Custodian ba nk concerned WTOPP claim 
Austria Pictet  433.16 
Canada Northern Trust 116,771.19 
Denmark Pictet 
Northern Trust  1,723.14 
12,573.55 
France Northern Trust  339,636.08 
Germany Pictet 50,113.71 
Greece Northern Trust  1,994.83 
Ireland Pictet  258.96 
Israel Northern Trust  643.22 
Italy Northern Trust 
Pictet  239,787.60 
3,252.75 
Luxembourg Northern Trust  4,006.13 
Poland Northern Trust  8,194.40 
Spain Pictet  3,317.65 
Switzerland Pictet 
Crédit Suisse/PostFinance  132,624.25 
6,321.93 
Other countries Northern Trust 3,041.30 
Total Pictet : 191,723.62 
Northern Trust  : 726,648.30 
Crédit Suisse /PostFinance  : 6,321.9330 
Overall total : 924,693.85 
Source: External auditor, based on data  provided by the WTOPP Secretariat. 
                                               
29 Pictet became a custodian bank in 2011. 
30 Crédit Suisse  is not a custodian bank. The Plan has a modest claim with it and reimbursement does 
not raise any problem. WT/L/886 
- 37 - 
  41. Pursuant to Recommendation No. 3 in our report on the 2010 accounts, the Secretariat has 
included in its balance sheet all the amounts outstanding in this respect, a total of CHF 924,694 (instead of the CHF 1,721,000 at 31 December 2011). It has also included a "reserve fund" in the balance sheet liabilities amounting to CHF 712,000 (instead of the CHF 747,000 in 2011), 
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 national legislation were considered as potentially irrecoverable.
31 The amount of the potentia lly irrecoverable claims 
should, however, be classified as a provision rather than a reserve fund  because these 
sums do in fact constitute a potential risk for the Plan whose amount can be reliably estimated. 
42. The Plan and its custodian banks should pu rsue their efforts with debtor countries. 
They obtained an exemption from withholding tax as of 1 January 2011. Despite three further 
letters sent in 2012 by the WTOPP Secretariat and by the custodian bank Northern Trust , however, 
France still has to reimburse CHF 339,636.08. 
43. Pursuant to the suggestions made in our previous report, contacts with the delegation 
of Canada to the WTO were followed up by a lette r to the Canadian delegation to the WTO, but 
no steps were taken vis-à-vis  other debtors, notably Italy, which owes over CHF 240,000. It is 
therefore important for the Secretariat to resume its efforts and to ask the mandated 
banks to intensify their efforts to obtain sa tisfaction. The threat of initiating legal 
proceedings should not be excluded.  
44. The risk of a statutory limitation period should not put an end to attempts to 
recover debts : taxes should not be considered as time-barred, in implementation of general legal 
principles, if their reimbursement was requested within the legal time-limit and if the fiscal service 
concerned is solely responsible for the failure to reimburse. 
Recommendation No.3. It is recommended that  the Secretariat make further efforts to 
recover the debts due corresponding to withholding tax not reimbursed by the tax 
authorities of the countries concerned (c onfirmation of previous recommendation). 
 
7. INVESTMENT POLICY 
45. 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% by emphasizing equities, pegged at 70% of 
the portfolio (with 10% invested in emerging markets), in preference to bonds (20%) and real estate (10%). 
46. In 2008, at the height of the financial crisis, the Plan's Management Board adjusted this 
policy by decreasing the share of equities in order to limit losses on those investments. 
On 14 October 2009, after having consulted five specialist 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% net rate of return, not including inflation: 
 equities: 40% (one quarter of which in emerging market securities); 
 bonds: 40%; 
 real estate securities: 20%. 
47. This modified asset allocation policy was implemented in January 2011, following a call 
for bids completed in 2010 in order to choose asset managers. In 2012, the Plan sold its highest-rated government bonds in euros, whic h had a low rate of return. Instead, it bought 
shares in loan funds and retained a large amount of liquidity. It is reviewing the best policy to be 
adopted for investment in real estate, the managers of one of these ( Warburg Henderson ) having 
proposed to buy back the shares of two sharehol ders that were withdrawing. The breakdown of 
                                               
31 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. WT/L/886 
- 38 - 
  the Plan's portfolio is close to the targets: 38.6% in equities, 39.2% in fixed-income 
investments, 18.7% in real estate, and 3.5% of liquidity. 
48. Taking into account the trend in financial markets in 2012, nominal performance was much 
higher than that for the previous year (10% as against -1.0% for the portfolio as a whole), 
but was 0.5% lower than the benchmark, exce pt in the case of emerging country bonds 
and investment in real estate with Crédit Suisse , which exceeded their benchmarks by 3% 
and 2%, respectively.  
Table 6. Trend in the breakdown of assets from 2011 to 2012 and comparative 
performance of the various classes of assets in 2012 (in CHF millions) 
Assets Value of assets 
end of 2011 Value of assets  
end of 2012  2012 performance 
(percentage) Difference 
compared to 
benchmark 
Shares 132.5 (38.2%) 152. 8 (38.6%) 13.9% -1.1% 
Developed 
markets   107.6 (31.0%) 123.8 (31.3%) 14.5% -0.2% 
Emerging 
markets   24.9 (7.2%) 29.0 (7.3%) 11.3% -4.4% 
Total bonds 143.7 (41.4%) 155 (39.2%) 9.5% -0.2% 
Bonds in 
Swiss francs 73.6 (21.2%) 110.3 (27.9%)   
Swiss bonds in 
Swiss francs 36.4 (10.5%)    
Short-term 
investment in Swiss francs  43.0 (10.9%)   
High return 
bonds in Swiss francs  11 (2.8%) 5.3% -3.4% 
Emerging 
country bonds in Swiss francs 37.2 (10.7%) 41.2 (10.4%) 19.5% 3% 
Loan funds  15.1 (3.8%)   
Bonds in 
euros 70.1 (20.2%) 44.7 (11.3%)   
Government 
bonds in euros 53.6 (15.4%)  24.5 (6.2%) 6.8% -0.1% 
High return 
bonds in euros 16.6 (4.8%)  20.2 (5.1%) 17.4% -5.1% 
Real estate 66.0 (19.0%) 73.8 (18.7%) 3.6%  
Warburg 
Henderson 32.9 (9.5%) Warburg 
Henderson  32.5 
(8.2%) 1.7%  
Crédit Suisse 33.0 (9.5%) Crédit 
Suisse  41.3 
(10.4%) 8.2% 2% 
Cash 5.2 (1.5%) 14.0 (3.5%)   
Total 347.5 395.6 10% -0.5% 
Source: External auditor, based on indicati ons provided by the Plan's Secretariat.IV. WT/L/886 
- 39 - 
  IV. ACKNOWLEDGEMENTS 
49. The external auditor wishes to thank sincerel y the Secretary of the Pension Plan and his 
collaborators for their welcome and for the precise information that they supplied to him. 
V. OPINION 
50. On the basis of the audit conducted, the exte rnal auditor certifies that, in his view, the 
accounts for the financial year 2012 present fairly the financial position of the WTO Pension Plan as at 31 December 2012. WT/L/886 
- 40 - 
  VI. ANNEX: INTRODUCTION  TO THE PENSION PLAN 
Background 1. Both the informal international organization 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 providing 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 advantageous than the latter to some of its staff. 
Management procedures 
3. The Plan is governed by Regulations adopted by the WTO General Council 
on 16 October 1998. It is supplemented by Administ rative 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 management of the Pension Plan to the Management 
Board composed of a Chairman, four members and four 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 list drawn up by the "participants", i.e. by staff memb ers 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-Gener al of the WTO on the proposal of the Board. 
The new incumbent is a member of the Administration and General Services Division of the WTO, and is assisted by two full-time staff members, a grade 8 official and a grade 4 secretary. 
6. Under the responsibility of the Management Board, the Secretariat directly managed the 
Plan for two and a half years, apart from asset management activities, which were originally entrusted to specialized bodies and then su bsequently, by contract of 1 June 2001, the 
administration and accounts management of the Plan were entrusted to Trianon S.A.
32, 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, the Secretariat of the Plan has retained responsibility for the preparation and follow-up of Management Board 
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. 
7. In the aforementioned area of activity, the Management Board defines the policy for 
distributing funds accumulated through pension contributions among different categories of securities (equities, emerging country equities, bonds and real estate securities) and selects bodies to manage those assets. The London branch of the United States Bank Northern Trust  
and Pictet  act as the custodian bank and monitor the operations of the management bodies. 
The company MBS Capital Advice , based in Geneva, has monitored the performance of these 
managers since October 2010 (when it replaced Wyatt , in place up to December 2009). Trianon  is 
responsible for the general accounts of the Plan and prepares the financial statements. 
                                               
32 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 Transport Association (IATA) and the WTO. WT/L/886 
- 41 - 
  Technical 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 down by its Regulations and Administrative Rules, referred to above. 
9. The pension contribution rate since 1 January 2010 has stood at 23.7% of the so-called 
"pensionable" remuneration
33, 7.9% of which is paid by the employees and 15.8% by 
the Organization (Article 20 of the Regulations). Retirement 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 years for staff who began working in the GATT or the WTO before 1990). The amount of the retirement benefit is established by reference to the "final average remuneration (FAR)" constituted by the 36 months of highest 
pensionable remuneration within the last five year s of the staff member's career; it is obtained 
by multiplying the first 30 years of contributory  service by 2% of the FAR and the subsequent 
years (up to a maximum of ten years) by 1% 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 larger" (Artic le 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% during the years preceding that age; the rate of reduction is lowered to 1% if the participant has completed at least 30 years of contributory service (Article 24 
of the Regulations). 
12. At 31 December 2012, the Plan had 218 beneficiaries
34, for 728 contributors. 
__________  
 
                                               
33 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 staff, are subject to income tax. 
34 These 218 beneficiaries include 93 retirees, 65 who took early retirement, 8 beneficiaries of survivor's 
pensions, 20 orphans and 17 disabled persons. To these must be added 15 retirees whose deferred pensions 
will begin to be paid after 2012.