RESTRICTED  
  
WT/BFA/W/ 636 
WT/L/ 1167  
12 June 2023  
(23-3796) Page: 1/28 
Committee on Budget, Finance and Administration  
General Council  
24-25 Ju ly 2023   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
WTO PENSION PLAN  
 
 
 
ANNUAL REPORT AND FINANCIAL STATEMENTS  
FOR THE YEAR ENDING  
31 DECEMBER  2022 
 
 
 
 
 WT/BFA/W/636 • WT/L/1167  
 
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  CONTENTS  
1  HIGHLIGHTS  ................................ ................................ ................................ ................  4 
1.1  Investment return  ................................ ................................ ................................ ........  4 
1.2  Asset allocation  ................................ ................................ ................................ ............  5 
1.3  Participants and beneficiaries 2022  ................................ ................................ .................  6 
2  SUMMARY OF MANAGEMENT BOARD ACTIVITIES  ................................ .........................  7 
3  REVIEW OF THE WTOPP INVESTMENT PERFORMANCE  ................................ .................  7 
4  ACTUARIAL POSITION OF THE PLAN  ................................ ................................ ............  8 
5  IPSAS ACCRUED LIABILITIES OF THE PLAN  ................................ ................................ . 9 
6  ORGANIZATION AND STRUCTURE OF THE PENSION PLAN ON 31  DECEMBER  2022  ...... 9 
7  ACCOUNTS  ................................ ................................ ................................ .................  10 
8  EXTERNAL AUDITOR  ................................ ................................ ................................ .. 10 
9  FINAN CIAL STATEMENTS  ................................ ................................ ...........................  12 
9.1  Management letter of representation  ................................ ................................ .............  12 
9.2  Statement 1: Income and expenditure statement  ................................ ............................  13 
9.3  Statement 2: Balance sheet  ................................ ................................ ..........................  14 
9.4  Schedule A: Source and application of funds  ................................ ................................ ... 15 
9.5  Schedule B: Breakdown of expenditures  ................................ ................................ .........  15 
9.6  Schedule C: Investment mandate overview  ................................ ................................ .... 16 
9.7  Schedule D: Asset allocation  ................................ ................................ .........................  17 
9.8  Schedule E: Investment performance  ................................ ................................ ............  18 
9.9  Schedule F: Investment performance history from inception to 31  December  2022 .............  19 
9.10  Schedule G: Exchange rates  used for closing on 31  December  2022 ................................  19 
9.11  Schedule H: Participation in the Pension Plan  ................................ ................................  20 
9.12  Schedule I: Structure of the WTO Pension Plan  ................................ .............................  21 
9.13  Schedule J: Glossary of terms  ................................ ................................ .....................  21 
ANNEXES  ................................ ................................ ................................ .......................  24 WT/BFA/W/636 • WT/L/1167  
 
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  MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD  
The Management Board of the World Trade Organization Pension Plan (WTOPP) is pleased to present to 
the General Council and to Plan participants and beneficiaries its 202 2 Annual Report prepared in 
accordance with Article 5 of the Regulations of the Plan.  
 
Most of the Board's work in 202 2 was directed to actuarial matters. This included developing draft 
reform proposals to addres s the substantial projected actuarial imbalance  identified in recent actuarial 
valuations . The work in 2022 w as largely devoted to developing recommendations to bring the actuarial 
position of the Plan back into long -term balance  and the process of consult ation with stakeholders . 
 
In 202 2, the WTO Pension Plan investment portfolio had a real return of -15.7%. This negative  
performance reflects geopolitical uncertainty and a correction to substantially above average returns in 
2021 that were not based on eco nomic performance. It is important to bear in mind that price volatility 
as measured by the value of the portfolio on 31  December of each year is not a good indicator of the 
underlying economic potential of the investments. Current economic circumstances r emain challenging 
for investors and are likely to remain so for some time.  
 
However, p rudent management of the investment portfolio has continued to provide  above the target 
rate of return for the past decade.  Nonetheless, continued above target returns c annot be counted on 
and, in any case, could not reasonably be expected to solve the identified actuarial imbalance.  Only a 
well-balanced and timely package of reforms can address the funding gap and work on that will continue 
to be the focus of the Manage ment Board in 2023.    
 
More information on the investment philosophy of the Management Board and details on the allocation 
of assets can be found in the report and its annexes.  
 
In closing, I would like to thank the members of the Management Board for thei r engagement and 
valuable contributions to matters concerning the Plan. On behalf of the Management Board, I would like 
to thank WTOPP Secretariat staff for their support and service. The Management Board and the Plan's 
Secretariat are fully engaged in ens uring the continued good governance and the sustainability of the 
WTO Pension Plan and are pleased to share this annual report with you.  
 
Jean-Marc van Dril, Chair of the Management Board  
 
 WT/BFA/W/636 • WT/L/1167  
 
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  1  HIGHLIGHTS  
1.1  Investment return  
Figure 1 Historical returns net of inflation and fees   
 
1.  In 202 2 the Pension Plan's investment portfolio had a nominal rate of return of -12.9%, following a 
downturn in global financial markets . As Swiss inflation for 202 2 was close to 2. 8%, the portfolio's real 
return was -15.7% for the year . Even though current economic circumstances remain challenging, a 
significant part of this negative return was due to valuations on financial markets reverting to more 
normal levels, after reaching extreme levels in 2021. While this has caused the Plan's po rtfolio's market 
value to decrease, it has also improved its capacity to generate income. A s a long -term investor  the 
Pension Plan  can tolerate  such volatility.  
Table 1 Net investment return  
 Nominal  Real 
2018 -5.8% -6.5% 
2019 12.6% 12.4% 
2020 4.2% 5.0% 
2021 11.3% 9.7% 
2022  -12.9%  -15.7%  
 
WT/BFA/W/636 • WT/L/1167  
 
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  1.2  Asset allocation  
Figure 2 Asset allocation as of 31 December 202 2, actual vs. strategy  
 
 
2.  The WTOPP rebalances its portfolio in the first quarter of each year, by re -aligning as necessary the 
allocation to each asset class with the strategy.1 This mechanism takes advantage of volatility in 
financial markets as it is carried out by selling secu rities that have become relatively more expensive 
and buying assets that have become relatively cheaper. A rebalancing will also be triggered by changes 
in financial markets causing the weight of equities in the portfolio to deviate from the strategic allo cation 
by more than 10% .  
Figure 3 Detailed asset allocation 202 2 
 
 
 
 
1 See reference to rebalancing in the Glossary and Annex 2 for more information on this approach.  
WT/BFA/W/636 • WT/L/1167  
 
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  1.3  Parti cipants  and beneficiaries 202 2 
Figure 4 Plan membership by type  
 
 
a including deferred retirement benefits.  
3.  There were 705 participants on 31 December 202 2, which was slightly lower than 716 participants 
on 31 December 20 21. On the other hand, the number of beneficiaries increased  from 427 to 446 over 
the same period.  
Table 2 Plan membership   
Membership  2021 2022 
Number of Participants  716 705 
Number of Beneficiaries  427 446 
 
Table 3 Types of benefits   
Types of benefits  Total number  Average monthly benefit  
Year 
2021 Year 
2022 Year 
2021 Year 
2022 
Retirement benefits  194 202  CHF 7,000   CHF 7, 100  
Early retirement benefits  138 144  CHF 5, 000   CHF 5, 200  
Disability benefitsa 22 22  CHF 5, 600   CHF 5, 400  
Surviving spouse's benefits  29 31  CHF 4, 200   CHF 4, 100  
Child's benefits  19 17  CHF 500   CHF 500  
Deferred retirement benefits  25 30  -   -  
a  includes benefits paid to beneficiaries above retirement age  
4.  As the number of beneficiaries continues to increase, so do the benefits paid annually by the Plan. 
Periodic benefits and lump sum benefits amounted to CHF 33.7 million in 202 2, which is about 
CHF 3.2 million more than the year before . The benefits are also higher than the received contributions  
(CHF 30.8 million) . As the population of retirees continues to increase, it is expected and considered 
perfectly normal that this gap will continue to widen over the years . These developments are considered  
in the context of the actuarial valuations that the Management Board regularly carries out to monitor 
the Plan's long term funding situation.  
WT/BFA/W/636 • WT/L/1167  
 
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  Figure 5 Contribution income and benefit expenditure  
 
a Including transfer values paid to other Organizations.  
b Including transfer values received from other Organizations.  
2  SUMMARY OF MANAGEMENT BOARD ACTIVITIES  
5.  In 202 2 the WTO Pension Plan Management Board met six times in regular Board meetings and once 
in a special session. The meetings occurred in a hybrid format . They took place on February  11th, 
February  22nd, April 25th, June  21st, September 20th, October 24th, and December  5th. As ongoing items, 
the agendas for all meetings included the presentation of the investment situation and a report by the 
Secretariat on matters arising since the previous meeting of the Management Board. Additionally, the 
Board's agenda included recurring items such as the approval of the Plan's Annual Report and F inancial 
Statements for submission to the General Council and review of the Plan's actuarial position.   
6.  Outside the formal Board meetings, the Management Board Working Groups met thirteen  times. For 
comparison, the working groups met nine times in 2021 and six times in 2020 . Ten meetings addressed 
actuarial issues ( focused on the development of a reform proposal ), two dealt with disabilities , and one 
addressed investment . 
7.  In 2022, the Board and Secretariat dealt with the Plan's actuarial situation on a priority basis. This 
included: publishing full actuarial valuation results that (based on 2020 numbers) identified a 10.5% 
contribution rate funding gap; preparing a reform p roposal to address this gap; organizing several 
presentations to the Committee on Budget, Finance and Administration (CBFA) and to participants and 
beneficiaries on the actuarial situation and reform proposal.   
8.  The Board and Secretariat also undertook imp ortant actions in other areas of management and 
governance.  For example, they secured a clean audit opinion from the External Auditors and initiated 
analyses and actions to implement the Auditor's recommendations. Following up on recommendations 
of the 20 19 and 2020 audits, the Board adopted guidelines formalizing review procedures for actuarial 
data, assumptions and methodology. It also formalized a mechanism with the WTO administration to 
compensate the Plan for the actuarial costs of management -induced separations. Furthermore, the 
Board took a decision on the allocation of excess cash or coverage of cash shortfalls based on the 
strategic investment allocation and agreed a procedure for the adjustment of disability benefits in the 
light of periodic medic al reviews. The Board also completed the annual review of its risk management 
strategy and risk register and reviewed four disability cases.  
3  REVIEW OF THE WTOPP INVESTMENT PERFORMANCE  
9.  The investment portfolio had a nominal return of -12.9% in 202 2, compare d to -12.2% for the 
Pension  Plan's benchmark. Swiss inflation for 2022 was close to 2.8%. Hence, the portfolio's real return 
was -15.7% for the year.  
WT/BFA/W/636 • WT/L/1167  
 
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  10.  The Plan's portfolio generated annual returns of +0.3%, +1.4% and +4.1% in nominal terms, 
respectively, over the last three, five and ten years. Despite significant negative returns in 2022, the 
10-year return remains above the Plan’s target of Swiss Inflation +3.5% . 
11.  The year 2022 was marked by the persistence of inflationary pressures, which h ad surfaced in 2021 
and which were exacerbated by the war in Ukraine. The acceleration of inflation has prompted Central 
Banks to radically change their monetary policy in 2022 (the US Federal Reserve has raised rates seven 
times during the year, from 0.25 % to 4.5%, the largest annual increase since 1980). In this context, 
the year was characterised by the simultaneous decline of almost all financial markets.  
12.  Equity valuations reached extreme levels by 2021. This trend was reversed in 2022, contributing 
significantly to the negative returns. Equity investments, which represent 50% of the Pension Plan's 
target allocation, had a return of -16.2% in 2022, against -15.7% for the benchmark . 
13.  Restrictive monetary policies have driven bond yields to their highest lev els since 2011. The bond 
market decline has been the largest in over 50 years. Fixed income investments (21% of the Pension 
Plan's target asset allocation) returned -12.6% compared with  -13.0% for the plan's benchmark. CHF-
denominated bonds delivered a neg ative performance in 2022 ( -6.8%). Emerging market bonds 
suffered larger declines ( -18.7% against -20.3% for the benchmark) . 
14.  Investments in Insurance Linked Securities (5% of the Pension Plan's target asset allocation) had 
a return of -3.6% for the year co mpared to -5.5% for the benchmark. These investments have no 
sensitivity to interest rate or economic developments. The negative return in 2022 is explained by the 
losses due to Hurricane Ian in Florida, one of the most devastating events of the last 20 ye ars. 
15.  Real estate investments represent 20% of the target asset allocation. The return on this portion of 
the portfolio was -8.8% for the year. The Swiss real estate  funds  (Credit Suisse 1A Immo PK and Credit 
Suisse RE Switzerland) had a return of -18.1% in  2022 while the SXI index, which tracks the return of 
Swiss publicly traded real estate funds, had a return of -15.2%. International real estate funds, which 
include the Plan's investments in Warburg Henderson fund, PRISA LP , and CBRE Fund, had a 
consolida ted return of 0.7% . 
16.  Yields on low -risk bonds remained very low or even negative between 2012 and 2021. As long -
term returns are mainly determined by the initial yield, the outcome of investments made during this 
period was predictably poor. The r eturn pers pective for the coming years is more appealing thanks to 
higher yields. The decline in equity prices is also favourable for future long -term returns . 
4  ACTUARIAL POSITION OF THE PLAN  
17.  Increases in longevity and reduced expectations about future returns linke d to low interest rates 
led to the identification of a large actuarial gap in 2022 . Subsequently,  the Management Board has been 
working for most of the year to develop a draft reform proposal to bring the Plan back to a sustainable 
position.  This draft proposal , which aims to address the gap with balanced efforts from WTO Members, 
staff and beneficiaries was presented to all stakeholders at the end of 2022 . Following intensive 
consultations, the proposal  is currently being finalized and will b e presented to the CBFA and 
subsequently  the General Council  for formal  consideration  in the course of 202 3. 
18.  The reform proposal is designed to address the actuarial funding gap identified at end 2020 . The 
projected Required Contribution Rate (RCR)  needs t o be 10.5 points higher  to keep the Plan sustainable 
under the current conditions and assumptions about the future ( i.e., a RCR of 34.2% compared to the 
current 23.7%).  The current gap  corresponds to a  funded ratio of  80%, essentially meaning that  assets 
and future revenue are 80% of what would be required to sustainably fund liabilities over the projected 
actuarial horizon .  
19.  The objective  of closing the gap of 10.5% identified in 2020  is considered a valid target  even though 
the size of the gap measured in subsequent interim valuations will vary in relation to the evolving 
demographics and year to year volatility in financial market  valuations . For example, a s market 
valuations rose significantly in 2021, the estimated gap decreased to 9.4% (82.3% funding ratio) .  
However, the next valuation is expected to show a n increased gap at end -2022 due to the drop of 
financial markets  and another year of operating with an actuarial gap . The interim actuarial valuation 
at end -2022 will b e presented in detail in a separate report  by the consulting actuary  to the CBFA  in 
mid-2023. WT/BFA/W/636 • WT/L/1167  
 
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  5  IPSAS ACCRUED LIABILITIES OF THE PLAN  
20.  The WTO's financial statements include an actuarial estimate of pension benefits that differs in 
scope and method from the W TOPP's actuarial valuation discussed in Section 4 , above. In line with the 
International Public Sector Accounting Standards (IPSAS), this estimate is produced for reporting on 
the WTO's accrued liabilities for employee benefits as at 31 December of each year, which includes 
mainly pensions and after-service health insurance.  
21.  The IPSAS estimate of the pension liability represents the hypothetical liability of the Organization 
to cover all its current employees' and retirees' acquired pension entitlements as of 31 December  2022. 
Unlike the Plan's actuarial valuation discussed in Section 4 above, the IPSAS estimate  does not consider 
future staff and uses a different methodology for setting the discount rate.  
22.  Both valuations are reported together with the balance sheet, in Statement 2 of the financial 
statements.  
6  ORGANIZATION  AND STRUCTURE OF THE PENSION PLAN ON 31  DECEMBER  2022 
23.  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.  
24.  The Regulations and Admi nistrative Rules of the WTO Pension Plan were adopted by the 
General  Council on 16  October  1998 (WT/L/282). The General Council approved the Rules of Procedure 
of the Management Board on 8 May 2001 (WT/L/402). The Regulations of the WTO Pension Plan were 
amended by the General Council on 1 December 2005, on 28 July 2009, on 26  October  2011, on 
30 November  2015 and on 26 July 2017. The Administrative Rules were amended on 
23 September  2005 and on 7  December  2016, and the Rules of Procedure were amended on 
7 December  2016.  
25.  Key components of the governance and administrative structure of the Pension Plan included the 
following on 31 December 202 2. 
Mr.  Jean -Marc van Dril, Chairperson  
Ms. Wendy G. Campagna  
Members elected 
by the General 
Council  Ms. Antonia Carzaniga  
Members appointed 
by the Director -
General  Ms. Alicia Goujon  Ms. Aegyoung Jung  
Mr. Conor Harrington  Mr. Rainer Lanz  
Mr. Darryl Leong  Mr. Thomas Verbeet  
Ms. Wei -Ting Chiu  
Alternates elected 
by the General 
Council  Ms. Kerry Allbeury  
Alternates appointed 
by the Director -
General  Ms. Brigitte Lueth  Ms. Laura Monnet  
Mr. Rodolfo Rivas  Ms. Nthisana Phillips  
Ms. Chiara Santangelo  Ms. Zheng Wang  
Mr. Robert Luther  Observer on behalf of the beneficiaries  
Mr. Paul Rolian  Alternate observer on behalf of the beneficiaries  
Secretariat  John Breckenridge, Secretary  
Yann Marcus, Pensions Officer  
Dário Muhamudo, Pension Specialist  
Accounting and Outsourced 
Administrative Support services  Trianon S.A.  
Consulting Actuary  c-alm 
Medical Adviser  Centre d'expertise médicale Lancy (CEML)  
Investment Analyst/Consultant  MBS Capital Advice S.A.  
Global Custodians  The Northern Trust Company  
Pictet Asset Services  
Fund Managers   Blackrock (emerging market bonds portfolio hedged in CHF)  
Crédit Suisse (Small cap equity portfolio, Swiss bond portfolio  
and Swiss real estate portfolio)  
GMO (emerging market bonds portfolio hedged in CHF)  
MFS (emerging market bonds portfolio hedged in CHF)  WT/BFA/W/636 • WT/L/1167  
 
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  7  ACCOUNTS  
25.  The financial statements and schedules are presented in Section 9 of this Report. The notes to the 
financial statements found in Annex 1 include important additional explanations about the accounts. 
These notes are integral to understanding the accounts an d the financial position of the Plan.  
26.  The income and expenditure statement for the period 1 January – 31 December 202 2 is reproduced 
in Statement 1.  
27.  The balance sheet as of 31 December  2022 is reproduced in Statement 2.  
28.  The source and application of funds for the period 1  January -31 December  2022 are reproduced in 
Schedule A.  
29.  Details of the exchange rates used for closing the accounts on 31  December  2022 and the currency 
breakdown as of 31  December  2022, after hedging, are provided in Schedule G.  
30.  A glossary of terms to facilitate an understanding of the tables is reproduced in Schedule J.  
31.  Explanations of significant events in the 202 2 accounts can be found in the notes in  Annex 1 . 
8  EXTERNAL AUDITOR  
32.  The report of the External Auditor on the Accounts of  the WTO Pension Plan for the year 
ended  31 December 202 2 is produced separately from the Annual Report . 
 Pictet (Equity portfolios (global equities and emerging markets)  
Prisa LP (US Real Estate portfolio)  
Warburg Henderson (European real estate portfolio)  
CBRE (European real estate portfolio)  
Scor (Insurance Linked Securities)  
Gam (Insurance Linked Securitie s) 
External Auditor  French Court of Audit  WT/BFA/W/636 • WT/L/1167  
 
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 OPINION OF THE EXTERNAL AUDITOR  
 
  
WT/BFA/W/636 • WT/L/1167  
 
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 9  FINANCIAL  STATEMENTS  
9.1  Management letter of representation  
33.  Pursuant to Article 5(d) of the WTO Pension Plan Regulations, t he Management Board of the 
WTO Pension Plan is responsible for these financial statements. The  financial disclosures in this 
report are intended to fairly present the Plan's financial results in  a manner that is complete and 
understandable.  
34.  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 o r 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.  
35.  Based on the above, the Management Board has concluded that these financi al statements 
present fairly the Plan's financial position and performance as of 31  December  2022. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
____________________  ____________________  
Jean-Marc van Dril  
Chair 
WTOPP Management Board  John Breckenridge  
Secretary  
WTO Pension Plan  WT/BFA/W/636 • WT/L/1167  
 
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 9.2  Statement 1: Income and expenditure statement  
INCOME AND EXPENDITURE STATEMENT (e xpressed in Swiss Francs)   
2022 2021 
Income     
Investment income       
Profit on securities  -  75,371,340   
Currency revaluation  -  -  
 -  75,371,340  
Contributions    
Organization, regular contributions          19,770,060    19,486,923  
Organization, additional contributions                         -     -    
Participants, regular contributions            9,928,018    9,778,321  
Interests on validations                      110  361  
Restorations              11,216    136,669     
Interests on restorations  1,063  - 
Transfers from other organizations               956,741    32,150     
Interests on transfers from other organizations  109,541  - 
  30,776,750  29,434,424  
Reimbursements claims under the death and disability 
insurance  657,535  645,051  
Total income  31,434,285  105,450,815 
Expenditure    
Periodic benefits    
Retirement benefits (Art. 23)  17,039,33 9   15,771,686  
Early retirement benefits (Art. 24)  8,657,802    8,331,035   
Disability benefits – (Art. 28)  1,456,039   1,478,417  
Surviving Spouse benefits (Art. 29)   1,506,775    1,456,261  
Child benefits (Art. 30)  108,178   109,448  
         28,768,133   27,146,847  
Lump sum benefits    
Withdrawal settlements (Art. 26)            1,013,239    710,058  
Commutations (Articles 23c), 24d), and 25c))  3,964,850   2,139,862  
Residual settlements (Article 33)  - 483,242  
Transfers to other organizations  - 33,257  
Interests on t ransfers to other organizations  - 1,726  
           4,978,090   3,368,145  
Participants' death and disability coverage  - 707,813  
Loss on investment    
Losses on securities  93,772,914  - 
Currency revaluation  136,916  2,950     
Negative credit interest  106,200  197,963  
  94,016,030  200,913  
Investment and other administrative expenses    
Management fees  503,184  577,824  
Trianon and other administrative costs  195,789  209,943  
Consultancy fees  145,000   120,000  
Actuarial expenses  146,134  93,738  
Bank charges  38,252   28,928  
 1,028,358  1,030,433  
Total expenditure  128,790,611  32,454,151  
Profit / Loss ( -) for the period  -97,356,326  72,996,664 WT/BFA/W/636 • WT/L/1167  
 
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 9.3  Statement 2: Balance sheet  
Balance sheet  
(expressed in Swiss Francs)  
Assets  At 
31.12.202 2 At 
31.12.20 21 Liabilities  At 
31.12.202 2 At 
31.12.20 21 
Investments     Current liabilities     
Securities  622,345,276   706,361,395 Accrued expenses  89,004 540,004  
Cash and cash 
equivalents  17,275,927   30,985,894   89,004 540,004  
  639,621,203  737,347,289  Capital    
Current Assets    Capital as at 1 
January  738,582,311   665,585,646  
Withholding 
taxes to be 
recovered  1,693,786   1,775,026   Profit / Loss ( -) -97,356,326    72,996,664 
Accrued income  - -   641,225,985  738,582,311 
Receivable 
additional 
contributions  -  -       
  1,693,786    1,775,026     
Total assets  641,314,989  739,122,315 Total liabilities  641,314,989  739,122,315 
36.  Please note that this balance sheet shows neither the present value of future benefits 
(the pension liability) on the liability side, nor the capitalized future contributions on the asset side. 
In the WTO's financial statements, the pension liabilities are estimated at CHF  1,405 million 
according to IPSAS accounting rules. If the Pension Plan's asset value of CHF  641 million  is deducted 
from this amount, the result is an estimated net accrued liability for employee benefits of 
CHF 764 million.  This net value represents the hypothetical liability of  the Organization to cover all 
its current employees' and retirees' pension entitlements as of 31 December 20 22. It differs from 
the long -term valuation used in managing the Plan mainly in that it does not consider future staff 
and uses a different methodo logy for setting the discount rate.  
37.  On the other hand, the actuarial model used in managing the Plan per Article  9 of the 
Regulations considers  future pension contributions and benefits for an open group of participants, 
and a projected real return rate based on expected return of the strategic portfolio allocation (see 
Schedule D). Its purpose is to produce best, yet conservative, estimates of f uture benefits, pension 
contributions and the investment returns . This model estimates the pension liability at 
CHF 1,059 million ,1 which , as explained in Section 4 of the Annual report,  represents a significant  
funding gap . The Management Board is workin g on a proposal for measures to close this funding 
gap.  
  
 
1 present value of future benefits (CHF 1,894 million) minus present value of future contributions 
(CHF 835 million).  WT/BFA/W/636 • WT/L/1167  
 
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 9.4  Schedule A: Source and application of funds  
Source and application of funds  
(expressed in Swiss Francs)   
2022 2021 
Funds as at 1 January  739,122,315  665,747,474 
Plus:   
Source    
Receipt of contributions              30,776,750    29,434,424  
Investment income              -   75,170,427 
Reimbursements of death and disability insurance claims                    657,535    645,051  
Increase in current liabilities                    -  378,176   
Total           31,434,285 105,628,078 
Less:    
Application    
Losses on securities  94,016,030  200,913  
Settlement of benefits              33,746,223    30,514,992  
Participants' death and disability coverage  -  707,813   
Investment and other administrative expenses                 1,028,358    1,030,433  
Reduction in current liabilities  451,000   - 
Total 129,241,611 32,253,238  
Funds as at 31 December  641,314,989  739,122,315 
 
9.5  Schedule B: Breakdown of expenditures  
Expenditures  
(Expressed  in Swiss Francs)  
 2022 2021 
Investment Management feesa   
MFS 98,642  110,521  
Northern Trust  16,077  19,001  
Pictet   388,465  448,302 
   
Total   503,184  577,824  
Consultancy fees    
MBS Capital Advice  145,000  120,000  
Actuarial expenses    
c-almb 146,134  93,738  
Administrative costs    
Trianon and other administrative costs  195,789  209,943  
Other expenses    
(bank charges and external audit)  38,252  28,928  
Total  1,028,358  1,030,433  
Note:  Costs related to the WTOPP Secretariat are borne by the WTO and are not reflected in the Plan's 
Financial Statements (see paragraph 9 of Annex 1).  
a  management fees shown in this table are  fees invoiced separately to the Plan as well as custody 
fees. They exclude m anagement fees embedded in the reported value of the holdings , which are 
estimated at CHF 1,959,407 for 202 2.  
b actuarial fees in 2021  and 2022  cover exceptional costs of transitioning to a new actuary  and expert 
advice in relation to developing a reform proposal to cover the actuarial gap . WT/BFA/W/636 • WT/L/1167  
 
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 9.6  Schedule C: 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  Pictet & Cie  MSCI Emerging 
Markets  Indexed  May 
2016 Geneva, 
Switzerland  pictet.com  
Global 
Small Caps 
Equities  Credit 
Suisse  MSCI World ex 
Switzerland Small 
Caps Indexed  August  
2020 Zürich, 
Switzerland  credit‑suisse.com  
Emerging 
Market 
Bonds  BlackRock  JP Morgan EMBI 
Glob Div. hedged in 
CHF Indexed  January  
2016 New York, 
United States  blackrock.com  
Emerging 
Market 
Bonds  MFS JP Morgan EMBI 
Glob Div. hedged in 
CHF 2%-3% January  
2011 Boston, 
United  States  mfs.com  
Emerging 
Market 
Bonds  GMO JP Morgan EMBI 
Glob Div. hedged in 
CHF 3%-5% January  
2011 Boston, 
United  States  gmo.com  
European 
Real Estate  Warburg 
Henderson  6.5% p.a.  - December  
2006 Hamburg, 
Germany  warburg -henderso
n.com  
US 
Real Estate  PRISA LP  NCREIF Fund Index 
ODCE  - February  
2015 Madison,  
United States  pramericarei.com  
European 
Real Estate  CBRE  - - December 
2018 London, 
United 
Kingdom  cbre.com  
Swiss Real 
Estate  Credit 
Suisse  SXI Real Estate 
Fund Index  - November  
2008 Zürich, 
Switzerland  credit -suisse.com  
Insurance 
Linked 
Securities  Scor 
 Swiss Re Global 
CAT bond Hedged 
CHF - December  
2019 Paris,  
France  scor.com  
Insurance 
Linked 
Securities  Gam Swiss Re Global 
CAT bond Hedged 
CHF - December  
2019 Connecticut,  
USA gam.com/fr/mana
gers/fermat -
capital -
management  
CHF Bonds  Credit 
Suisse  SBI AAA -BBB 1 -5 Y - August   
2020 Zürich, 
Switzerland  credit‑suisse.com  
 WT/BFA/W/636 • WT/L/1167  
 
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 9.7  Schedule D: Asset allocation  
Asset Allocation  
as of 31  December  2022 
Assets  MCHF  Current  
weightings  Strategy  Deviation from  
the strategy  
Global equities  311.2 48.6% 50.0%  -1.4% 
Developed markets  203.0  31.7% 32.0%  -0.3% 
Emerging Markets  57.8 9.0% 10.0%  -1.0% 
Small Caps  50.4 7.9% 8.0%  -0.1% 
CHF bondsa 137.9 21.6% 21.0%  0.6% 
CHF Bonds  73.3 11.5% 13.0% -1.5% 
Emerging countries bonds  64.6 10.1% 10.0%  0.1% 
Real Estate  136.3 21.3% 20.0%  1.3% 
European Real Estate  33.0 5.2% 5.0%  0.2% 
U.S. Real Estate  43.3 6.8% 5.0%  1.8% 
Switzerland  Real Estate  60.0 9.4% 10.0%  -0.6% 
Other Investments  37.0 5.8% 5.0%  0.8% 
Insurance Linked Securitiesa 37.0 5.8% 5.0%  0.8% 
Cash  17.4 2.7% 4.0%  -1.3% 
Total  639.7     
Note:  Numbers may not add precisely to totals provided due to rounding.  
a Hedged in CHF. The Plan hedges 80% of foreign bonds and ILS investments . The hedges are  
renewed quarterly . 
  WT/BFA/W/636 • WT/L/1167  
 
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 9.8  Schedule E: Investment performance  
Investment Performance as of 31  December  2022 (expressed in nominal terms)  
 Over  
1 year p.a.  Over  
3 years p.a.  Since  
inception p.a.  TEa IRa 
TOTAL       
Consolidated securities  -12.9% 0.3% 4.1%   3.49% -0.19 
Added valueb -0.7% -0.7% -0.2%    
EQUITY       
Consolidated equities  -16.2% 1.2% 6.4%   0.55% -0.25 
Added value  -0.5% -0.1% 0.3%   
Developed markets  -14.9% 2.2% 6.9%   
Added value  -0.2%  -0.1% -0.2%    
Emerging markets  -19.1% -4.5% 4.0%   
Added value  -0.2% -0.3% 0.0%   
Small Caps  -17.1%     
Added value  0.3%     
FIXED INCOMEc      
Consolidated fixed incomed   -10.9% -2.3% 1.7%   3.16% 0.09 
Added value  0.2% 0.3%  0.1%    
Emerging countries bonds  -18.7% -6.5% 1.9%   
Added value  1.6% 0.7% 0.5%   
CHF Bonds  -6.8% -6.5% 1.9%   
Added value  -0.3% 0.7% 0.5%   
Insurance linked Securities   -3.6% 0.8%  0.6%    
Added value  1.9% 0.0%  -0.3%    
REAL ESTATE       
Consolidated real estate  -8.8% 0.0% 3.2%   ‑‑‑ ‑‑‑ 
Added valueb        
Warburg Henderson  -7.3% -4.7% 2.5%   ‑‑‑ ‑‑‑ 
Added valueb        
CBRE  -7.1% -0.9% -0.3% ‑‑‑ ‑‑‑ 
Added valueb      
Prisa  7.1% 7.3% 6.7% ‑‑‑ ‑‑‑ 
Added value  -2.0% -1-0% -2.5%   
Credit Suissee   -18.1% -2.9% 2.5%   ‑‑‑ ‑‑‑ 
Added value  -2.9% -3.2% -2.2%   
Note:  Performances are presented net of fees and costs. Consolidated performances (over 1 year, 3 years 
and since inception in August 1999) are calculated taking into account previous investment vehicles, 
which were liquidated prior to this reporting exercise and do not appear separately in the table . 
a TE = tracking error over 3 years, IR = information ratio over 3 years  
b Added value compares the performance to benchmarks, except when there is no formal benchmark 
(Warburg Henderson and CBRE), as specified in Schedule C . 
c In line with its investment principles, the Plan minimizes currency risk on its fixed income and ILS 
investments by  investing in CHF -denominated instruments, or by hedging investments denominated 
in currencies other than CHF. In the latter case, the hedging instruments' gains, losses, and costs 
are embedded in the asset class' performance, which is consistent with the fact that the return 
target expected out of these instruments is being considered in CHF terms when making investment 
decisions .  
d In addition to the bonds' performance, the consolidated fixed income performance also includes the 
interest paid on the Plan 's cash . 
e The Credit Suisse pocket consists of two funds: the CS Immo PK and the CS RE Switzerland (index 
fund)  WT/BFA/W/636 • WT/L/1167  
 
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 9.9  Schedule F: Investment performance history from inception to 31  December  2022 
 
 
 
9.10  Schedule G: Exchange rates used for closing on 31  December  2022 
Currency  pair Exchange rates  
CHF per 1 EUR  0.9874  
CHF per 1 USD  0.9252 
JPY per 1 CHF  142.6124 
CHF per 1 GBP  1.1129 
Figure 6 : Currency breakdown as of 31 December 202 2 after hedging  
 
5060708090100110120130140150160170180190200210Total PortfolioBenchmark Total Portfolio
5060708090100110120130140150160170180190200210220230240EquitiesBenchmark Equities
5060708090100110120130140150160170180190200210Fixed IncomeBenchmark Fixed income
5060708090100110120130140150160170180190200Real EstateReal Estate
WT/BFA/W/636 • WT/L/1167  
 
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 9.11  Schedule H: Participation in the Pension Plan  
The following tables show the trends in the numbers of participants and beneficiaries in  the 
Pension  Plan in the course of 202 2. 
Number of participants and beneficiaries on 31 December 20 21 
 2021 2022 
Active members  716 705 
Beneficiaries  427 446 
Participants in the Pension Plan in 202 2 
  
Total number on 31 December 20 21 716 
Movements in 20 22  
  
- Entries  126 
- of which re -entries under the terms of Art.  15(b) of the Regulations  48 
- Separations  137  
   
Total number on 31  December  2022 705   
Breakdown of separations in 20 22    
- retirement  10 
- early retirement  7 
- deferred retirement  4 
- withdrawal settlement  42 
- transfer out  0 
- deferment of decision  74 
- death  0 
- disability  0  
 
Total separations  137 
Benefits paid by the Pension Plan  
Type of benefit  At 31 
December 
2021 New benefits  
in 20 22 Benefits ended  
in 20 22 At 31 
December 
2022 
Retirementa 194 11 -3 202 
Early retirementa 138 8 -2 144 
Deferred retirementb 25 6 -1 30 
Surviving spouse's benefit  29 2 0 31 
Partial /total disability benefit  22 0 0 22 
Child's benefit  19 2 -4 17 
Total benefits  427 29 -10 446 
a  Includes one deferred benefit that commenced being paid in 2022 . 
b  Includes only deferred pension benefits not yet in payments. Deferred pensions in payments are 
classified as retirement or early retirement benefits . 
 WT/BFA/W/636 • WT/L/1167  
 
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 9.12  Schedule I: Structure of the WTO Pension Plan  
 
 
9.13  Schedule J: Glossary of terms  
Accrued expenses  include expenses incurred but not paid in the current accounting year.  
Accrued income includes income which has been earned but not yet received in the current 
accounting year.  
Active investment management  is a form of portfolio management whereby the por tfolio 
manager invests the assets in a manner different from the benchmark in an attempt to produce 
higher returns than the benchmark. The disadvantages of such a management style are 
characterized by higher management fees, higher trading costs as well as  the risk of significantly 
underperforming.   
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. They 
do not include the costs for the Plan's Secretariat, which are borne by the WTO (Article 5(f) of the 
Plan Regulations).  
Commutation  refers to retirement benefits, early retirement benefits and deferred retirement 
benefits commuted at the request of the par ticipant, into a lump sum not exceeding 1/2 of the 
actuarial equivalent of the benefit or the amount of the participant's own contributions, whichever 
is the larger.  
Consultancy fees  include the fees charged by the investment analyst/consultant.  
Contributi ons refer to sums payable for restoration, validation and benefit as detailed in Art.  20 of 
WTOPP  Regulations . 
Contributions receivable  refers to contributions due in respect of contributory service in the 
accounting year but received after 31  December of the accounting year.  
WT/BFA/W/636 • WT/L/1167  
 
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 Currency hedging. In line with the Plan's investment principles, the Plan seeks to limit exposure 
to currency risk  on debt instruments because they bear a currency risk that is theoretically not 
compensated in the long term, and because they play a stabilizing role to regulate the portfolio's 
short term volatility and allow rebalancing gains. When investing in debt as sets denominated in 
currencies other than CHF, the Plan therefore hedges the currency risk. Technically, this involves 
the use of forward contracts, in which two parties agree to exchange a set amount of one currency 
for another at a predetermined exchange  rate at some future date.  If the currency of the investment 
depreciates causing losses on the portfolio, the hedging instruments will offset some of these losses. 
Hedging can have a cost, largely based on differences between lending and borrowing interes t rates 
of the respective currencies.  
 
Currency revaluation  represents the adjustment of foreign currency -denominated bank account 
balances at 31  December  2022 to the exchange rate for that day. This adjustment reflects the 
variation in the exchange rate a pplicable to foreign currency -denominated bank account balances at 
the beginning of the year and in the exchange rates applicable to movements in the same accounts 
during the year, at the time each transaction took place.  
Indexed management  is a form of p ortfolio management that attempts to deliver the returns of 
the underlying benchmark by replicating exactly or by getting as close as possible to the composition 
of the benchmark at any point in time. It differs from active management in that it is signifi cantly 
less costly and does not reflect the views, forecasts or opinions of the investment manager.  
IR or Information Ratio  is defined as the outperformance of the investment manager above the 
index divided by the portfolio's tracking error. The informatio n ratio is used to represent a manager's 
skill. Generally, any ratio over 0.30 is thought of as demonstrating skill. IR refers to the information 
ratio over three years.  
Insurance Link Securities (ILS)  are financial instruments whose values are driven by i nsurance 
premiums and loss events. ILS enable re/insurance companies to enter into a risk transfer contract 
with investors in the capital markets,  where the investor puts a collateral in exchange for a  premium. 
Depending on whether the risk happens, the co llateral will be drawn or returned to the investor, and 
the premium adjusted for the next term.  
Interest on validations  and interest on restorations  refer to interest payments made under 
Articles 20(d) and 20(e) 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.  
 
Profit/loss on securities  is the result of:  
• capital gain/loss realized on securities;  
• profit arising from the distribution of dividends and interest received on investments;  
• revaluation of securities at their market price at 31  December (unrealized profit or loss).  
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 correction for inflation (measured on the basis of the annual movement of the 
consumer price index in Switzerland). The real rate of ret urn 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 while the term net refers to the return including all 
investme nt 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.  
Rebalancing  refers to the realignment of the allocation of the Plan's portfolio with its strategy. 
A predefined process identifies the triggers and other operational aspects (e.g. timing) of rebalancing 
actions. The rules are approved by the Board and applied automat ically. This mechanism takes 
advantage of the inevitable excesses of financial markets.  WT/BFA/W/636 • WT/L/1167  
 
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 Regulations and Administrative Rules  refer to the Regulations and Administrative Rules adopted 
by the General Council on 16  October  1998, as amended by the General Coun cil on 
1 December  2005, on 28  July 2009, on 26  October  2011, on 30  November  2015, on 
7 December  2016 and on 26 July 2017.  
Restoration  refers to the inclusion in contributory service of the prior contributory service of a 
former participant who again become s a participant.  
 
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 sim ilar to the geometric mean return.  
TE or 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 no t 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. 
For an indexed management mandate, the tracking error would usually be less than 0.8. Anything 
above this would be considered active. TE is over 3 years.  
Validation  is defined in Art. 2(v) of WTOPP Regulations, as the inclusion in contributory service of 
a period of non -contributory service which occurred prior to the commencement  of participation.  
Withholding taxes to be recovered  includes amounts of withholding tax levied by national tax 
authorities and subject to recovery after 31  December  2022. Recoverable withholding tax reflects 
the Plan's recognition as a tax -exempt entity d ue 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 claim s 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 is often required to have this status fully recognized.  
_______________  
  WT/BFA/W/636 • WT/L/1167  
 
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 ANNEXES  
ANNEX 1 NOTES TO THE FINANCIAL STATEMENTS  
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 reasons, the current United Nations operational rates 
of exchange are used for the conversion of other currencies into the Swiss franc, except in the case 
of the investment portfolios where the rates shown in Schedule G were used for valuation purposes.  
2.  The accounting year is 1  January to 31  December.  
3.  Pursuant to Article 13 of the Regulations of the Plan and Rule A.8 of the Rules of Procedure, 
the Management Board shall be responsible for the financial security and probity of the Plan and,  in 
particular, th e maintenance of its actuarial balance and of financial controls and accounts.  
4.  Pursuant to Article 5(e) of the Regulations of the Plan and Rule C.1 of the Rules of Procedure, an 
audit of the accounts of the Plan shall be made annually by the External Audit or, namely the External 
Auditor of the WTO. The provisions of Chapter XI ("External Audit") and the Appendix ("Additional 
terms of reference governing external audit") of the WTO Financial Regulations shall apply mutatis 
mutandis to the audit.  
Statement of  income and expenditure  
5.  The Pension Plan registered a loss on securities of CHF 93.8 million.1 This represented a -12.9% 
nominal investment return and, taking Swiss inflation into account, -15.7% in real terms. Th is 
performance , which reflects sharp downturns in global financial markets,  was significantly lower  than 
the Plan's long -term target of  2.7% over the next ten yea rs and  3.5%  thereafte r. Current economic 
circumstances remain challenging . However, as a long -term investor, the Pension Plan can tolerate 
such volatility.   
6.  Regular contributions received from the Organization and the participants amounted 
to CHF 29.7 million, up CHF 0.4 million compared with 202 1.  
7.  Both p eriodic benefits and lump sum benefits increased by CHF  1.6 million  each, to CHF  28.8 
million and CHF  5.0 million respectively .  The sum of benefits paid out exceeded the total amount of 
contributions received. This difference will increase  in the future  as the population of retirees 
continue s to grow relative to the number of active participants.   
8.  The Management Board terminated the Plan's death and disability reinsurance coverage as of 31 
December 2021  as increases in the premiums no longer made the coverage  an attractive proposition . 
Therefore, no expenditure amount is recorded for 2022 as " Participan ts' death and disability 
coverage ". The Plan's however still received CHF 0.7 million as reimbursements of claims under its 
death and disability insurance coverage , because the policy remains active for all disability cases 
that begin before the date of te rmination.  Therefore it is expected to continue to receive 
reimbursements for several years.   
9.  Investment and  other administrative expenses have remained stable  at CHF 1.0 million. They 
are presented in further detail in Schedule B "Breakdown of Expenditure s". On the one hand, 
investment management fees have decreased  as they are linked to the size of the portfolio . On the 
other hand,  actuarial expenses have increased significantly in relation to work needed to support 
the development of a reform proposal . Additionally, the Board agreed to a  modest increase in the 
investment advisor's fees.  The costs of providing a Secretariat for the Pension Plan are borne by the 
WTO and not reflected as a cost to the Plan. The Secretariat consists of a part -time Secretary and 
currently two  full-time staff. In 202 2, staff costs amounted to CHF  437,512  including salaries and 
benefits.  Additionally, the Secretariat does not pay rent for office space and computers or phone 
services.  These are estimated to be CHF  29,423  based on the WTO cost accounting methodology.  
 
 
1 for consistency with other sections of  the statements and the Annual Report, this refers only to the 
loss on securities. When adding credit interests and adjustments for currency revaluations (which can be 
positive or negative), the total loss on investment was CHF 94.0 million at end -2022.  WT/BFA/W/636 • WT/L/1167  
 
- 25 - 
 
  
 Balance sheet  
10.  The value of assets decreased  mainly due to investment losses  registered in 202 2. Cash and 
cash equivalents amounted to about CHF 17.3 million in 202 2.  
11.  Withholding taxes to be recovered amounted  to CHF  1.7 million in 202 2, a slight decrease 
compared to CHF 1.8 million in 20 21. With effective assistance from the Plan's custodian banks, t he 
Pension Plan Secretariat continues to pursue the recovery of all withholding taxes , including taxe s 
over five year s old that are written off from the financial statements . 
  WT/BFA/W/636 • WT/L/1167  
 
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 ANNEX 2 INVESTMENT PRINCIPLES OF THE PENSION PLAN  
1.  Pursu ant 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 profess ional advice, and the 
appointment of investment managers to implement that policy.  
2.  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 ef ficiently 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. Leverage and net sh ort positions are not allowed.  
3.  In 2013 the Management Board approved a consolidated set of investment guidelines to articulate 
more precisely the Plan's approach to investment. A summary of these guidelines was shared with 
Plan participants and beneficiari es and can be found below. In 2020 the investment guidelines were 
revised to reflect  the Board's decision on a new strategic asset allocation (50%  equities, 30% fixed 
income and 20% real estate) and the new additional rule for rebalancing , however t he princip les 
behind the below summary remain unchanged.  
Summary of the WTO Pension Plan's approach to investment  
 
Long -term investing  
 
4.  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 historical analysis – that in the long run, market returns will tend to 
reflect the assets' economic achievements.  
5.  This long -term orientation enables the Mana gement Board to deploy its time efficiently 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.  
6.  Cognizant of the unrel iable 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  
 
7.  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 cap acity to generate future 
earnings.  
8.  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 exa mple, if a company's share price quickly falls by 50%, its volatility will skyrocket. 
However, if the long -term perspective 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.  
9.  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 o n 
an on -going basis.  
10.  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.  WT/BFA/W/636 • WT/L/1167  
 
- 27 - 
 
  
 Allocation of assets  
 
11.  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".  
12.  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.  
13.  The WTOPP will maintain adequate diversification because expected returns on asset classes 
may take a long time to materialize and because the non -correlation of different assets helps dampen 
volatility and hence help avoid ill -considered decisions.  
14.  Asset clas ses 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 u niverse.  
15.  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 m easurable characteristics of the Plan's 
investments allocated to an asset category or by fundamental changes in the Plan's liabilities or 
structure.  
Style of management  
 
16.  The objective of the implementation process is to execute the investment strategy as c losely as 
possible while minimizing costs and avoiding unwanted implementation risks.  
17.  The Management Board implements the WTOPP's strategic allocation predominantly through 
indexed vehicles or portfolios.1 Indices will be selected with utmost care, so tha t they truly represent 
the asset class in which the WTOPP's strategy intended to invest.  
18.  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 based, in most cases, on short -term views.  
19.  The WTOPP may use active management when passive management is not feasible or when 
tangible and clearly identifiable reasons lead to the belief that active man agement represents a 
better path.  
20.  Overall, the Plan will strive to minimize 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  
 
21.  The WTOPP adopts a counter -cyclical approach through a systematic annual rebalancing 
mechanism whose function is to maintain the weight of the assets aligned with the strategic 
allocation.  Rebalancing exercises are undertaken at least annually, normally in February.  Since a 
Board decision in 2020, a rebalancing will also be triggered by changes on financial markets causing 
the weight of equities in the portfolio to deviate by more than 10% from the strategic allocation . 
22.  The systematic r ebalancing is an effective way for the Plan to maintain a stable exposure to the 
market while taking advantage of market volatility.  
 
1 Indexed vehicles aim to generate returns that are equal to those of a market index.  WT/BFA/W/636 • WT/L/1167  
 
- 28 - 
 
  
 Cost and conflicts of interest  
 
23.  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.  
24.  The supply of investment services or products is primarily driven by the financial interests of 
providers rather than by investors. The Management Board will theref ore 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 fee.2 
25.  The investment guidelines adopted by the Managem ent 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 reviewed to ensure they remain appropriate to the 
structure and circumstances of the Plan.  
__________  
 
2 Such arrangements are unfair for investors because of the asymmetry of risk and reward