WORLD TRADE  
ORGANIZATION   
WT/L/820 
1 September 2011 
 (11-4294) 
General Council 
12-13 October 2011  
 
 
    
 
WTO PENSION PLAN 
 
  
ANNUAL REPORT OF TH E MANAGEMENT BOARD 
 
AND REPORT OF THE EXTERNAL AUDITOR 
 
THEREON FOR THE YEAR ENDING 
 
31 DECEMBER 2010
 WT/L/820 
Page 2  
 
  Message from the Chairman of the Management Board 
 
  As you read this Annual Report, you will not e that 2010 was not only another busy year for 
the Management Board with nine meetings in all, but  also a transition year for the Pension Plan.  The 
year marked both a change in the investment advi sory services provided to the Plan and a significant 
change in investment strategy.  The Management Board decided that the time had come to adopt a 
more conservative investment posture and reduce th e Plan's equity exposure in favour of a more 
balanced mix of investment vehicles.  The change in investment strategy was implemented at the end 
of the year.  In its final year the existing strategy yiel ded a real rate of return in line with the long-term 
target of 3.5 per cent. 
  As part of its continuing efforts to achieve economies in the running of the Plan, the Management Board decided that the funding of in -service death and disability risks should henceforth 
be covered by an insurance policy rather than by th e Plan itself, resulting in an expected long-term 
cost saving and actuarial surplus for the Plan.  A further, significant economy will accrue from the 
above-mentioned change in investment advisory services.     WT/L/820 
 Page 3 
 
 
  TABLE OF CONTENTS 
  Page 
 
I. INTRODUCTION 4 
II. STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2010 4 
III. MEETINGS OF THE MANAGEMENT BOARD 5 
IV. PARTICIPATION IN THE PENSION PLAN 6 
V. ACCOUNTS 8 
VI. ACTUARIAL POSITION OF THE PLAN 8 
Report of the External Auditor on the Accounts of the WTO Pension 9 
Plan for the Year Ending 31 December 2010 
Opinion of the External Auditor on the Accounts of the WTO Pension 10 
Plan for the Year Ending 31 December 2010 
STATEMENT 1 11 
 Income and Expenditure Statement for the Period 1 January - 31 December 2010 
STATEMENT 2 12  Surplus Account as of 31 December 2010 STATEMENT 3 13  Balance Sheet as of 31 December 2010 
SCHEDULE A 14 
 Source and Application of Funds for the Period 1 January - 31 December 2010 SCHEDULE B 15 
 Investment Mandate Overview as of 31 December 2010 SCHEDULE C 16 
 Asset Allocation as of 31 December 2010 
SCHEDULE D 17 
 Investment Performance SCHEDULE E 18 
 Investment Performance History, since inception to 31 December 2010 SCHEDULE F 19 
 Exchange Rates Used for Closing on 31 December 2010 
 Currency Breakdown as of 31 December 2010, after hedging 
SCHEDULE G 20 
 Structure of the WTO Pension Plan SCHEDULE H 21 
 Glossary of Terms 
ANNEX 1  23  Investment Principles ANNEX 2  24  Statement of Significant Accounting Policies ANNEX 3  25 
 Report on the Financial Statements  for the Financial year ended 
 31 December 2010 WT/L/820 
Page 4  
 
  I. INTRODUCTION 
1. The WTO Pension Plan was established on 1 January 1999 following the decision by the 
General Council on 16 October 1998 (WT/L/282) to te rminate the membership of ICITO in the 
United Nations Joint Staff Pension Fund on 31 Dece mber 1998 and to adopt the Regulations and 
Administrative Rules of the Plan. 
2. The Management Board of the Plan was duly constituted by the General Council in 
accordance with Article 4 of the Regulations on 26 March 1999. 
3. The General Council approved the Rules of Procedure of the Management Board on 
8 May 2001 (WT/L/402). 
4. The present report for the period from 1 January 2010 to 31 December 2010 has been 
prepared by the Management Board in accordance with  Article 5 of the Regulations of the Plan for 
presentation to the General Council and to Plan participants.   
II. STRUCTURE OF THE PENSION PLAN ON 31 DECEMBER 2010 
(a) Management Board 
 The Management Board was composed as follows on 31 December 2010: 
 
Mr. Nicholas Niggli, Chairman 
Mr. Otto Schneider 
Members elected 
by the General 
Council Mr. John Breckenridge 
Members appointed 
by the 
Director-General Ms Helen Stylianou Mr. Richard Eglin 
Vacant Mr. Anthony Mistri 
Mr. Philip Tissot Ms Paulette Planchette 
Mr. Jean-Marc Mignon 
Alternates elected 
by the General 
Council Mr. Rolf Adlung 
Alternates 
appointed by the 
Director-General Mr. Ahmad Mukhtar Ms. Susanne Auer 
Mr. Rodney Neufeld Mr. Hubert Escaith 
Mr. Donald Ng Mr. Juan Marchetti 
Mr. Claude Mercier Observer on behalf of the beneficiaries 
Mr. Paul Rolian Alternate observer on behalf of the beneficiaries 
 
(b) Secretariat 
 Robert Luther, Secretary 
 Jean-Pierre Helary, Assistant Secretary  Christine Figuigui, Administrative Assistant  Virginie Guirado, Clerk  
- Outsourced support services 
  Trianon S.A., Lausanne  (c) Consulting Actuary 
 Cameron Hannah (Mercer HR Consulting S.A.) 
  WT/L/820 
 Page 5 
 
 
  (d) Medical Adviser 
Dr Nasser Madi 
 (e) Investment Analyst/Consultant 
MBS Capital Advice SA (since 4 October 2010) 
 
(f) Global Custodian 
 The Northern Trust Company 
 (g) Fund Managers 
 Crédit Suisse (Swiss real estate portfolio) 
 Pictet (actively managed emerging market equity portfolio) 
 Rogge Global Partners PLC (actively managed global bond portfolio) (until 
29 December 2010) 
 Warburg Henderson (European real estate portfolio) 
 Wellington Management International (two ac tively managed global equity portfolios) 
(until 20 December 2010) 
 (h) External Auditor 
 French Court of Audit. 
 
5. An organizational chart is reproduced in Schedule G. 
III. MEETINGS OF THE MANAGEMENT BOARD 
6. The Management Board held nine meeti ngs in 2010.  These took place on 13 January, 
17 February, 24 March and 14 April, 28 April (speci al session), 27 May, 24 June, 7 July (special 
session), 4 and 12 October and 20 December 2010.  The agendas included as standing items the 
review of investment performance and a report by the Secretary on matters arising since the previous 
meeting of the Management Board. 
7. Regular progress reports were made available to the Plan participants and beneficiaries.  The 
remainder of this section of the Annual Report is de voted to a summary of th e main items of business 
dealt with by the Management Board in 2010. 
(a) Selection of investment adviser 
8. Following the termination of the contract w ith Towers Watson (formerly Watson Wyatt) on 
17 December 2009, an invitation to tender was issued to five firms in April 2010.  Three tenders were 
received, and the Management Board decided to select MBS Capital Advice, a Geneva-based firm 
with extensive experience in providing investment a dvice to pension funds operated by international 
organizations and multinational companies. WT/L/820 
Page 6  
 
  (b) Review of investment strategy 
9. Overall, the investment portfolio produced a no minal annual return of 4.2 per cent, against a 
custom benchmark return of 2.5 per cent.  A key contributor to the outperformance of the portfolio was the Wellington Global Opportunities global e quities mandate which outperformed its benchmark 
by 4.4 percentage points.  The Wellington Inte rsection global equities mandate also beat its 
benchmark by 1.1 percentage points, whereas the Pictet emerging market equities mandate 
fell 0.6 percentage points short of its benchmar k on the year.  The Rogge global bond mandate was 
another key contributor to outperformance, pr oducing a healthy return of 4.8% in 2010, 
1.8 percentage points ahead of its benchmark.  The Crédit Suisse real estate mandate yielded an 
11.0% return on the year, beating its benchmark by 5.3 percentage points. The Warburg Henderson 
real estate mandate fared less well, owing to the adverse movement of the Euro against the Swiss 
franc, and underperformed against the 6.5 % ta rget benchmark by -10.6 percentage points. 
(c) In-service death and disability coverage 
10. The Management Board decided to seek quotatio ns through the broker Vanbreda International 
for the coverage of in-service death and disability ri sks.  Coverage of these risks has hitherto been 
funded by the Plan at an annual cost estimated by the consulting actuary of approximately 3.3 per cent 
of annual pensionable remuneration, i.e. CHF 4. 16 million at 31 December 2009.  The quotation 
received from Willis indicated that the same covera ge could be insured for an annual premium of 
CHF 1.215 million, thus generating a small actuarial  surplus each year and reducing the long-term 
cost of the Plan over time. 
11. The Management Board decided, therefor e, to subscribe a policy through Vanbreda 
International with Willis for the a bove coverage.  Under the terms of the same policy, Willis will also 
insure the service-incurred death and disability risks, the coverage of which is the responsibility of the 
Organization. 
(d) Recovery of withholding tax on Plan investments 
12. The Management Board continued to monitor the recovery of withholding tax on Plan 
investments from national tax authorities.  The Board noted that the situation was generally 
satisfactory, with the exception of Canada, France a nd Italy where, despite c ontinuing efforts by the 
Secretariat, significant amounts still remained to be  recovered and where the deadline for recovery of 
certain sums had already passed. 
IV. PARTICIPATION IN THE PENSION PLAN 
13. The following table shows the trends in the numb ers of participants and beneficiaries in the 
Pension Plan in the course of 2010. 
 2010 2009 
Active Members  733 719 
Pensioners  186 1711 
 
                                                      
1 Deferred retirement benefits were not included in  the total reported in the 2009 Annual Report.  WT/L/820 
 Page 7 
 
 
  Participants in the Pension Plan in 2010 
 
 
Total number on 1 January 2010 
 Movements in 2010 
 
 - Entries  - Re-entries under the terms of Art. 15(b) of the 
Regulations 
 - Separations   
719 
 
 
 
54 
2 
 
42 
 Total number on 31 December 2010  
 
Breakdown of separations in 2010   - retirement  - early retirement 
 - deferred retirement 
 - withdrawal settlement  - transfer to UNJSPF  - deferment of decision  - death 
            -            disability 
 Total separations   
733 
 
  
5 2 
- 
23 
0 
11 
- 
1 
 
42 
 
Benefits paid by the Pension Plan 
 
Type of benefit At 31 December 2009 New benefits 
in 2010 Benefits ended 
 in 2010 At 31 December 
2010 
Retirement 79 5 2  82 
Early retirement 51 2 0 53 
Deferred retirement 7 2 0 9 
Surviving spouse's benefit 5 2 0 7 
Partial /total disability 
benefit 13 1 0 14 
Child’s benefit 16 5 0 21 
Total benefits 171 17 2 186 
 WT/L/820 
Page 8  
 
  V. ACCOUNTS 
14. A statement of significant accounting policies is reproduced in Annex 2. 
15. The income and expenditure statement fo r the period 1 January-31 December 2010 and 
surplus account as at 31 December 2010 are reproduced in Statements 1 and 2, respectively. 
16. The balance sheet as at 31 December 2010 is reproduced in Statement 3. 
17. The source and application of funds for the period 1 January-31 December 2010 is 
reproduced in Schedule A. 
18. Details of the exchange rates used for closing the accounts on 31 December 2010 and the 
currency breakdown as of 31 December 2010, after hedging, are provided in Schedule F. 
19. A glossary of terms to facilitate an understandi ng of the tables is reproduced in Schedule H. 
VI. ACTUARIAL POSITION OF THE PLAN 
20. Effective 31 December 2010, the Consulting Actuar y completed a formal actuarial valuation.  
Following the most recent formal actuarial valuati on of the Plan, a number of amendments were made 
to both the actuarial assumptions and benefit provi sions. On benefit provisions, a normal retirement 
age of 65 was introduced with the possibility for curr ent members to work until this age and continue 
to accrue retirement benefits. On the actuarial assu mptions, three modifications were made, first to 
increase the assumption for general salary inflati on from 3.5% to 4.0%, secondly to introduce an 
allowance for future mortality improvement and th irdly to introduce an asset smoothing method. In 
conjunction with these amendments, it was agreed to in crease the participant contribution rate to 7.9% 
and the Organisation contribution rate to 15.8% givi ng a total contribution rate of 23.7%. The long-
term cost of the Plan as at 31 December 2010, excluding any allowance for expenses was 25.6%. The 
increase in the long-term cost is mostly due to the f act that the investments of the Plan significantly 
underperformed relative to the actuarial assumpti ons. We do not recommend any amendment to the 
cash contribution rate at this formal actuarial va luation. We do, however, recommend that the Board 
continue to monitor the position on an annual basis. 
 
 
 
     
    
  ___________________________ __________________________   Nicholas Niggli Robert Luther   Chairman Secretary   WTOPP Management Board WTO Pension Plan 
  WT/L/820 
 Page 9 
 
 
  Report of the External Auditor on the Accounts of the WTO Pension Plan 
for the Year Ended 31 December 2010 
 
  The report of the External Auditor on the A ccounts of the WTO Pension Plan for the year 
ended 31 December 2010 is reproduced in Annex 3. 
  WT/L/820 
Page 10  
 
  Opinion of the External Auditor on the Accounts of the WTO Pension Plan 
for the Year Ended 31 December 2010 
 
  We have examined the financial statements of the WTO Pension Plan for the year ended 
31 December 2010, which comprise the income and expenditure statement, the surplus account, the 
balance sheet and the note on source and applicati on of funds.  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 inte rnational auditing standards.  These standards 
require that our work be organized  and implemented in such a way as to obtain a reasonable assurance 
that the financial statements contain no significant inaccuracy.  An audit consists, inter alia , in 
randomly reviewing the documents submitted in sup port 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 c onducted constitutes a reasonable foundation on which to 
base our opinion.   Our opinion is that the financial statements  present fairly the financial position of the 
WTO Pension Plan as at 31 December 2010 and its fi nancial performances, changes in the yield from 
investments and cash flows for the financial year en ded on that date, in accordance with international 
accounting standards.  These standards were applie d in the same manner as in the preceding financial 
year.   
 
     
 
  
 
________________________________ 
Didier Migaud 
PRESIDENT OF THE FRENCH COURT OF AUDIT 
  WT/L/820 
 Page 11 
 
 
  STATEMENT 1 
Income and Expenditure Statement 
(Expressed in Swiss francs - data may not add to totals due to rounding)  
Expenditure at 
31.12.2010 at 
31.12.2009 Income at 
31.12.2010 at 
31.12.2009 
Benefits 
 
 
 
Lump sum 
 Withdrawal settlement – 
Art. 26 
Commutation – Art.23(c) & 
Art. 24(c) 
Transfer to other organizations 
Interest on transfers  
 
 
 
 
 
441,679 
 
1,715,163 
 
566,703 
20,410  
 
 
 
 
 
398,969 
 
3,338,512 
 
309,148 
22,658 Contributions 
 
Participants, regular 
contributions 
Organization, regular 
contributions 
Organization, additional 
contributions 
Interest on validations 
Restorations – Article 18 
Interest on restorations  
 
9,863,997 
 
19,728,000 
 
- 
 
1,336 
14,659 
1,044  
 
9,103,524 
 
18,207,100 
 
197,500 
 
798 
- 
- 
 2,743,955 4,069,287  29,609,036 27,508,922 
Periodic benefits 
 
Retirement benefit – Art. 23 
Early retirement benefit – 
Art. 24 
Surviving spouse benefit – 
Art. 29 
Child benefit – Art. 30 
Disability benefit – Art. 28 
  
 
5,744,319 
3,190,793 
 
331,394 
 
89,822 
677,215  
 
5,408,261 
2,897,039 
 
291,545 
 
81,029 
678,678 Transfer values 
 
 
Transfer from other 
organizations  
 
 
26,478  
 
 
1,646,405 
 10,033,543 9,356,552  26,478 1,646,405 
In-service death and 
disability coverage 
 200,096 - Other Income 
 
 64 
 - 
 
  Investment and Other 
Admin. expenses 
 
Currency revaluation 
Bank charges 
Audit costs 
Management fees (see 
Schedule A for breakdown) 
Consultancy fees 
Actuarial expenses 
Administrative costs  200,096 
  
 
 
693,764 
7,599 
2,320 
1,344,212 
 
40,000 
46,450 
178,757 
 - 
  
 
 
98,828 
7,135 
2,431 
1,315,590 
 
77,681 
92,227 
164,484  
 
Investment Income 
 
Profit on securities 
Credit interest 64 
  
 
  13,312,296 
12,480 
 - 
  
 
  54,925,815 
21,697 
 
 2,313,102 1,758,376  13,324,776 54,947,512 
Excess income over 
expenditure 
 27,669,658 68,918,624    
 42,960,354  84,102,839  42,960,354  84,102,839 
 
 
___________________________________ 
Nicholas Niggli 
Chairman, WTOPP Management Board   
 
___________________________________ 
Robert Luther 
Secretary, WTO Pension Plan WT/L/820 
Page 12  
 
   
STATEMENT 2  
 
Surplus Account 
(expressed in Swiss francs)  
Debit at 31.12.2010 at 31.12.2009 Credit at 31.12.2010 at 31.12.2009
   Excess income over expenditure  27,669,658 68,918,624
    
    
    
    
    
Profit 27,669,658 68,918,624 Loss  
     
27,669,658 68,918,624  27,669,658 68,918,624
 
 
 
 
___________________________________ 
Nicholas Niggli 
Chairman, WTOPP Management Board  
 
 
 
___________________________________ 
Robert Luther 
Secretary, WTO Pension Plan 
  WT/L/820 
 Page 13 
 
 
  STATEMENT 3 
 
Balance Sheet 
(expressed in Swiss francs - data may not add to totals due to rounding)  
Assets at 31.12.2010 at 31.12.2009 Liabilities at 31.12.2010 at 31.12.2009 
    
Securities 330,947,770 301,885,221 Capital 1.1  311,345,449 242,426,825 
Current accounts  9,024,530 10,303,182    
 339,972,300 312,188,403    
  Reserve funds    
  Operating cost 250,000 250,000 
     
Current assets   Current liabilities   
Withholding taxes to be 
recovered  4,369 7,594 Accrued expenses 722,968 632,873 
Contributions receivable  462 498    
Validation amounts 
receivable 10,944 31,827    
 15,775 39,919    
      
      
   Profit / Loss (-) 27,669,658 68,918,624 
 339,988,075  312,228,322  339,988,075 312,228,322 
 
 
 
  
___________________________________ 
Nicholas Niggli 
Chairman, WTOPP Management Board  
 
 
 
___________________________________ 
Robert Luther 
Secretary, WTO Pension Plan WT/L/820 
Page 14  
 
  SCHEDULE A 
 
Source and Application of Funds 
 (expressed in Swiss francs - data may not add to totals due to rounding)  
Source 1.1.2010-31.12.2010 1.1.2009-31.12.2009 
   
Funds as at 1.1 312,228,322  243,261,420  
Receipt of contributions 29,609,036 27,508,922 
Transfer values 26,478 1,646,405 
Profit on securities 12,631,012 54,848,684 
Increase in current liabilities 90,095 48,278 
Other income 64 - 
 354,585,007 327,313,709 
Less:   
Application   
   
Settlement of benefits 12,777,498 13,425,839 
In-service death and disa bility coverage 200,096 - 
Expenditure* 1,619,338 1,659,548 
   
 14,596,932 15,085,387 
Funds as at 31 December 339,988,075 312,228,322 
 
 
*Breakdown of expenditures:  
 
Management fees 
Northern Trust 253,181 
Pictet 206,123 
Rogge 260,336 
Wellington 624,572 
Total: 1,344,212 
 
Consultancy fees  
MBS Capital Advice 40,000 
 
Actuarial expenses 
Mercer 46,450 
 
Administrative costs 
Trianon 157,579 
 
Other Expenses 
(including bank charges, travel costs, exte rnal audit and miscellaneous charges) 31,097 
 
Grand Total: 1,619,338 
  WT/L/820 
 Page 15 
 
 
  SCHEDULE B 
 
Investment Mandate Overview 
Asset class Fund Manager Benchmark Ex-ante 
tracking error Inception Location Website 
Global Equities Wellington 
Intersection MSCI World 1.5% - 2.5% May 2000 Boston, 
Massachusetts 
London, England wellington.com 
Global Equities Wellington 
Opportunities MSCI World 3% - 6% May 2005 Boston, 
Massachusetts 
London, England wellington.com 
Emerging 
Markets Equities Pictet & Cie MSCI Emerging 
Markets Free 6% - 9% January 2005 Geneva, 
Switzerland pictet.ch 
International 
Bonds Rogge Citigroup World 
Gov. Bond 
(hedged in CHF) 1% - 2% February 2005 London, England rogge.co.uk 
European 
Real Estate Warburg 
Henderson 6.5% p.a. -- December 2006 Hamburg, 
Germany warburg-henders
on.com 
Swiss Real Estate Credit Suisse SWX Immofonds -- November 2008 Zürich, 
Switzerland credit-suisse.com
 WT/L/820 
Page 16  
 
  SCHEDULE C  
 
Asset Allocation as of 31 December 2010 
(data may not add to totals due to rounding) 
Assets Mio. 
CHF Current 
Weights Strategy Tactical 
Bandwidths Deviation from 
the strategy Deviation outside
bandwidths 
          
Global Equities 192.6 56.7% 70.0% 62.5% - 77.5% -13.3% -5.8% 
  Well (Intersection) 92.1 27.1% 39.0% 35.5% - 42.5% -11.9% -8.4% 
  Well (Opportunities) 73.3 21.5% 21.0% 19.0% - 23.0% 0.5% - 
  Pictet (Em. Mkts) 27.3 8. 0% 10.0% 8.0% - 12.0% -2% - 
International Bonds 87.4 25.7% 20. 0% 18.5% - 21.5% 5.7% 4.2% 
Real Estate 50.9 15.0% 10.0%  8.5% - 11.5% 5.0% 3.5% 
  Warburg Henderson 17.3 5.1% 5.0%  -  0.1% - 
  Credit Suisse 33.6 9.9% 5.0%  -  4.9% - 
Cash 9.0 2.7% 0.0%  -  2.7% - 
Total 340 100% 100.0%    0.0%  
  WT/L/820 
 Page 17 
 
 
  SCHEDULE D 
 
Investment Performance  
(expressed in nominal terms) 
 Over 1 year p.a. Over 3 ye ars p.a. Since inception TE IR 
      
TOTAL      
      
Consolidated Securities 4.2% -6.9% 0.4% 3.2% -0.1 
Added value 1.7% -0.3% 0.1%   
      
EQUITY      
      
Consolidated Equities 3.7% -10.3% -1.1% 3.4% 0.0 
Added value 2.0% -0.2% -0.4%   
      
Wellington Intersection 1.8% -11.3% -4.2% 4.1% -0.1 
Added value 1.1% -0.5% 0.3%   
      
Wellington Opportunities 5.1% -9.6% 2.2% 3.8% 0.3 
Added value 4.4% 1.2% 2.2%   
      
Pictet Emerging Markets 6.6% -9.6% 10.3% 5.6% -0.5 
Added value -0.6% -3.0% -2.0%   
      
FIXED INCOME      
      
Consolidated Fixed Income 4.8% 4.3% 3.1% 1.9% 0.3 
Added value 1.8% 0.6% 0.1%   
      
Rogge Global 4.8% 4.3% 3.2% 1.9% 0.3 
Added value 1.8% 0.6% 0.6%   
      
REAL ESTATE      
      
Consolidated Real Estate 5.9% -11.9% -0.1% --- --- 
Added value 1.4% -8.6% -7.2%   
      
Warburg Henderson -4.1% -4.1% -1.4% --- --- 
Added value -10.6% -10.6% -7.9%   
      
Credit Suisse 11.0% --- 8.9% --- --- 
Added value 5.3% --- -3.6%   
      
 
TE = tracking erro r over 3 years 
IR = information ratio over 3 years WT/L/820 
Page 18  
 
  SCHEDULE E 
 
Investment Performance History, Since Inception to 31 December 2010 
   
    
 
    
 
     
 
    
 
    Total Portfolio
5060708090100110120130140150
08/199908/2000
08/200108/2002
08/2003
08/200408/2005
08/2006 08/2007
08/2008
08/2009 08/2010T otal Portfolio Benchmark Equitie s
5060708090100110120130140150
08/199908/2000
08/200108/2002
08/2003 08/2004
08/2005
08/2006 08/2007
08/2008 08/2009
08/2010Equities Benchmark
Fixed Income
5060708090100110120130140150
08/1999
08/200008/2001
08/2002
08/2003
08/2004
08/200508/2006
08/200708/2008
08/2009
08/2010Fixed income Benchmark Real Estate
5060708090100110120130140150160170180190200210
02/2005
02/2006
02/2007
02/2008
02/200902/2010Real Estate Benchmark WT/L/820 
 Page 19 
 
 
  SCHEDULE F 
 
Exchange rates used for closing on 31 December 2010 
  
Currency Exchange rates 
(indirect quotation) 
EUR 0.800 
USD 1.073 
JPY 87.013 
GBP 0.685 
AUD 1.047 
CAD 1.066 
HKD 8.340 
SGD 1.374 
  
 
Currency Breakdown as of 31 December 2010, after hedging 
  
 WT/L/820 
Page 20  
 
  SCHEDULE G 
 
Structure of the WTO Pension Plan 
  
 
    
 
    
 
     
 
    
 
     
 
    
 
   DIRECTOR-GENERAL PARTICIPANTS GENERAL COUNCIL 
ADMINISTRATIVE 
SERVICES 
CONSULTING ACTUARY 
MEDICAL ADVISER 
FRIENDS OF THE BOARD 
INVESTMENT 
ANALYST/CONSULTANT  
MANAGEMENT BOARD 
ASSET 
MANAGEMENT SERVICES EXTERNAL AUDITOR  WT/L/820 
 Page 21 
 
 
  SCHEDULE H 
 
Glossary of terms 
  
Accrued expenses  includes expenses incurred but not paid in the current financial year. 
 Active Investment Management is a form of portfolio manageme nt whereby the portfolio manager 
invests the assets in a manner different from the benc hmark in an attempt to produce higher returns 
than the benchmark.  The disadvantages of such a management style are characterized by higher 
management fees, higher trading costs as well as  the chance to significantly underperform the 
benchmark.  Actuarial expenses  includes expenses charged by the consultin g actuary for the provision of actuarial 
services. 
 
Administrative costs  includes costs incurred in the general administration of the Pension Plan. 
 Audit costs  includes costs (travel, per diem) incurred by the External Auditor in connection with the 
audit of the 2010 accounts.  
Consultancy fees  includes the fees charged by the investment analyst/consultant. 
 Contributions receivable  refers to contributions due in respect of contributory service in 2010 but 
received after 31 December 2010.  
Currency revaluation  represents exchange rate losses. 
 Indexed management  is a form of portfolio management that  attempts to deliver the returns of the 
underlying benchmark by replicating exactly or by getting as close to the composition of the 
benchmark as possible at any point in time. It diffe rs from active management in that it is significantly 
less costly and does not reflect the views, forecasts or opinions of the investment manager. 
 
Information Ratio is defined as the outperformance of the investment manager above the index 
divided by the portfolio's tracking error.  The inform ation ratio is used to represent a manager's skill.  
Generally, any ratio over 0.30 is  thought of as having skill. 
 
Interest on validations  refers to interest payments made unde r Article 20(d) of the Plan Regulations. 
 Management fees  includes fees paid for the management of WTO portfolios. 
 Organization, additional contributions  refers to the additional contributions paid by the 
Organization to compensate for the additional actua rial cost generated by the early separation of 
participants in the context of restructuring exercises. 
 Provision for operating costs refers to the reserve established to cover operating costs not currently 
charged to the Plan.  
Rate of return is the percentage change in value of the portfolio over a specified period, taking into 
account both the investment income and the change in the market value of the portfolio.  It is 
expressed as an equivalent annual rate .  The nominal rate of return means that the rate is gross of fees 
(including management and consu lting fees) and of inflation (measured on the basis of the annual 
movement of the consumer price index in Switzerland) .  The real rate of return is calculated as the WT/L/820 
Page 22  
 
  rate of return net of investment-related fees and cost s and net of inflation.  The target real rate of 
return is the long-term real rate of  return that the Plan needs to achie ve in order to meet its liabilities. 
 
Regulations and Administrative Rules  refers to the Regulations and Administrative Rules adopted 
by the General Council on 16 October 1998. 
 
Time-weighted return  is a measure of compound return.  It reduces the distorting effect of inflows 
and outflows and is used to compare the returns of investment managers.  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 absolute risk ;  even though a portfolio has a very low tracking 
error, it can still be very risky due to the underlying  nature of the market in which it invests.  A 
tracking error for a passive mandate would be low—dependent upon the mandate, usually less than 
0.8.  Anything above this would be considered active. 
 Withholding taxes to be recovered  includes amounts of withholding tax levied by the Swiss 
authorities and subject to recovery after 31 December 2010.   WT/L/820 
 Page 23 
 
 
  ANNEX 1 
 
Investment Principles 
  
1. Pursuant to Article 13 of the Regulations of the Pension Plan and Rule A.9 of the Rules of 
Procedure, the Management Board shall be responsib le for the secure investment of all Plan assets, 
the formulation of investment policies after taking appropriate professional advice, and the 
appointment of investment manage rs to implement that policy. 
 
2. The investment strategy of the Plan is based  on an asset allocation designed to ensure the 
adequate funding of the Plan's liabilities over the long term.  A careful balance is drawn between 
maximization of returns on the assets of the Plan an d the maintenance of a reasonable level of risk.  
The strategy is geared to achieve a target rate of r eal return of 3.5 per cent, which is the assumption on 
which the feasibility study and contribution rates of the Plan were originally based. 
 
3. The WTOPP's three asset classes are defined by  differences in their expected response to 
economic conditions, such as price inflation or cha nges in interest rates and are weighted in the 
portfolio by considering their expect ed returns, risk and correlations. 
 4. Derivatives may be used within the globa l hedged fixed income mandate for hedging 
purposes, where they provide the opportunities to ach ieve the objective of the Plan more efficiently 
than would be the case through the direct dealing in  underlying securities.  Derivative instruments for 
this mandate are restricted to forward foreign cu rrency contracts, futures, covered bond options and 
interest rate options.  Leverage and net short positions are not allowed. 
 
 
     __________________________ ________________________ 
 Nicholas Niggli Robert Luther 
 Chairman Secretary  WTOPP Management Board WTO Pension Plan WT/L/820 
Page 24  
 
  ANNEX 2 
 
Statement of Significant Accounting Policies 
  
1. Pursuant to Article 14(a) of the Regulations of  the Pension Plan, the unit of account of the 
Pension Plan is the Swiss franc.  For practical re asons, the current United Nations operational rates of 
exchange are used for the conversion of other currenc ies into the Swiss franc, except in the case of the 
investment portfolios where the rates shown in Schedule C were used for valuation purposes. 
2. The accounting year is 1 January to 31 December. 
3. Pursuant to Article 13 of the Regulations of the Plan and Rule A.8 of the Rules of Procedure, 
the Management Board shall be responsible for the financial security and probity of the Plan and in 
particular the maintenance of its actuarial ba lance and of financial controls and accounts. 
4. Pursuant to Article 5(e) of the Regulations of the Plan and Rule C.1 of the Rules of 
Procedure, an audit of the accounts of the Plan sh all be made annually by the External Auditor, 
namely the External Auditor of the WTO.  The provisions of Chapter XI ("External Audit") and the 
Appendix ("Additional terms of reference governing external a udit") of the WTO Financial 
Regulations shall apply mutatis mutandis  to the audit. 
 
  
 
   ___________________________ ___________________________  Nicholas Niggli Robert Luther 
 Chairman Secretary 
 WTOPP Management Board WTO Pension Plan    WT/L/820 
 Page 25 
 
 
   
 
ANNEX 3 
 
 
 
 Auditors of the 
World Trade Organization 
WTO 
 WTO PENSION PLAN 
RÉGIME DES PENSIONS DE L'OMC PLAN DE PENSIONES DE LA OMC 
 
    
 
    
 
     
 
REPORT ON THE FINANCIAL STATEMENTS  
FOR THE FINANCIAL YEAR ENDED  
31 DECEMBER 2010  
 WT/L/820 
Page 26  
 
  CONTENTS 
 
 
I.  OBJECTIVES AND SCOPE OF THE AUDIT ..................................................................  27  
II.  LIST OF RECOMMENDATIONS ......................................................................................  27  
III. COMMENTS AND RECOMMENDATIONS ....................................................................  28  
A.  F
OLLOW -UP TO PREVIOUS RECOMMENDATIONS  .....................................................................  28 
1.  Recommendations of the auditor ..........................................................................................  28  
2.  Internal audit' s comments .....................................................................................................   29 
B.  PRESENTATION OF THE FINANCIAL STATEMENTS  ...................................................................  29 
C.  BRIEF PRESENTATION OF THE 2010  ACCOUNTS  ......................................................................  29 
D.  ACTUARIAL ANALYSES OF THE PLAN ......................................................................................  30 
E.  RESERVE FUND FOR OPERATING COSTS  ..................................................................................  32 
F.  EXCHANGE LOSSES  ..................................................................................................................  32 
G.  INSURANCE PREMIUM FOR IN-SERVICE DEATH OR DISABILITY  ..............................................  33 
H.  REIMBURSEMENT OF WITHHOLDING TAX ...............................................................................  33 
I.  INVESTMENT POLICY  ...............................................................................................................  34 
IV.  ACKNOWLEDGEMENTS ..................................................................................................  35  
V.  ANNEX:  INTRODUCTION TO THE PENSION PLAN .................................................  36  
A.  BACKGROUND  ..........................................................................................................................  36 
B.  MANAGEMENT PROCEDURES  ...................................................................................................  36 
C.  TECHNICAL CHARACTERISTICS OF THE PLAN ..........................................................................  37 
  WT/L/820 
 Page 27 
 
 
  I. OBJECTIVES AND SCOPE OF THE AUDIT 
1. Pursuant to our notification of 26 April 2011, an external auditor conducted an audit mission 
within the Secretariat of the Management Board of the WTO Pension Plan (WTOPP), from 30 May to 
1 June 2011.  The purpose of this audit was to examine the WTOPP's financial statements for the 
financial year ended 31 December 2010. 
2. The audit was conducted in accordance with in ternational auditing st andards (International 
Standards on Auditing - ISA) and with th e Organization's financial regulations. 
3. Each comment and recommendation was discussed with the persons concerned.  The audit's 
closing meeting was held with Mr Robert Luther, Secretary of the Pension Plan, on 1 June 2011.  
Management acknowledged the relevance of our rema rks.  This note takes fully into account its 
comments and replies. 
4. Our opinion on the financial statements is given unreservedly. 
II. LIST OF RECOMMENDATIONS 
 Recommendation No. 1 .  The full financial statements should be presented to the 
external auditor, including all the schedules explaining them. 
 Recommendation No. 2 .  The actuary should be requested to provide clear 
justification for the gap existing between  the estimates of the Pension Plan's 
commitments presented by him in July 2010 and April 2011. 
 Recommendation No. 3 .  The operating costs of the Pension Plan borne by the 
Organization should be reimbursed a nnually to the WTO (renewal of a 
recommendation made in the previous audits). 
 Recommendation No. 4 .  (i) The amounts due for withholding tax and not 
reimbursed should be recorded as assets in the Pension Plan's balance sheet;  (ii) Reimbursement should be  sought beyond the time-limits, which are not binding if 
requests for reimbursement have been made within the time-limits and in the form 
prescribed by each national legislation;  and (iii) Requests for reimbursement should receive support through intervention by the Plan and/or the World Trade Organization. WT/L/820 
Page 28  
 
  III. COMMENTS AND RECOMMENDATIONS 
A. F
OLLOW -UP TO PREVIOUS RECOMMENDATIONS  
1. Recommendations of the auditor 
5. Of the four recommendations made in 2010 re garding the 2009 accounts, three have been 
implemented and one is in the process of being implemented: 
Table 1:  Summary of the implementation of the recommendations in our report on the 
WTOPP's financial statements for the financial year ended 31 December 2009 
 
Subject Implemented Being 
implemented Not 
implemented Total Paragraph nos. 
in the original 
report 
No. 1.  The operating costs of the Plan borne by the Organization should be 
reimbursed annually to the 
WTO, in accordance with 
the Plan's Regulations 
(renewal of a recommendation made in the 
previous audits).  x  
 13-15 
No. 2.  The sum of 
CHF 22,345.51 should be 
deducted from both the amount shown for bank 
charges and the amount 
shown for profits on shares included under expenditure 
and income, respectively, in 
the income and expenditure 
statement for 2009, owing to 
an allocation error. X   
 16-18 
No. 3.  The reconciliation of 
the bank account statements and the Plan's accounts 
should be carried out 
monthly. X   
 19 and 20 
No. 4.  The actuary to the 
Plan should be requested to 
prepare long-term forecasts 
comparing, year by year, the respective changes in the 
actuarial value of the Plan's 
liabilities and assets. X   
 36-38 
Total number 3 1 0 4  
Percentage of total 75 25 0 100  
  WT/L/820 
 Page 29 
 
 
  2. Internal audit's comments 
6. The WTO's internal audit service, set up recently with a limited number of staff, has not 
conducted any audit of the WTOPP. 
B. PRESENTATION OF THE FINANCIAL STATEMENTS  
7. The WTOPP's financial statements have traditi onally been presented in the annual report by 
the Plan's Management Board.  They are supplemente d by eight tables (schedules A to H) dealing, in 
particular, with the Plan's investments, and by two annexes concerning, respectively, "Investment 
principles" and "Statement of significant accounting principles". 
8. At the time of the audit, the annexes had been  prepared and were similar to those for the 
previous year, but the schedules were not available.  The documents that were not attached, relating, 
in particular, to the "Investment mandate " (schedule B), the "Asset allocation as of 
31 December 2010" (schedule C), the "Investment performance" (schedule D), and the "Investment 
performance history since inception" (schedule E), are very useful to the auditor when considering the 
trend in the Plan's assets.  This lacuna has been o ffset in part by making available reports by the asset 
managers and the custodian bank, but the full financial statements, including all explanatory 
documents, should be submitted at the time of the audit. 
9. Recommendation No. 1.  The auditor recommends  to the Secretariat of the Management 
Board that the full financial statements be presen ted to the external auditor, including all the 
schedules explaining them . 
C. BRIEF PRESENTATION OF THE 2010  ACCOUNTS  
10. The operating account of the Pension Plan1 ("the income and expenditure statement") shows 
excess income over expenditure of CHF2 27,669,658, 59.85 per cent lower than that in 
2009 (CHF 68,918,624). 
11. This trend can mainly be explained by the 75.76 per cent drop in profits on securities 
(from CHF 54.92 to CHF 13.31 million) and by a 98.39 per cent reduction in transfers of pension rights from other international organizati ons (from CHF 1.64 million to CHF 26,478). 
12. The Plan's expenditure remained stable (CHF  15.29 million, or +0.70 per cent in comparison 
with 2009);  investment and other administrativ e expenses increased by 31.55 per cent, mostly 
because of a sixfold increase in exchange losses (CHF 693,764 as against CHF 98,828);  pensions 
rose by 7.24 per cent as a result of the larger number of beneficiaries (which rose from 171 to 186, taking into account all types of pension, and nine beneficiaries of deferred pensions, which have not 
yet started to be paid), while payments in capital fe ll by 32.57 per cent.  A new cost emerged:  the 
insurance premium of CHF 200,096 taken out to co ver the risk of in-service death or disability. 
13. The actuarial rate of return on investment  remained positive, as it had been from 2003 to 
2009, with the exception of 2008.  It fell sharply in 2010 in comparison with 2009 and was below the Plan's objective (3.02 per cent against 3.5 per cent, net of inflation). 
 
 
                                                      
1 Annex A contains an updated version of the outline of the Pension Plan organization and parameters 
given in the external auditor's previous reports. 
2 Swiss francs. WT/L/820 
Page 30  
 
  Table 2:  Calculation of the actuarial rate of return (in Swiss francs) 
 
Actuarial rate of return 2008 2009 2010 
a. Value of assets as of 1 Janu ary 365,933,216 243,261,420 312,228,322 
b. Value of assets as of 31 December  243,261,420 312,228,322 339,988,075 
i. Investment income (136,131,210) 53,448,278 11,279,201 
Average assets = (a+b-i)/2 372,662,923 251,020,732 320,468,598 
Actuarial rate of return in nominal terms = 
i/average assets (36.53%) 21.29% 3.52% 
Consumer price index for Switzerland3 0.8% 0.2% 0.5% 
Actuarial rate of return, net of inflation (37.33%) 21.09% 3.02% 
Source : Financial statemen ts of the WTOPP. 
 
Table 3:  Trend in actuarial rates of return, inflation adjusted 
 
2003 2004 2005 2006 2007 2008 2009 2010 
+10.01% +4.47% +23.71% +9.01% +3.48% -36.53% +21.29% +3.02% 
Source : Auditor, on the basis of WTOPP Secretariat statistics.  
14. The presentation of the Plan's balance sheet complies with Swiss regulations on pension 
plans:  the capital of CHF 311.34 million recorded  in the balance's liabilities, an increase of 
28.43 per cent, corresponds to the net assets in an IP SAS-consistent statement of financial position.  
In addition to the excess income over expenditure  of CHF 27,669,658 menti oned above, the liabilities 
also include accrued expenses at the end of the financial year (CHF 722,968), an increase of 14.25 per cent compared to 2009, as well as the provision of CHF 250,000 for operating costs, an 
amount that has not changed since previous years and commented below. 
15. Assets (CHF 339.98 million) rose by 8.79 per cent in comparison with 2009, attributable to 
the 9.63 per cent rise in the valu e of the Plan's investments. 
16. The increase in the value of the assets and net assets in the balance sheet (its capital) are 
positive trends, but this balance sheet is not consis tent with IPSAS and does not mention the actuarial 
value of pension commitments, an essential element in assessing the situation of a pension plan. 
D. A
CTUARIAL ANALYSES OF THE PLAN 
17. The latest interim report by the Plan's actuary (the Mercer  company), dated 9 July 2010, 
covers the situation at 31 December 2009.  It estimates the Plan's commitments4 at that date to be 
CHF 1,552 million and gives a year-by-year forecast of the Plan's cash flow up to 2043, in accordance 
with recommendation No. 4 in our re port on the 2009 accounts.  This forecast5 shows that income 
(annual contributions and the return on investment, calc ulated on the basis of an expected gross rate of 
                                                      
3 Rate of change in the Consumer Price Index (C PI) for December compared to December of the 
previous year, as reported by the Swiss Federal Office of Statistics. 
4 The "present value of total projected benefits". 
5 The forecast has been made on the hypothesis that WTO staff numbers remain constant, each 
departure being offset by a recruitment.  WT/L/820 
 Page 31 
 
 
  return of 6.5 per cent, including  inflation) should balance expenditure (pensions payable each year) 
over the period examined, if the expected return on  investment is achieved.  The forecast therefore 
shows that the reform of the Plan's parameters that  came into effect in 2010 should suffice to ensure it 
remains in balance for the next 35 years, provided th at the return on investment meets the targets set. 
Table 4:  Actuarial projections of the Plan's cash flow (in thousands of Swiss francs)  
 
Year A Contributions B Return on 
investment C Pensions paid Balance 
(A+B-C) 
2010 31,647 20,7896 14,690 37,746 
2015 36,814 33,845 27,060 43,599 
2020 42,785 48,547 42,549 48,783 
2025 50,172 64,614 62,630 52,156 
2030 59,341 81,007 89,662 50,686 
2035 70,950 95,957 122,671 44,236 
2040 86,112 108,531 162,331 32,312 
2043 96,865 112,961 196,428 13,398 
Source : Auditor, based on the Mercer report of 9 July 2010. 
18. The WTO commissioned the same actuary to prepare a report estimating the Plan's 
commitments at 1 January 2011 in order to submit an opening balance consistent with IPSAS 25.  
This report, dated 13 April 2011, estimates net pension commitments  at 1 January 2011 to be 
CHF 492.183 million, representing CHF 832.171 million of pension commitments, minus 
CHF 339.988 million for the fair value of the Plan's assets. 
19. The method used to calculate these commitmen ts is the "Projected Unit Credit" method 
provided in IPSAS 25.  The report indicates that this calculation, made for accounting purposes, is 
only valid for a particular time and does not constitute a forecast of the Pension Plan's capacity to pay 
employee benefits in the future.  The difference between the two estimates (CHF 1,552 million and 
CHF 832 million) is such that it would be helpfu l to have the actuary's comments explaining the 
difference between the calculation methods used in th e two reports and the precise significance of the 
figures reached. 
20. In addition, the presentation of the opening balance for 2011 proposed by the actuary is 
questionable because it proposes including the amount of pension commitments net of the Plan's assets.  According to IPSAS 25 (paragraph 60), howe ver, such a presentation is only possible if the 
pension plan is legally separate from the entity repor ting the financial statement concerned, which is 
not the case for the WTO's Pension Plan. 
21. Recommendation No. 2.  The auditor recommends  to the Secretariat of the Management 
Board that its actuary be requested to provide clear justification for the gap existing between the estimates of the Pension Plan's commitments  presented by him in July 2010 and April 2011. 
                                                      
6 It will be noted that the return on investment fo recast for 2010 (CHF 20.789 million) is higher than 
the real return for 2010 (CHF 11.279 million). WT/L/820 
Page 32  
 
  E. R
ESERVE FUND FOR OPERATING COSTS  
22. The liability side of the balance sheet still includes a reserve7 of CHF 250,000 for operating 
costs (salaries, provision of office space, ancillary  costs) potentially invoiced by the WTO in respect 
of the staff made available to the Plan by the Organization.  This reserve, which was established 
pursuant to recommendations by the previous extern al auditors, has never been reassessed, while the 
real value of the operating costs concerned amount s to approximately CHF 500,000, and the WTO has 
never requested payment or posted a receivabl es entry in its accounts under this heading. 
23. The solution would be for the WTO to invoice th e Plan's real operating costs paid by the 
Organization each year, in accordance with Article  5(f) of the Regulations, which states that 
"All expenses incurred in administering the plan … sh all be borne by the Plan".  The reserve could be 
used to pay some of these costs.  This soluti on has not been implemented as yet because of the 
additional costs it would involve for the Plan. 
24. One positive step has recently been taken in  this regard inasmuch as on 23 May 2011 the 
WTO Secretariat submitted a memorandum proposing th at the WTOPP be responsible each year for a 
WTO invoice for its operating costs.  The first invoice, to be issued at the end of 2011 for the 2011 
financial year, would only concern the salaries of  the Plan's two full-time staff, i.e. CHF 300,000, 
without taking into account part of the salaries for staff working part-time for the Plan or ancillary 
charges, which would be estimated and invoiced in future years.  This memorandum was considered 
by the WTOPP's Management Board on 1 June 2011. 
25. Recommendation No. 3.  The auditor recommends  to the Secretariat of the Management 
Board that all the operating costs of the Pensio n Plan borne by the Organization be reimbursed 
annually to the WTO (renewal of a recommendati on made for the previous financial years) . 
F. EXCHANGE LOSSES  
26. The reason for the sixfold increase in exchange losses mentioned above is the accounting 
conversion of the balances in the WTOPP's forei gn currency bank accounts into Swiss francs, which 
is done at the end of each year (and not each month as is the case for the WTO).  The bank account 
most affected is a current account in euros with the Crédit Suisse , whose total fell from €4,203,800.73 
to €684,953.77 in 2010, recording an exchange loss of CHF 688,931.50. 
27. In the 2010 financial year, each transaction in th is bank account was recorded in the Plan's 
general ledger at the day's rate for the euro.  The am ount of the exchange loss is calculated as follows:  
the balance in the euro bank account at 31 Decemb er 2010 was converted into Swiss francs at the 
United Nations rate for 31 December 2010 (€684, 953.77 x 1.24967 = CHF 855,966.17).  The balance 
in the general ledger at 31 December 2010 (which r ecords the balance at the beginning of the financial 
year plus all operations in 2010 converted at  the day's rate) is deducted from this amount, 
i.e. CHF 1,544,897.67.  The figure thus obtained is an exchange loss of CHF 688,931.50. 
28. This loss can be explained by the 15.92 per cent drop in the euro against the Swiss franc 
between 31 December 2009 (1.48628) and 31 Decembe r 2010 (1.24967).  Bearing in mind the small 
number of transactions involved, the risk of error pinpointed in the external auditors' reports on the 
WTO's accounts appears negligible in this case. 
                                                      
7 The term "reserve" used in the WTOPP's balance sheet appears more approp riate than "provision" 
used in our previous reports because it is consistent with the decision take n by the WTOPP in 2000, even if the 
word "provision" sometimes appears in the surplus ac counts and if a provision was possible, the charge 
concerned being indisputable, taking into account the wording of the Plan's Regulations.  WT/L/820 
 Page 33 
 
 
  G. INSURANCE PREMIUM FOR IN-SERVICE DEATH OR DISABILITY  
29. The WTO and the WTOPP traditionally divide certain risks, the Organization covering the 
risk of accidents for its staff through an in surance policy taken out with the company Willis  and the 
Plan up until now covering directly risk of in- service death and disability following illness, which it 
finances by means of 3.3 points of the total contri butions to the Pension Plan (i.e. 23.7 per cent of 
"pensionable" remuneration8).  The two bodies have jointly sought  to obtain quotations for these risks 
on the market through the broker Vanbreda International  and have together found a solution that is 
less costly for each of them by entering  into a new contract with the insurer Willis . 
30. The share of this contract taken out by the Pl an for the risk of in-service death or disability 
costs some CHF 1.21 million annually, a much lowe r sum than the CHF 4.16 million corresponding to 
the three points mentioned above.  The premium of CH F 200,096 paid in 2010 covers this risk for the 
months of November and December 2010. 
31. The Plan has decided not to lower the amount of contributions in proportion to the saving 
made because the contract with Willis  is only for three years and it is not certain that it can be 
renewed on the same terms.  This appears to be a wise decision.  It helps to facilitate cover of the 
Plan's long-term commitments. 
H. REIMBURSEMENT OF WITHHOLDING TAX 
32. Dividends earned from the WTOPP's securities are subject to fiscal levies at source and the 
Plan requests the tax authorities in the countries concerned for their reimbursement because the WTO 
is exempt from tax pursuant to the 1994 Marrak esh Agreement, which established it, and the 
1947 Convention on the Privileges and Immunities of  the United Nations and Specialized Agencies, 
which is referred to in the Marrakesh Agreement.   Moreover, the Pension Plan is not legally 
independent of the WTO, even though it has a certain degree of autonomy.9 
33. In practice, the WTOPP authorizes the bank th at is the custodian of its investments, 
Northern Trust , to obtain reimbursement of withholding taxes.  Northern Trust  has not been able to 
obtain reimbursement from the following five countries:  France (CHF 472,940), 
Italy (CHF 247,604), Canada (CHF 117,665), Denmark (CHF 13,012), Poland (CHF 8,755), 
Luxembourg (CHF 4,137), Greece (CHF 2,060) and Israel (CHF 629). 
34. The total amount due was CHF 866,8 03 at 21 March 2011 (CHF 865,777 at 
31 December 2010).  As the time-limits for this t ype of claim (from one to six years depending on the 
country) are very short, CHF 688,686 of the amount due risks being time-barred.  The indisputable total was therefore CHF 178,117 at 21 March 2011 (CHF 177,092 at 31 December 2010). 
35. These outstanding amounts do not appear in th e balance sheet, with the exception of 
CHF 4,369 not yet reimbursed by Crédit Suisse  at the end of the financia l year, corresponding to taxes 
levied on interest earned from one of the Plan's bank accounts, which it manages without any intermediary. 
36. This situation calls for severa l remarks:  the taxes should not  be considered as time-barred
10 if 
their reimbursement was requested w ithin the legal time-limit and if the fiscal service concerned alone 
                                                      
8 "Pensionable" remuneration is defined in the annex. 
9 This is why, during its transiti on to IPSAS, the WTO will not be able to give its pension fund the 
same accounting treatment as an independent pension fund. 
10 Northern Trust  shares this opinion, according to information given by the Plan's Secretary to the 
Management Board on 12 October 2010, stating that Northern Trust  had indicated that it would be possible to 
obtain reimbursement of all the claims, including those for which the time-limit had expired. WT/L/820 
Page 34  
 
  is responsible for the failure to reimburse;  the amounts outstanding should appear in the assets 
column of the Plan's balance sh eet because they concern taxes imposed on assets belonging to it, if 
necessary with a provision for those amounts which it would appear have to be written off for any 
particular reason (request not submitte d in time or not made in the required form).  Approaches by the 
Plan itself, or even by the WTO,  to the fiscal services would be more persuasive than those by an 
intermediary bank, based in London what is more, outside the countries concerned.  For the largest 
amounts, legal proceedings could be brought. 
37. Recommendation No. 4.  The auditor recommends  to the Secretariat of the Management 
Board that:  (i) the amounts due for withholdin g tax and not reimbursed be recorded as assets 
in the Plan's balance sheet;  (ii) reimbursement be sought beyond the time-limits, which are not 
binding if requests for reimbursement have been made within the time-limits and in the form 
prescribed by each national legislation;  and (iii) requests for reimbu rsement receive support 
through intervention by the Plan and/or the World Trade Organization. 
I. I
NVESTMENT POLICY  
38. The Plan's investment policy, defined in 2004 and implemented since 2005, seeks to achieve a 
high net rate of return of 3.5 per cent by emphasizi ng equities, which are pegged at 70 per cent of the 
portfolio (with 10 per cent invested in emerging ma rkets), in preference to bonds (20 per cent) and 
real estate (10 per cent). 
39. In 2008, at the height of the financial crisis, the Plan's Management Board decided to adjust 
this policy by decreasing the share of equities in  order to limit losses on these investments.  
On 14 October 2009, after having consulted five sp ecialist firms, the WTOPP's Management Board 
endorsed this more prudent  approach by adopting the following new portfolio breakdown, while at the 
same time maintaining the target of 3.5 per cent net rate of return, excluding inflation: 
 - Equities:  40 per cent (one quarter of which in emerging markets); 
 - bonds:  40 per cent;  - real estate:  20 per cent. 
40. This modified asset allocation policy had not ye t been implemented in 2010 and a call for 
bids was prepared to choose asset managers, after the Management Board had considered their terms 
of reference (to decide between more or less "active" management of securities).  This is why the breakdown of the Plan's portfolio has changed little:  the share of real estate rose from 10.5 per cent to 
15 per cent from 2009 to 2010, while the shares of eq uities and bonds fell slightly (from 59.5 per cent 
to 56.7 per cent for the former and from 26.7 pe r cent to 25.7 per cent for the latter). 
41. Taking into account the trend in financial ma rkets in 2010, performance was much lower than 
that for the previous year (4.2 per cent as agains t 22.1 per cent for the portfolio as a whole), but was 
1.7 per cent higher than the benchmark.  The only counter-performance record ed was in real estate 
managed by Warburg Henderson , whose negative result (-4.1 per cent) was 10.6 per cent lower than 
the benchmark. 
42. The Secretariat indicates that this "counter-p erformance" should be seen as relative because 
the benchmark for Warburg Henderson 's real estate securities is cal culated in euros, whereas the 
performance for the Plan's securities is recorded in Swiss francs, a currency that rose by 16 per cent 
against the euro in 2010.  WT/L/820 
 Page 35 
 
 
  Table 5:  Trend in the breakdown of assets from 2009 to 2010 and 
comparative performance of the various classes of assets in 2010 
(in millions of Swiss francs)  
 
Asset 
managers Value 
of assets 
end of 2009  Value 
of assets 
end of 2010  2010 
performance, 
percentage Performance 
of benchmark 
model for 
each fund Difference 
compared to 
benchmark 
model 
Shares 185.8 
(59.5%) 192.6 
(56.7%) 3.7% 1.7% +2.0% 
Wellington11 
Intersection 90.5 
(28.9%) 92.1 
(27.1%) 1.8% 0.7% +1.1% 
Wellington 
Opportunities 69.7 
(22.3%) 73.3 
(21.5%) 5.1% 0.7% +4.4% 
Pictet (emerging 
markets) 25.6 
(8.19%) 27.3 
(8%) 6.6% 7.2% -0.6% 
Bonds 
Rogge  83.5 
(26.7%) 87.4 
(25.7%) 4.8% 3.0% +1.8% 
Real estate 32.7 
(10.5%) 50.9 
(15.0%) 5.9% 4.5% +1.4% 
Warburg 
Henderson 13 
(4.16%) 17.3 
(5.1%) -4.1% 6.5% -10.6% 
Crédit Suisse 19.7 
(6.3%) 33.6 
(9.9%) 11.0% 5.7% +5.3% 
Cash 10.3 
(3.2%) 9 
(2.7%)    
Total 312.2 340 4.2% 2.5% +1.7% 
Source : Auditor, based on indicati ons provided by the WTOPP.  
IV. ACKNOWLEDGEMENTS 
43. The Auditor wishes to thank sincerely the Secr etary of the Pension Plan and his collaborators 
for their welcome and for the precise information that they supplied to us. 
                                                      
11 The Plan's equity investments are made through two funds of the Wellington company:  
Wellington Intersection  and Wellington Opportunities . WT/L/820 
Page 36  
 
   
V. ANNEX:  INTRODUCTION TO THE PENSION PLAN 
A. B
ACKGROUND  
1. Both the informal international organiza tion which managed the General Agreement on 
Tariffs and Trade (GATT) 1947 and the WTO, wh ich succeeded it in 1995, entrusted the United 
Nations Joint Staff Pension Fund with providing retire ment, death and disability benefits to their staff 
up until 31 December 1998. 
2. As from 1 January 1999, the WTO launched its  own Pension Plan and implemented an 
overall reform of its human resources management, including the adoption of a remuneration system 
different to that of the United Nations and more a dvantageous than the latter to some of its staff. 
B. MANAGEMENT PROCEDURES  
3. The Plan is governed by Regulations adopted by the WTO General Council on 
16 October 1998.  It is supplemented by Administra tive Rules and by the Rules of Procedure of the 
Pension Plan Management Board, which were  adopted by the latter and approved by the 
WTO General Council. 
4. Article 5 of the Regulations entrusts manageme nt of the Pension Plan to the Management 
Board composed of a Chairman, four members and f our alternates appointed by the General Council, 
together with four members and four alternates appointed by the WTO Director-General (of whom 
two members and two alternates are appointed from a lis t drawn up by the "participants", i.e. by staff 
members of the WTO).  The "beneficiaries" of the Pl an, 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 incumbent is the present Director of the Ad ministration and General Services Division of the 
WTO, assisted by two full-time staff members, a grade 8 official and a grade 4 secretary.  
The administrative assistant of the Division also devo tes part of her time to the requirements of the 
Plan. 
6. Under the responsibility of the Management Board,  the Secretariat directly managed the Plan 
for two and a half years, apart from asset manageme nt activities, which were originally entrusted to 
specialized bodies.  Subsequently, by contract of 1 June 2001, the ad ministration and accounts 
management of the Plan were entrusted to Trianon Conseil S.A.12, a Swiss company specializing in 
pension scheme management, whose present headquarter s are in Renens, a suburb of Lausanne in the 
canton of Vaud.  Since that date, the Secretaria t 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 by pension contri butions among different categories of securities 
                                                      
12 The Trianon  company 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/820 
 Page 37 
 
 
  (equities, emerging country equities, bonds and r eal estate securities) and selects bodies to manage 
those assets.  The London branch of the US Bank Northern Trust  acts as custodian bank and monitors 
the operations of the management bodies.  The company MBS Capital Advice , based in Geneva, has 
monitored the performance of these manage rs since October 2010 (when it replaced Wyatt , in place 
until December 2009).  The Trianon  company is responsible for the general accounting of the Plan 
and prepares the financial statements. 
C. 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 dow n by its Regulations and Administrative Rules, 
referred to above. 
9. The pension contribution rate since 1 January 2010 stands at 23.7 per cent of the so-called 
"pensionable" remuneration13, 7.9 per cent of which is paid by the employees and 15.8 per cent by the 
Organization (Article 20 of the Regulations).  Retir ement may be taken by any staff member who has 
paid at least five years of contributions and has reached the "normal retirement age", set at 65 years 
(or 62 years for staff recruited before 2010 and 60 years for staff who began working in the GATT or 
the WTO before 1990).  The amount of the retirement be nefit is established by reference to the "final 
average remuneration (FAR)" constituted by the 36 months of highest pensionable remuneration 
within the last five years of the staff member's career;  it is obtained by multiplying the first 30 years 
of contributory service by 2 per cent of the FAR and the subsequent years (up to a maximum of ten years) by 1 per cent of the FAR (Article 23 of the Regulations). 
10. The benefit may be commuted, "at the request of the participant, into a lump sum not 
exceeding one third of the actuarial equivalent of the benefit or the amount of the participant's own 
contributions, whichever is the larger " (Article 23 of the Regulations).  This option is used frequently 
by staff members at the time of retirement. 
11. An early retirement benefit may be claimed during the five years preceding the normal 
retirement age:  it is reduced by 3 per cent during the years preceding that age;  the rate of reduction is 
lowered to 1 per cent if the participant has completed at least 30 years of contributory service 
(Article 24 of the Regulations). 
12. The Plan is still young and faces no risk of fi nancial imbalance in the short term:  at 
31 December 2010, it only had 186
14 retirees, compared to 733 contributors.  It has just raised the 
retirement age for new staff and the pension contributi on rate in order to absorb the actuarial deficit 
noted by the actuary to the Plan between the actuari al value of its long-term liabilities and that of its 
assets. 
__________  
 
                                                      
13 The "pensionable" remuneration is the net salary of the staff member increased by a coefficient 
(which differs according to th e amount of the salary concerned) and is calculated on the basis of the Geneva tax 
rate.  This increase is intended to offset the fact that retirees, unlike serving WTO st aff, are subject to income 
tax. 
14 Including nine retirees whose deferred pe nsions will begin to be paid after 2010.