UN Retirees Common Cause Appeal Hearing

UN Retirees Common Cause Appeal HearingCommon Cause Appeal by UN Retirees submitted in August/ September 2009, Case # UNAT 2009-001. Revisited in February 2010. Case due for hearing 15 March – 1 April 2010 in Geneva.

Introduction:

Since the submission of our Common Cause Appeal (plus Addendum) to the newly constituted UN Appeals Tribunal (case # UNAT 2009-001) by end September 2009, and its sharing with concerned retirees through the courtesy of  The UN Post, UN Justice and UN Pensioner India; in the following months. As of the date of this post,  there have been over 1,730 views, and growing, of our articles in The UN Post:

1. UN Common Cause Appeal 3. Cause for Celebration, Letter to UN Retirees
2. Letter to UN Retirees on Common Cause 4. Letter VI to UN Retirees

It is safe to assume that a significant number of viewers are either UN retirees or concerned citizens. There have been many emails expressing appreciation of the novel transparent approach, taking advantage of the technology through borderless communication portals to share with those who may be impacted by development in the UNJSPF’s thinking mindset.

Relevant Articles of UN Charter and UDHR:

A significant number of retiree-emails wanted to know the relevant articles etc. of the UN Charter and Universal Declaration of Human Rights that give equal and fair treatment to all including retirees. In response to these requests we now revisit and share some of the relevant details submitted earlier in May 2009 to the Standing Committee of the UNJSPF and later on highlighted in the common cause appeal submitted in August/September 2009 to the UNAT/New York.

UN Charter – Chapter IX – Article 55 – International Economic & Social Cooperation: universal respect for, and observance of, human rights and fundamental freedoms for all without distinction as to race, sex, language, or religion.

In the context of the supremacy of the Universal Declaration of Human Rights (UHDR), we give below extracts of different provisions of this important piece of “legislation”. UDHR is indeed a world legislation having been universally ratified and came into operation, with individual member states enacting supportive legislation for national implementation and monitoring.

Article 10 of UDHR: the universal right to full equality to a fair …hearing by an independent and impartial tribunal… This is being denied to the 1/3 lump sum seekers because of the existing in-house UNJSPF mechanism for dispute-resolution, which cannot be seen as “independent and impartial tribunal”.

For example, the consideration of the individualised appeals (from many retirees) in May 2009 to the Standing Committee of the UNJSPB, took place in July 2009 WITHOUT any opportunity to any of the appellants for oral hearing and submission of their arguments. In contrast, UN Disputes Tribunal allows presence of appellants/counsels and oral hearing while reviewing the case.

Article 19 of UDHR:  this article assures freedom to seek and receive…  information… through any media and regardless of frontiers…

We consider this right as invaluable to receive prompt, correct and truthful information regarding the basis, philosophy and justification, if any, for the life-time denial of full pension for 1/3 lump sum recipients in the context of pension fund reforms in many civil service pension systems that consider pension for old people as “valuable right” and treat all pensioners with equity and fairness.

Article 22 of UDHR: this article provides for… social security and its realization through national efforts and international cooperation… in accordance with the organization and resources… indispensable for his dignity and the free development…

Here again, for many in the developing world, UN pension is often the main or probably the only source of income for social security and dignified living.  Denial of full-pension even after the recovery of all the 1/3 lump sum + interest, in the context of rising costs and in the absence of any other social safety net,  cannot be seen (by any stretch of imagination) as being  fair and equal in the treatment of all pensioner with dignity…equity and fairness.. or based on natural justice.

Article 25 of UDHR: this article confers the right to a standard of living adequate for the health and well-being of him/herself and of his/her family… including safety/security net to take care of circumstances beyond control…

If these are indeed fundamental human rights enshrined in the UN governance, how can anyone justify the denial of a significant part of UN pension even after its full recovery during the commutation period?

Article 28 of UDHR: this article guarantees a social and international order in which the rights and freedoms set forth in the UDHR can be fully realized.

In the context of what has been pointed out above, can UNJSPF management declare, in good conscience,  that it is abiding by the UDHR in the treatment of its pensioners, especially those of 1/3 lump sum recipients even after the full recovery of the 1/3 lump sum payments.

In these circumstances, we believe that it is already time for an enlightened organization like UN/UNJSPF to review its rules, regulations, procedures and working methods, especially after 60 years during which time many fault lines would have been exposed, and make sure these are in full accordance with the fundamental values enshrined in the UN Charter and UDHR, so that all UN Pensioners are treated with equity, fairness and based on natural justice.

Examples:

Also, some of the retirees want to see examples of financial calculations to explain the lump sum being recovered through reduced pensioners life time. Here is an example, prepared by a retiree in respect of his own pension.

Example I – A former pensioner’s simple calculation of loss incurred by opting for 1/3 Lump sum vs. full pension

UN Pension One-third option appears beneficial device for the Pension Fund. How?

Commuting one-third of our pension appears “valuable” (tempting) especially by many nationals and of developing countries where life expectancy is not that attractive and several immediate commitments waiting to be taken care of upon retirement. As such, we find UN pensioners in India have, by and large, opted for one-third commutations.

But, given the life-styles (affording a good diet, a reasonably good house, regular health-check-ups and taking corrective action when necessary) that we have enjoyed as UN employees, we find, and there are definite indications among our members that confirm that we can expect to live an above average life.

With better life expectancy, however, we become LOSERS in case we had availed of the “one-third” option. How?

A colleague (M.L. Sharma of UNICEF) had done some research about the loss that we thus incur. He has calculated that the Pension Fund has already realized much more than what they had paid him by way of a lump-sum amount of 1/3rd of his commuted pension. He retired on 31 December 1982 and received a lump-sum of US $ 73,451. The chart below shows that in 11 years time up to December 1993, ML has fully paid back (in fact a little more) what he had received from the Pension Fund as the “commuted” amount representing 1/3rd of his pension. Thereafter, January 1994 onwards, for the rest of his life he has to be content with the reduced pension deprived of the 1/3rd portion. This shall remain a recurring loss, but whatever the loss be, we wish him well and a long life.

From To Monthly 2/3 pension 1/3 loss X months Total Loss
1/83 3/84 937 468×15 7,020
4/84 3/86 1,001 500×24 12,000
4/86 3/88 1,040 520×24 12,480
4/88 3/89 1,099 550×12 6,600
4/89 3/90 1,147 574×12 6,888
4/90 3/91 1,201 600×12 7,200
4/91 3/92 1,274 637×12 7,644
4/92 12/93 1,314 657×21 13,797
Total Loss (1)
$ 73,629

Against US $73,451 received by commutation, by 12/93 I had lost a total of US $73,629.

My loss is further multiplying since January 1994:

From To Monthly 2/3 pension 1/3 loss X months Total Loss
1/94 3/94 1,314 657×3 1,971
4/94 3/96 1,388 694×24 16,656
4/96 3/97 1,463 731×12 8,772
4/97 12/97 1,512 756×9 6,804
Total Loss (2)
$ 34,203

The chart shows that in 11 years the Pension Fund has fully recovered rather a little more than what they had paid by way of 1/3 commuted pension

Combined Total Loss up to December 1997, (1+2) above 107,832
1/3rd received on retirement in January 1983 – 73,451
Net loss up to 12/97 $ 34,381

Notes:

  1. The above table is based on reality check, i.e. the lump sum having been used up for family resettlement and other immediate social/family obligations, hence Not available/used for any investment purposes.
  2. Based on UNJSPF making, say, an average monthly investment of $600 (representing 1/3 portion recovered from pensioner’s standard pension) for the same period (1983 – 1997: 180 months) – with an interest rate of 4% adjusted for inflation of 2% per annum – will result as follows:
    • Final maturity value at the end of 180 months:     $ 170,570
    • Inflation adjusted value of the same amount:       $ 126,400

Thus, by approving the 1/3 lump sum of $73,451 in January 1983, and using 1/3 monthly reduction in standard pension for recurring investment, UNJSPF has gained significantly.

Example II – Comparison of lump sum against current value based on inflation index (US)

Assumptions:  Lump Sum received in 1995 based on 13 years annuity value period:   $2000 x 12 x 13 = $ 312,000.

Lump sum takes into account the interest receivable to UNJSPF as this lump sum paid in advance vs. entitlement payable monthly as normal standard pension being reduced to 2/3 of standard pension.

Monthly pay back to UNJSPF by way of reduced pension = $ 2,000 (for ever, as per current practice).

As per North American inflation index for the period 1995 – 2008, (156 months) the value of $ 312,000 in 1995 would be costing currently (2008) $ 436,700.

Against this, UNJSPF investing $2,000 monthly basis (i.e. money recovered from the pensioner based on pension reduction) at 4.0% interest and allowing 2% inflation would result in a return in 2008 of $464,070.

This would seem that UNJSPF would be entitled a maturity value of $464,070, thus gaining $ 464,070 minus $436,700 (current value of lump sum as above) = $ 27,370 in terms of current (2008) value for the same period (156 months).

Explained differently, inflation adjusted buying power of $464,070 would be currently $357,900, which is again more than $45,900 against lump sum payment of $ 312,000.

Therefore, it would appear that UNJSPF would stand to gain even more when the pensioner lives beyond the actuarial age of life expectancy, with reduced pension continuing.

Example III – A Typical Case

This is somewhat a simple example to show the gain for UNJSPF by investing the monthly recovery of from a typical 1/3 Lump Sum recipient and the amount deposited in a recurring Savings Account for 13 years.

Initial Lump Sum recovery US$ 2,500
Monthly recovery US$ 2,500
Interest Rate 5%
Term of Recovery period 156 months or 13 years
RESULT
Total Amount recovered US$ 392,500
Interest Earned US$ 162,338
Final Earning US$ 554,838

Notes on Sustainability vis-a-vis Restoration of Full Pension after a Pre-Determined Commutation Period

  1. Given the above examples of UNJSPF gaining through lump sum payment and reduced pension for indefinite period, the required adjustments, if any, based on actuarial analysis be undertaken to implement full restoration of pension after pre-determined commutation period. Hypothetically, this adjustment may be accomplished in several ways, i.e. adjustment in contribution levels, factors used for lump sum calculation, pre-determined (not for life time) period  for the purpose of reduced pension payment, demographic differentiation in  actuarial age of life-expectancy, etc.
  2. UNJSPF, as a social security agency to fulfil the mandates of Universal Declaration of Human Rights (UDHR), should strive to treat all pensioners on the basis of equity and fairness, once the lump sum indebtedness of the pensioner remains fulfilled.  UNJSPF has an obligation to be seen to be operating as what UN Secretary General declared during a recent Human Rights Day (20 Dec 2008) that we can only honour the towering vision of that inspiring document (UDHR) when its principles are duly applied everywhere and for everyone.”
  3. In fulfilling the above UDHR obligation, UNJSPF secretariat and especially, its esteemed and knowledgeable CEO, should be advising the UN legislative bodies on the necessary changes, if any, in regard to policies/procedures to be implemented, i.e. to ensure sustainability and at the same time achieving the goals of equity and fairness enshrined in the UDHR. Neither the UNJSPF secretariat nor its CEO can or should abandon their primary responsibility of reviewing the archaic regulations/rules/procedures and bringing them in tune and harmony with UDHR, UN Charter and changing needs/times IN A TIMELY FASHION, and obtain legislative clearance, if and where necessary.
  4. In the case of (lump sum recipient) no Cost Of Living (COL) adjustment for the 1/3 portion is being made or paid for ever; UN retiree-national staff and whose pension in local currency adjusted on the basis of government official COL index for the reduced 2/3 pension only, do not reflect the actual market rate increases in their cost of living.  This is further exasperated in the case of GS staff receiving only a minimum stipulated pension payment.
  5. It is important that UN pension system be comparable to many enlightened civil service pension systems rather than private groups, and yet sustainable based on UDHR values.

V. Muthuswami (vm10022010)

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2 Replies to “UN Retirees Common Cause Appeal Hearing”

  1. Article 8 of UNAT Statute –  relate to oral hearing and presence of appellant (s) PLUS, as deem fit, attorneys/reps.Though the common cause appeal # UNAT 2009-001 filed in Aug/Sept 2009 requested for “oral” hearing of the case in public, we have not heard any specific news from the Registrar, except that the UNAT will consider the case in its next session (15 March – 1 April 2010). The public hearing is paramount because of the fundamental questions of equity, fairness and justice have been raised and these deemed presently flawed in the UNJSPF rules/procedures/practices.   We do not want to conduct our case and decision on our fate based on flawed regulations and in absentia. We hope and pray that the UNAT Judges consider our request for oral hearing in public for the sake of human justice and in respect to similar situation in other countries too.  Organising visa and travel to Schengan visa (for travel to Geneva) requires  many time-consuming procedures, proofs, etc. even for a good senior citizen (especially from developing countries) and it is therefore important for the UNAT Registry to advise the appellants on a timely basis without being reminded. Let reformed UN Justice open its eyes to human dignity and fairness! 

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