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CERN Pension Fund Governance Restructure: Key Decisions and Structure Overview

This document outlines the background and key decisions leading to the new governance structure of the CERN Pension Fund. It covers the developments from 2004 to 2007, including the establishment of the new Governing Board and the roles of various entities involved. The main decisions taken by the CERN Council in June 2007 regarding governance, funding policy, and organizational responsibilities are highlighted. The composition and mandates of the Governing Board and Investment Committee are detailed, along with the roles they play in managing the Fund's assets and ensuring financial sustainability for pension obligations. The document emphasizes the importance of transparency, professionalism, and clear guidelines in overseeing the Fund's operations.

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CERN Pension Fund Governance Restructure: Key Decisions and Structure Overview

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  1. Pension FundNew Governance Structure

  2. Contents • Background • Main decisions - CERN Council / June 2007 • New Governing Board • Next steps

  3. Background • 2004-2005: OSNES I (5 Council Delegates; nobody from PFGB) • Review chairman election process and PFGB terms of office • Council decides 6-year limit on PFGB mandates • Council decides PFGB Chairman always a Council Delegate • 2005: OSNES II (5 Council Delegates; 3 PFGB members; 1 ESO) • Review whole Pension Fund Governance structure • Proposal (agreed by everyone in the OSNES II WG) • Diverging views expressed (by Council Delegates, by CERN DG) • Council asks 3 independent experts for advice • Sept 06: experts report submitted to Council • Alternative governance structure outlined • Council endorses Panel’s recommendations • Council appoints OSNES III to draft proposals

  4. Background • 2006: OSNES III (4 Council delegates + 1 ESO) • PFGB members want to participate -> rejected • Staff Association asks to participate -> rejected too • Proposals submitted to CERN Council in December • Strike at CERN to oppose to the OSNES III report • New WG “Levaux” decided by Council

  5. “Levaux” Working Group F. Bello S. Lettow P. Levaux, chairman P. Williams F. Ferrini CERN Council PFGB ESO Council CERN Management • 9 members: • 1 observer from the Pensioners • with the help of CERN Services (Legal , Translation) J.A. Schneider Ph. Lambert E. Allaert D. Duret Experts ESO Staff Assoc. CERN Staff Assoc.

  6. Main decisions - CERN Council / June 2007 • Reaffirmation of the roles of CERN Council • Regulator • Supreme authority • Sponsor • The Fund remains under the sole legal framework of the Organization (CERN) • CERN Council remains the ultimate authority • The management of the Fund is delegated to an executive structure, separate from the CERN Management

  7. Main decisions - CERN Council / June 2007 • Clarification of roles/responsibility/line of reporting of each of the organs of the Fund • The GBPF reports directly to the CERN Council • The CERN DG has no responsibility as far as governance is concerned, but: • If the proposals may have a direct impact on the staff policy, the Council shall instruct the DG to elaborate concerted concrete proposals (SCC, TREF loops, …) • If the proposals have a direct impact on the budget of the Organisation, the Council shall consult the DG before any decision • ESO to be consulted as described in the agreement between CERN and ESO

  8. Main decisions - CERN Council / June 2007 • Funding Policy to be established • must be clearly defined and incorporated into the Rules and regulations of the Fund • must define the funding ratio, the Fund’s objective being to reach and maintain this ratio • must define the mechanisms and duration of the recovery period to reach these objectives in case of underfunding • must reinforce the guarantees in the event of dissolution of the Organisation or withdrawal of one of the Member States

  9. Main decisions - CERN Council / June 2007 • A smaller GBPF • 10 members instead of 20 • The professional character of the bodies of the Fund is reinforced • 2 experts in the GBPF (with voting rights) • 2 experts in the Investment Committee • A code of conduct for the members of the GBPF

  10. Governing Board: Composition • 10 members and 10 alternates • 2 members appointed by Council • of which the President • 1 representative ESO DG • 1 ESO Council/DG, 1 ESO Staff Association • 2 appointed by CERN Management • 4 directly-elected members • 1 appointed by the Staff Association • 1 appointed by CERN and ESO Pensioners Association (CEPA) • 2 experts (with voting rights) • 2 Vice-presidents, 1 “employer”, 1 “employee” • General Manager (ex-officio)   1 2 new new 1 

  11. Governing Board: Mandate • Entrusted by Council with responsibility for overseeing the operation of the Fund • Secure and maintain the actuarial balance of the Fund in order to meet the Organisations’s pension obligations to the members and beneficiaries • Define the Funding Policy, incl. risk level

  12. Investment Committee : Composition minimum 6 members • Maximum 8 members • 1 member appointed by CERN Council • 2 “employer” members of GBPF • 2 “employee” members of GBPF • Administrator ex-officio • External Professional Experts appointed by GBPF • President chosen from among the members of the GBPF • 2 members of GBPF, with expertise in investment policy and practice • 1 member from Investment Unit (without right to vote) • GBPF may widen the composition if necessary without right to vote 2 

  13. Investment Committee: Mandate • Advises GBPF on investment matters • Draws up an annual investment plan • Defines tactical investment • Supervises performance of Fund managers • Reports to GBPF new

  14. The New Governing Board F. Ferrini, chairman Ph. Lambert S. Lettow D. Duret G. Deroma D.-O. Riska J.A. Schneider F. Derie F.Wittgenstein K. Van Riel

  15. Next steps • Appointment of the Vice-president (for approval by CERN Council in December) • Definition of the Funding Policy and decision on SAA • Code of Conduct • Appointment of the General Manager • Appointment to the Investment Committee • Actuarial review: proposals to CERN Council • Indexation of pensions for 2008-2010 • Increase of Contributions ? • And make the new governance structure a success

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