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PENSIONS: CRISIS! WE MUST TAKE ACTION!

PENSIONS: CRISIS! WE MUST TAKE ACTION!. Main auditorium 25 November 2005 – 2pm. Pensions: crisis meeting | Summary. Staff meeting: reminder Strike on 10 November: follow up Finance Committee: decisions & consequences Memo from the DG to the staff: our reply

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PENSIONS: CRISIS! WE MUST TAKE ACTION!

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  1. PENSIONS: CRISIS!WE MUST TAKE ACTION! Main auditorium 25 November 2005 – 2pm

  2. Pensions: crisis meeting|Summary • Staff meeting: reminder • Strike on 10 November: follow up • Finance Committee: decisions & consequences • Memo from the DG to the staff: our reply • CFO meetings in Departments: our position • And now? we must take action! Crisis meeting

  3. Staff meeting on 3 November | Reminder • Issue presented in detail • Package of measures elaborated by the GBPF: balanced! • Contribution rate of 33% from 2006: justified! • Preparation of Finance Committee meeting on 10 November: CCP, TREF, CCP « Manipulation » by DG and CFO! • Staff Council on 1.11.2005: unanimously votes for a strike warning Crisis meeting

  4. Crisis meeting

  5. Finance Committee 10 Nov| Proposal n°1 Finance Committee is invited to recommend the Council: a) to approve Recs.1 to 11 by the Governing Board (including Rec.5 for an immediate increase in contributions to the Pension Fund of 2pp for the Organization and 1pp for the active members); b) to increase MS contributions by 7 million Swiss francs per annum from 2006 to cover the 2pp increase in the Organization’s contributions to the Pension Fund; c) to examine the position of the Pension Fund in 2007 when all the following information has been collected: • a comparison with the other comparable European pension funds, which should be done in 2005; • the triennial actuarial review, which must be scheduled at the end of 2006 to be available in 2007; • a review of the current Rules and Regulations of the Pension Fund. Crisis meeting

  6. Finance Committee 10 Nov |Proposal n°1 • Result of the vote: In favour: Switzerland Abstention: Belgium, Spain, Italy • Clarification of the message from the SA: • SA Email: « As was expected, the Member States, in line with their statements at TREF, refused an increase in their contributions » • Question:  This is the first time I see the statement that the Member States refused an increase in their contributions • Reply: our message was imprecise, we should have specified « as from 2006 »  Fully in line withSA declaration at TREF and Finance Committee, asking for a timetable to be drawn up, with the aim of reaching an increase in contributions of 3% by 2012 at the latest. Crisis meeting

  7. Finance Committee 10 Nov| Proposal n°2 Finance Committee is invited to recommend the Council: a) to approve Recs. 1 to 4 and 6 to 11 by the Governing Board b) to approve a limited increase in the contributions of the Organization and active members to the PF, corresponding to a total of 0.63% of basic salary with effect from 1st January 2006 to be shared as follows: an increase in the Organization's contribution to the Pension Fund of 0.42% from 1st January 2006; an increase in the staff contribution of 0.21% with effect from 1st January 2006. c) to examine the position of the Pension Fund in 2007 when all the following information has been collected: a comparison with other comparable European pension funds, which should be done in 2006; the triennial actuarial review, which must be rescheduled for the end of 2006 to be available in 2007; a review of the current Rules and Regulations of the Pension Fund. This proposal implies that a decision on Rec. 5 by the Governing Board (i.e. 2 pp and 1 pp increase in contributions to the PF) is postponed Crisis meeting

  8. Finance Committee 10 Nov|Proposal n°2 • Result of the vote Against : Germany, Switzerland Abstention : Greece • SA declaration to the Finance Committee: • With this decision the Finance Committee has seriously compromised the possibility of restoring a healthy and constructive dialogue between the Staff Association and the Management. • The principle of mutual trust and loyalty which binds CERN to its staff has thus been damaged Crisis meeting

  9. Finance Committee 10 Nov|Reminder of GBPF package Crisis meeting

  10. Finance Committee 10 Nov|Reminder of GBPF package Actuarial estimation of funding ratio Crisis meeting

  11. Finance Committee 10 NovConsequences on the balance X X 0.17% 0.9% lacking 12.9% X X 1.7% 0.34% ? X X 1.7% Crisis meeting

  12. Finance Committee 10 NovConsequences on the balance Crisis meeting

  13. Email from the DG to the staff (3 Nov)| SA Reply • DG:« For a number of years, the CERN Pension Fund has exhibited a structural deficit - resulting from an increasing number of pensioners and a declining number of active staff - which could lead to long-term, albeit not immediate, difficulties for the payment of pensions. » Crisis meeting

  14. Email from the DG to the staff (3 Nov)| SA Reply • DG: « These proposals have been discussed, in accordance with the statutory procedures, at the Standing Concertation Committee and subsequently at TREF and have formed the basis of a joint text drawn up by the CERN Management which has received the approval of the staff representatives  » !!Article V 1.06 of the Staff Rules stipulates that « the prior consultation of the Governing Board of the Pension Fund is required in matters relating to benefits and contributions of the aforesaid Fund » DG Proposal GBPFProposal Crisis meeting

  15. Email from the DG to the staff (3 Nov)| SA Reply • DG: « These proposals have been discussed, in accordance with the statutory procedures, at the Standing Concertation Committee and subsequently at TREF and have formed the basis of a joint text drawn up by the CERN Management which has received the approval of the staff representatives. » • Proposal by the Management to Finance Committee on 10 November (CERN/FC/4993) « les augmentations ne pourraient prendre effet qu’à compter de 2012 » !!Agreement on the text drafted by A.J. Naudi (CCP on 18 October) « ces augmentations ne pourront être mises en application qu’en 2012 » Crisis meeting

  16. Email from the DG to the staff (3 Nov)| SAReply • DG: «  These proposals have been discussed, in accordance with the statutory procedures, at the Standing Concertation Committee and subsequently at TREF and have formed the basis of a joint text drawn up by the CERN Management which has received the approval of the staff representatives. » !!SA declaration & white paper at TREF on 19-20 October: « In order to arrive at a consensus in TREF, we are ready to show flexibility as far as the implementation of recommendation n°5 is concerned, on the condition that : • a time schedule is adopted, with the aim to increase the contributions by the staff and the Organization in stages, to reach 1 and 2 % respectively, at the latest on1st January 2012, • the consequences on the reestablishment of the balance are evaluated, and • compensatorymeasures are examined and proposed by the Governing Board of the Pension Fund. » Crisis meeting

  17. Email from the DG to the staff (3 Nov)|SA Reply • DG: «  It is those very representatives who are now requesting you to take part in a concerted work stoppage, on grounds that have not been made explicit. If these grounds relate to a new requirement for a guarantee that the measures proposed by the Governing Board will be applied in 2012, such a long-term commitment cannot reasonably be made. » !!SA: !!Schedule already requested at CCP and TREF in October !!Council has already implemented an increase in contributions according to a similar schedule (CERN/CC/1815/Rev. Dec. 1990): Crisis meeting

  18. Email from the DG to the staff (3 Nov) | SA Reply Wrong! Wrong! Wrong! Wrong! Wrong! Wrong! • Capitalized fund has budgetized fund problems • Statutory procedures respected • Agreement of staff representatives at CCP • Agreement of staff representatives at TREF • New demand to guarantee application by 2012 • Commitment for 2012 cannot be reasonably made Crisis meeting

  19. Email from the DG to the staff (3 Nov)| SA Reply • DG:« However, the complementary studies mentioned above could lead to other proposals and solutions to the Fund’s difficulties in 2007 » !!SA: • DG proposes further studies in the hope that: • economic factors of tomorrow will mask the structural problems of today • that the comparisons (we do not know how they will be carried out),willjustify the need to reduce pensions Crisis meeting

  20. CFO meetings in the Departments | SA Position • CFO: 30.37% + debt to the Fund = 46% of basic salary • 30.37% = contributions Organization + Staff! • Beginning 1980: debt instead of partial budgetization proposed by the Management • CFO: impossible to increase the debt • Report by the Pension Fund Working Group presented to FC and Council in June 1990 (CERN/CC/1815): «Recommends to approve a Debt, as long as its amount remains a reasonable proportion of the Fund’s assets ( ≈ 25%) » Today we are at 12% This recommendation was unanimously approved by the members of the working group (of which A.J. Naudi) with the exception of the Staff Association representative. Crisis meeting

  21. CFO meetings in the Departments | SA Position • CFO: internal taxation on pensions = the solution! • Implementation would take years • Other uses would be necessary: • Reimbursement of the debt • In the event of a dissolution of the Organization: • Indexation of pensions • Calculation of indexation in a closed Fund scenario • Health insurance (employer contribution) • In the event of a surplus: • Reduction in contributions • Gain in purchasing power for pensioners Crisis meeting

  22. We must take action! (1/3)|Letter to CERN Council • Interpretation by the Swiss Federal Authorities of Article 21 of the Agreement on 11 June 1955 with CERN concerning the legal status of the Organization in Switzerland • « At CERN, it is the duty of the Organization and its employees tojointly fix the benefits of the Pension Fund, as well as the contributions of the employers and employees. »(CH Ambassador) « The level and share of contributions should not be fixed unilaterally by the Organization » (CERN/CC/1815) • « It is above all important to ensure the long-term financialequilibriumof the CERN Pension Fund, so that its statutory and contractual obligations towards its members can be guaranteedat all times » (CH Ambassador)  Letter to CERN Council delegations Crisis meeting

  23. We must take action! (1/3)| Letter to CERN Council We deeply regret the climate of misunderstanding, mainly with the Management whose good faith can be questioned, which prevailed throughout the whole process of discussion of the Pension Fund Equilibration Measures devised by the Pension Fund Governing Board. We equally deplore the procedural irregularities which flawed the process. However, in looking for a way forward that would preserve the legitimate interests of the staff while taking into account those of the Organization, our attention has very recently focused on the Swiss Government’s interpretation of the concept of "equivalent social protection" contained in Art. 21 of the CERN’s Host Agreement with Switzerland, which had been requested by CERN Council and the CERN Pension Fund. In his letter dated 13 June 1989, the Representative of Switzerland, HE Ambassador Andres stated on behalf of his authorities that on the basis of the Host State Agreement, the Host State must see that the international officials working on its territory dispose of an adequate social security. He confirms that such an adequate social security exists in CERN through the existence of the Pension Fund. Crisis meeting

  24. We must take action! (1/3)|Letter to CERN Council He continues by saying that at CERN it is incumbent on the Organization and its employees to jointly determine the benefits provided by the Pension Fund, as well as the contributions of employers and employees thereto. He concludes his letter by mentioning the importance to ensure the long-term financial balance of the Pension Fund so that its statutory and contractual obligations towards its members are guaranteed at all times. This interpretation by the Swiss authorities was duly acknowledged and accepted by CERN. The equilibration of the Pension Fund is of such importance to the active staff, the retired staff, and the Organization that, in our opinion, one should seize every opportunity to try to arrive at a solution which can be accepted by all parties. Once equilibration measures are taken, much will remain to be done (the overall review of the Rules of the Fund in particular) to further improve the situation of the Fund. Crisis meeting

  25. We must take action! (1/3)|Letter to CERN Council Even though a review of benefits is always a difficult and hazardous exercise, the Staff Association is ready to fully play its role in such an endeavour and, once again, be a reasonable and constructive partner, sparing no effort to try to arrive at a solution which would preserve the legitimate interests of all parties. We do not doubt that such is also your approach and that, on the present occasion, you will act in line with the above interpretation of Art. 21 of the Host Agreement with Switzerland so as to arrive at a solution which can be accepted by staff and Organization alike. We are, of course, at the disposal of the President of Council, the Chairman of Finance Committee, the Delegates and the Director-General to further discuss the ways and means by which the above course of action could be implemented. Crisis meeting

  26. We must take action! (2/3)|Legal action at the ILOAT • Appeals: against the decision not to adjust pensions in 2005 (0% instead of +1.7%) • Further appeals filed against all decisions disputed by us: For example, decisions which cost the Pension Fund and are directly attributable to CERN Council Crisis meeting

  27. We must take action! (3/3)|Action Pensioners & Active staff • Pensioners GAC: day of action on 30 November • Active staff: the time for action has come! To show that the balance of our Pension Fund is, in our eyes, as important as the progress of the Laboratory’s activities Let’s change our priorities for one day! Let’s take leave on Wednesday 30 November! Crisis meeting

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