1. How much is the CERN Pension Fund deficit today?
or 80 MCHF/year !!!
How much is the CERN Pension Fund
deficit today?
Action de decembre: Dorothee invitee au Conseil restreint de mars.
Reste a eclaircir si invitation systematique
220000CHF, c’est 90CHF/pers/jour

2. If our capitalised fund was balanced …
CERN
contribution
Return on investment
Staff
contribution
100% ON
75% ON
50% ON
5% par an de rendement en moyenne sur 20 ans
25% ON
Pension Fund Assets 0% ON
Paid pensions
Staff meetings / March 2010

3. but our pension fund is not balanced
CERN
contribution
Return on investment
Staff
contribution
+40M CHF/y
+80M CHF/y
100%
OFF
DEFICIT OF
2 000 MCHF
75%
OFF
The deficit is self-fuelling!
65%
50% ON
- 80M CHF/year
CAPITAL OF
3 700 MCHF
25% ON
Pension Fund Assets 0% ON
Conclusion
Imbalance means the CERN contribution goes up in smoke !!!
Paid pensions
Staff meetings / March 2010

4. Downward spiral: and year after year...
CERN
contribution
Return on investment
Staff
contribution
100%
OFF
75%
OFF
65%
65%
50%
OFF ON
How old will you be in 2038 ?
Self-fuelling
25%
OFF ON
Self-fuelling
Pension Fund Assets 0% ON
OFF
Self-fuelling
The Actuary has concluded:
“the Fund will run out of money by 2038”
Paid pensions
Staff meetings / March 2010

5. Will the return on investment save us?
CERN
contribution
Return on investment
Staff
contribution
100%
OFF
Return on investment
Funding Ratio 5%
10%
5 coins
10 coins
100%
3 coins
6 coins
60%
75%
OFF
50% ON
25% ON
Pension Fund Assets 0% ON
Example of the year 2009:
An exceptional return (~10%) has only permitted to stabilize the deficit !!!
WilI the return on investment save us in the long term: no !
Paid pensions
Staff meetings / March 2010

6. For pensioners and staff recruited before 1987
Deficit mainly due to some Council decisions taken in the past
Contribution: staff have always paid what they have been asked to !
Benefits: CERN Council decided to setup a mechanism of under-indexation
for : pensions reduced by up to 8% !
CERN
contribution
Origin
Actuarial
Review
Missing contributions (estimation 2007)
Guarantee of resources (3,5% net yield)
1986
517 MCHF
No reduction factors/early departures
1988
350 MCHF
Delay CERN increase 1983 measures
1998
181 MCHF
Return on investment
Staff
contribution
100%
OFF
75%
OFF
50% ON
25% ON
Pension Fund Assets 0% ON
Origin of deficit: a few CERN Council decisions
1976: suppression of guarantee of resources
: suppression of reduction factors for early departures
: delay increase in contributions (from 21% to 30%)
Paid pensions
Staff meetings / March 2010

7. For staff recruited from 1987 ~80% of current staff members
CERN
contribution
Return on investment
Staff
contribution
100% ON
75% ON
For staff recruited from 1987, the system is balanced:
our level of contribution is sufficient for funding our future pensions
Why?
Contribution: level of contribution has been constantly high
Benefits: CERN Council decided to introduce a reduction factor to our pensions between the ages of 60 (by -30%) and 64 (by -7%)
50% ON
25% ON
Pension Fund Assets 0% ON
Paid pensions
Staff meetings / March 2010

8. Many countries have problems with their pension system
“Pay-as-you-go” scheme
Return on investment
Employer
contribution
Staff
contribution
Main differences with capitalized fund:
active staff pay for pensioners
no return on investment
Very sensitive to demographic variations
Currently in a worse financial situation
Paid pensions
Many CERN Council Delegations think with this model in mind... along with the current corrective measures in vogue in many countries, but at CERN...
the problem is very different: capitalized (and not “pay as you go”) scheme
Staff meetings / March 2010

9. Deficit: what has CERN done since 2004?
So many studies!
In 2004:
deficit of 254 MCHF
CERN Council has requested six studies/working groups since 2004.
Delaying tactics, but no financial effort by CERN to tackle the deficit ...
CERN is burying its head in the sand!
Staff meetings / March 2010

10. And yet ... Reminder: obligation of CERN Deficit
to guarantee benefits regardless of funding situation
derived from its Status of International Organization
CERN has two roles: Employer + State
CERN has its own social security system
Deficit
Its existence has been known by Council for a long time
Can be mostly explained by past decisions by Council
Since 2004, Council has shown no real intention to make up this deficit
In 2005, Council increased contributions (CERN+STAFF) by only 0,51% instead of 3%
CERN has abused its dual role as “Employer + State”
Employer: it has decided on various elements of a staff policy
State: it has not compensated the Pension Fund for the cost of these elements of staff policy
CERN qui garantit et non pas, comme l’a dit le DG, les Etats-membres
Staff meetings / March 2010

11. What is CERN doing now? December 2009 Council meeting
No official communication to staff and pensioners!!!
Was the PFGB White paper (WP) on full funding examined?
Set up (another!) Advisory Committee with
3 CERN/ESO Council delegates
1 CERN Management representative as secretary
but no representative of the staff/pensioners!!!
(Part of) mandate of this committee:
Prepare the DG for future negotiations with the staff
Since 1st January 2010
Advisory Committee has already met twice
Staff Association has met the new President of CERN Council
“Desire to proceed quickly: new measures on 1st January 2011”
“Measures involving all parties”
Presence DG a ce stade: en contradiction avec la nouvelle gouvernance decidee par le Conseil lui-meme en 2007 !
Staff meetings / March 2010

12. Our opinion should resign from his position in the PFGB
To not attract the attention of the staff:
“dormez, je le veux”
Council does not like WP conclusions
Concertation process not conducted
in good faith
Staff Council has decided that the Staff Association President:
should resign from his position in the PFGB
to be free from his duty of discretion
to be able to fully defend the rights of all the beneficiaries
Council wishes to depart from the conclusions of the White Paper
Staff meetings / March 2010

13. Reminder White Paper: how to absorb the deficit?
+114 MCHF/year
+0 MCHF/year
Staff meetings / March 2010

14. Reminder White Paper: Pension Fund Governing Board
PFGB (CERN/ESO Council, CERN Management, Pensioners, CERN/ESO Staff, Experts):
Recognizes CERN’s responsibility in the face of this deficit of MCHF
STAFF:
+5 MCHF
But CERN Council wants to change this ratio
CERN/MS:
+109 MCHF
Effort porte sur le Conseil du CERN
Staff meetings / March 2010

15. Is the ratio in the White Paper fair?
What have been the financial efforts to deal with the deficit of the Fund so far:
by the employees:
Staff recruited from 1987
In 1986, CERN Council decided to reduce our pensions between the ages of 60 (by -30%) and 64 (by -7%)
Staff recruited before current pensioners included
In 2005, CERN Council decided to implement a mechanism of under- indexation for : pensions reduced by up to 8%
by the employer:
CERN: peanuts !
In 2005, 2/3 of 0,51% (instead of 3%) increase in contributions
Is the ratio in the White Paper fair?
Obviously, because up to now to tackle the deficit:
no substantial financial effort has been agreed on by CERN
efforts have already been agreed on by the “employee” college
Staff meetings / March 2010

16. Advisory committee without staff representatives?
Tripartism scorned!
What should we be afraid of?
Our contributions will rocket
Our benefits will be attacked (regardless of our acquired rights ???)
Recent evolution in other IO
EPO: from defined-benefit to defined-contribution scheme
ESA: contributions (Org.-Staff ratio from 67%-33% to 60%-40%)
We thought we had guarantees?
The case of EUTELSAT - Feb.2010: nothing but doubts
Autres Org, souvent meme delegues… memes idees!
Defined contribution: impossible de dire ce que sera votre pension. Vous avez ce que vous cotisez, mais pas ce que vous toucherez: risque sur les epaules du staff
En cas de dissolution du CERN, CERN PF transforme en une fondation de droit CH, caisse mise en equilibre
Staff meetings / March 2010

17. Why act now: what is the cost of doing nothing?
CERN Council’s apathy could continue: the Fund would be empty in 2038
CERN Council will impose a new major effort
on active staff (never mind the fact that 4/5 of the staff joined CERN after 1987)
by asking them to contribute more
by reducing benefits
increased temptation to attack our acquired rights
on beneficiaries
by raising the current ceiling of 8% of under-indexation of pensions
5YR-2010 (salaries, CHIS): an opportunity given to trample over our rights
Staff: a cost to be reduced and no longer a resource to be managed
Etats-Membres pas d’accord entre eux: ceux qui veulent faire et ceux qui ne veulent rien faire.
Staff meetings / March 2010

18. Why act now: the stakes linked to the deficit of 2000MCHF
Staff recruited from 1987 ~ 4/5 of current active staff
Deficit: it is not for us to pay the bill!
We must make this clear before we are asked to pay
If nothing is done to make up this deficit
An empty fund in We would be the main victims!
Staff recruited before current pensioners included
Mechanism of under-indexation for
If this measure compensates for a contribution deficit, this means that CERN must pay its share (twice the amount)!
Staff meetings / March 2010

19. Why act now?
For our pensions, there is no better guarantee than a properly capitalized Fund!
1st step: petition in March “2 000 MCHF deficit, that’s enough!”
We cannot let the deficit grow even more!
We therefore ask CERN, as a conservative measure, to financially compensate any loss beyond the current deficit of MCHF
The best way to test whether CERN Council truly wants to stop burying its head in the sand
CERN budget for 2011 voted in June 2010: it’s time for action !
2nd step (later): CERN Council must assume its responsibilities and inject the money it has not injected in the past
Staff meetings / March 2010

20. In short 1/2
Pension Fund: MCHF deficit is growing by 80 MCHF/year
Imbalance means the CERN contribution goes up in smoke !
The Fund will run out of money by 2038 !!!
The return on investment WILL NOT save us in the long term
114 MCHF/year are needed to restore the balance in 30 years
PFGB recognizes CERN’s responsibility in the face of this deficit by proposing a ratio: CERN/MS: +109 MCHF / STAFF: +5 MCHF
This ratio by PFGB is fair when considering that:
substantial efforts have already been agreed on by the “employee” college
no substantial effort has been agreed on by CERN
Main origin of deficit: CERN has not compensated the Pension Fund for the cost of some elements of staff policy it decided on in the past
Staff meetings / March 2010

21. In short 2/2
But Council wishes to depart from the conclusions of the PFGB
Advisory committee without staff representatives:
concertation process not conducted in good faith !!!
Delegations will come with their own solutions:
many Delegates think with the “pay as you go” scheme in mind (and not capitalized scheme) ... along with the current corrective measures in vogue in many countries
as in other International Organizations: ESA, EPO
staff: a cost to be reduced and no longer a resource to be managed
Staff must react now because:
Attacks against our interests will come: contribution, benefits, acquired rights
It is not up to 4/5 staff to pay the bill !
In 2010: 5YR/CHIS dossier
18 March: Gathering of Pensioners and Staff
Petition: “2 000 MCHF deficit, that’s enough!”
Conservative measure:
ask CERN to financially compensate any loss beyond MCHF
should represent 80 MCHF of the 114 MCHF/year needed
Staff meetings / March 2010

22. Appeal to the staff and pensioners
How much is the CERN Pension fund deficit today?
click here
Appeal to the staff and pensioners
2 000 MCHF deficit, that’s enough!
Let us join forces!
Thursday 18th March
Staff Meetings - March 2010