FC  108/16

Finance Committee

Table of Contents

I. Executive Summary

II. International Civil Service Commission (ICSC)

A. United Nations Common System

III. United Nations Joint Staff Pension Board (UNJSPB)

IV. Changes in salary scales and allowances

A. Professional and Higher categories

B. general service category

II. International Civil Service Commission (ICSC)

A. UNITED NATIONS COMMON SYSTEM

Review of the pay and benefits system

3. The ICSC, at its fifty-eighth session held in Paris from 29 March to 16 April 2004, having taken into account the views expressed by the Member States at the fifty-eight session of the General Assembly, decided to continue its consideration of the allowances and benefits within the framework of its review of the pay and benefits system and fixed the following schedule:

The Commission took the following decisions with regard to:

a) Mobility and hardship allowance

4. The Commission decided to request its secretariat to further develop two approaches which would delink the mobility and hardship scheme from the annual adjustment procedure applied to the base/floor salary scale. The two approaches were:

1. The establishment of a flat amount for each level of hardship identified in the scheme, i.e. from B to E;
2. The establishment of a percentage amount related to each staff member’s base/floor salary.

5. With regard to either approach, the Commission decided that a regular review cycle would be appropriate to adjust the amount of the payment. It requested its secretariat to provide the cost implications of each of the proposed approaches.

b) Education grant

6. The Commission decided to request its secretariat to convene a working group consisting of representatives of the organizations and staff, with a view to further developing the proposals for a review of the methodology to determine the level of the education grant, in particular the lump sum approach and other measures that may be necessary to ensure a streamlined operation of the grant, bearing in mind the views expressed by the Commission, and to report on the group’s finding to the Commission at its fifty-ninth session.

c) Implementation of the pilot study on broadbanding/reward for contribution

7. The ICSC in reviewing the progress made in the implementation of the pilot study on broadbanding/reward for contribution decided that:

1. For the duration of the pilot study each broad band would have two salary ranges, one for staff with dependants and one for staff without dependants. Staff would be placed into either the single or dependency range based on their current status and at their current salary. The staff member would progress through the salary band on the basis of performance, competency development and client feedback;
2. For the purpose of the pilot study, the minima and maxima of the base/floor salary scale in effect would be used to establish the new salary bands;
3. Performance award amounts could be granted during the pilot study in salary increments of base pay or in the form of non-pensionable lump sum amounts for staff who had reached the maximum of their band to maintain cost neutrality, etc;
4. For the purpose of the pilot study, a promotion increase from one band to the next higher band should result in an increase from 3 to 6 per cent of net base salary but not less than the amount necessary to bring the individual to the minimum of the next higher band;
5. To avoid “salary creep”, where all staff in a band progress to the maximum salary, the following alternatives should be further developed with the volunteer organizations for application in the pilot study:
1. Setting performance objectives to reflect the responsibilities of the job;
2. Setting salary control points to slow down the progression through the band;
6. The exact percentages for the weighting of the factors (results achievement, competency development and client feedback) should be decided in consultation between the ICSC secretariat and the volunteer organizations with results achievement receiving the greatest weight.

8. With regard to the baseline data required to evaluate the pilot study the Commission further decided that:

1. Workforce data, results of attitude surveys and ranking distributions under current appraisal systems should be in hand before the commencement of the pilot study on 1 July 2004;

2. To the extent possible, client feedback mechanisms and competency development linked to development plans should be in place before the commencement of the pilot study on 1 July 2004; however, further development after commencement should not delay the initiation of the study;
3. Control groups will be established for the testing programme, preferably within the volunteer organization;
4. The participating group of staff in the pilot study should be selected by the volunteer organizations after consultations with the ICSC secretariat;

9. With regard to the project work plan and project manager the Commission decided that:

1. The work plan for each volunteer organization should be developed in line with the established work plan that should be used as a template for each volunteer organization;
2. The duration of the pilot study, as shown in the work plan, will initially be limited to a three-year period, subject to the Commission’s decision on an extension, if any;
3. A project manager with demonstrated expertise in successful implementation of the reforms such as pay for performance and broad banding should be brought on-board as soon as possible;
4. The organizations participating in the pilot study will be limited to those identified and approved by the Commission at its fifth-eighth session, namely WFP, IFAD, UNAIDS and UNDP.

Conditions of service of staff in the Professional and higher categories:

d) Review of the level of the children’s and secondary dependant’s allowances

10. The Commission decided to recommend to the General Assembly that:

1. Starting from the current review, the amounts of children’s and secondary dependant’s allowance should be determined on the basis of the value of tax abatements and social security payments in the countries of the eight headquarters duty stations, including Spain;

2. That the current levels of the children’s and secondary dependant’s allowances should remain unchanged;

3. The current list of duty stations where the allowances are payable in local currencies be maintained for the time being pending a review of the methodology to determine the dependency allowances;

4. Dependency allowances payable to eligible common system staff be reduced by the amount of any direct payments received from Governments in respect of dependants.

Conditions of service of General Service and other locally recruited staff

e) Hazard pay for locally recruited staff
 

11. The Commission decided that the level of hazard pay granted to locally recruited staff should be increased to 25 per cent of the midpoint of the local salary scale and that the decision would be implemented with effect from 1 June 2004.

Conditions of service applicable to both categories of staff

f) Paternity leave

12. The Commission decided, in the light of existing provisions developed individually by organizations for paternity leave and the statements from organizations, that the cost of the entitlement was negligible and that its application had no effect on operational capacity; and in consideration of the need to maintain good staffing/management relations, decided that:

1. A duration of up to four weeks paid leave for paternity purposes should be granted to staff at headquarters and family duty stations and up to eight weeks for staff at non-family duty stations or in exceptional circumstances such as inadequate medical facilities at the duty station, complications in the pregnancy, death of the mother etc;
2. The provisions outlined at para. 12(a) above should supersede existing paternity leave arrangements in organizations;
3. The provisions for adoption leave should not be subsumed under the provisions for paternity leave;
4. Administrative details covering the management of paternity leave (e.g. the maximum number of leave entitlements) should be determined at the level of the organizations.

g) Statistical review of gender balance in the organizations

13. The Commission expressed disappointment that the rate of advancement of women had slowed down over recent years and that only limited progress had been made in organizations of the United Nations common system in terms of gender advancement. It requested its secretariat to provide a report on further progress at its sixty-second session in 2006, including information on the representation of women by region as well as organizations’ gender plans and their development, implementation and effectiveness.

Review of the pensionable remuneration

14. The Commission decided to propose to the Board the establishment of a joint working group for review of pensionable remuneration, consisting of staff drawn from the two secretariats (ICSC and UNJSPF) and the following time schedule:

• Fall and winter 2004/2005. Joint working group prepares documentation to be considered at Commission’s session;
• Spring and summer 2005. Commission reviews documentation presented to it;
• Summer 2006. Commission and Board jointly submit their recommendations to go forward to the General Assembly.

15. The Commission also decided to address the following issues during its upcoming review of pensionable remuneration:

1. The relationship of the common scale of staff assessment to the tax regimes applicable at the headquarters duty stations;
2. The adjustment of the pensionable remuneration scale between comprehensive reviews;
3. The relationship of the common scale of staff assessment to the pensionable remuneration levels for professional and general service staff, including an analysis of income inversion, and the consequent pensions of both categories of staff;
4. An analysis of the concept of income replacement as it relates to the calculation methodology for pensionable remuneration, particularly in the context of taxes applicable to retirees and those applicable to employees and the weighted average contributory service used in the grossing-up factor;
5. A comparison between United States pensions and income replacement values and those of the United Nations, including an actuarial comparison of the United States CSRS and FERS schemes vis-à-vis the Pension Fund scheme as well as a “cost to employer” approach;
6. The relationship of the continuing pay and benefits review and relevant pension issues.

III. United Nations Joint Staff Pension Board (UNJSPB)

16. The UNJSPB will hold its 52nd session in July 2004 in Montreal, Canada. At this session the Board will fulfil its obligation under article 14 of the Pension Fund Regulations to report to the UN General Assembly on the operations of the Fund at least once every two years. The Board will consider the results of the latest actuarial valuation of the Fund as at 31 December 2003 as well as a number of items that are required under the Fund's Regulations and Rules or in accordance with established practice of the Board. These items include the report of the Medical Consultant; the report of the Representative of the Secretary-General on the management of the Fund's investments; financial statements and audit reports; administrative expenses; the Emergency Fund; election of the Standing Committee; and the date and place of the meeting of the Standing Committee in 2005 and the Board session in 2006.

17. Important additional items to be considered at the Board session in 2004 include a progress report on the implementation of the Management Charter; the report of the Working Group on the size and composition of the Board and of the Standing Committee; proposals for review of the benefit provisions of the UNJSPF, in particular the possible purchase of additional years of contributory service and adjustment of pensions after awards. There will also be an experience review of the provisions in the Regulations dealing with divorced spouses.

18. The relevant information arising from this meeting will be subject of an oral briefing to the Committee.

IV. Changes in salary scales and allowances

A. PROFESSIONAL AND HIGHER CATEGORIES

Post Adjustment Matters

19. The following levels for the Rome post adjustment classification, showing the fluctuations of the post adjustment multiplier relative to changes in the rate of exchange were announced by the International Civil Service Commission (ICSC) from July 2003 to June 2004. Changes in the multiplier were for the most part due to currency fluctuation only.

TABLE I

B. GENERAL SERVICE CATEGORY

Interim Adjustment

20. In accordance with the procedures for interim adjustment approved by the Council at its Eighty-Sixth session², it is foreseen that a 2.5 per cent net increase in salaries of the General Service staff in Rome will become due effective 1 November 2004.

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¹ Index of cost-of-living for international officials in Rome. Please note that the index has been re-based effective 1 October 2000, date of the last cost-of-living survey

² CL 82/REP, para. 186-187;

CL 86/REP, para. 160(b)