Departing UN Pension Chief Defends Returns at $62 Billion FundKambiz Foroohar and Bill Faries
Bulk of fund’s gains came in line with rising U.S. markets
UN General Assembly has broadly criticized management at fund
The departing head of investments at the United Nations’ $62 billion pension fund defended her tenure as the global body seeks to overhaul management under Secretary-General Antonio Guterres starting next year.
Carol Boykin said the UN Joint Staff Pension Fund has swelled by $10 billion since she took office in late 2014. That growth, much of it fueled during a market surge this year, has helped the fund overcome performance shortfalls in the 2015 and 2016 calendar years.
“I am very proud of the accomplishments of the fund over the past three years,” Boykin, the former chief investment officer of the Maryland State Retirement and Pension System, said via email. She cited the fund’s returns over that period, after adjusting for inflation, of about 4.6 percent, above its long-term target of 3.5 percent.
Boykin also singled out the fund’s efforts to boost its focus on socially-responsible investments, including climate change, under her management. She cited a “AAA” rating from the Asset Owners Disclosure Project, which maintains an index that ranks funds on their climate-risk management efforts. The AAA rating is up from a “D” the fund had when she arrived at the UN, Boykin said.
Nevertheless, the fund has come under criticism from the UN General Assembly and the organization’s employee union. Last month Guterres’s office said Boykin will be replaced by Sudhir Rajkumar, a top official at the World Bank Treasury. Boykin described that change, coming in Guterres’s first year as secretary-general, as “consistent with the UN’s change in administration.”
The General Assembly’s criticism, in a resolution passed in December 2016, focused on two issues: the pension fund’s performance, including $3.4 billion in foreign-exchange costs in the 2014-2015 period, and delays in making payments.
The payment delays were largely attributed to new benefits-management software installed in 2015. Thousands of new retirees, some of whom had to wait six months to receive payments, were enraged.
Criticism of the payment delays were largely directed at Sergio Arvizu, the fund’s chief executive officer who oversees benefits and operations. Arvizu was a target last year of the UN’s labor union over efforts to change management policies at the fund. In a 2015 letter to members, Arvizu said he was facing a “malicious campaign with gross misrepresentations.” The allegations triggered an internal investigation by the UN’s anti-corruption watchdog, which cleared Arvizu.