United Nations | Pension360

Auditor Asks Questions About $200 Million of Missing Money From UN Pension Fund For Afghanistan Police

According to U.S. auditors, more than $200 million is “missing” from the United Nations’ Afghanistan Law and Order Trust Fund (LOFTA), a fund used to pay the salaries and pensions of the Afghanistan police force.

The Special Inspector General for Afghanistan Reconstruction authored a letter, released Monday, questioning whether the fund’s money was the subject of widespread “fraud”. From the Fiscal Times:

U.S. auditors are once again sounding the alarm on the UN Development Program for not being able to account for more than $200 million from the Afghanistan Law and Order Trust Fund known as LOFTA.

In a new letter released Monday, Special Inspector General for Afghanistan Reconstruction John Sopko warns Pentagon officials of the growing concerns of fraud and abuse within the program.

Sopko’s letter paints a disturbing picture of hundreds of millions of dollars going out the door—paying for inflated police salaries, potential “ghost employees” and questionable “deductions” to the Afghan Ministry of Interior.

The IG said he had requested the UN agency describe “how it has accounted for up to $200 million in “deductions” that the Afghan Ministry of Interior may have taken from the salaries” of police employees who are paid with the LOFTA funds.

The agency, however, could not answer Sopko’s question.

In another instance, a previous probe identified more than 4,579 improper payroll payments from the fund made between December of 2012 and 2013—totaling approximately $40 million.

Last year, the Defense Department’s Inspector General found that the Afghan Ministry of Interior “could not account for $17.4 million in pension withholdings and $9.9 million in cooperative fund withholdings” according to SIGAR.

The U.S. is particularly concerned because it contributed much of the money that is disappearing. From MSNBC:

The U.S. and other nations have donated more than $3 billion to the Law and Order Trust Fund for Afghanistan, the fund that pays the nation’s police force. Helen Clark, the UNDP administrator, has argued that it is not the agency’s job to conduct oversight of some of the programs administered through the trust fund.

The ANP has struggled to battle corruption in its ranks, and for several months last winter, officers were not paid due to what Afghan officials told The New York Times was simply an administrative issue.

The latest move by the Inspector General to get information about how reconstruction money is being spent shows again how much money has disappeared over the 13 years of war and attempts at reconstruction. Last month, another SIGAR inquiry looked at $6.5 million wasted on constructing communications towers despite ample evidence that the towers were a bad idea.

Click here to read the entire letter from the Special Inspector General.

United Nations: Increased Pension Coverage Key To Future Global Development

The International Labour Organization (ILO), a UN agency, released a report yesterday warning that 48 percent of the world’s population didn’t have access to a retirement benefit of any kind in 2013.

The report, titled Social Protection for older persons: Key policy trends and statistics, said that retirement benefits make “good economic sense” and aid global economic development—but many countries are cutting back on benefits due to austerity measures. From the United Nations:

According to ILO, although more than 45 countries have reached 90 per cent pension coverage and more than 20 developing countries have achieved or nearly achieved universal pension coverage, the trend of fiscal consolidation spurred by austerity has led to a contraction in social protection for older persons with consequent adjustments.

These include cuts in health and other social services, the reduction of benefits and increase in contribution rates and the raising of the retirement age.

“These adjustments are undermining the adequacy of pension and welfare systems and reducing their ability to prevent poverty in old age,” Ms. Ortiz noted.

“The long-term liabilities of austerity take time to show up. Depressed household income levels are leading to lower domestic consumption and slowing down economic recovery. It is alarming that future pensioners will receive lower pensions in at least 14 European countries by 2050,” she added.

Meanwhile, a handful of countries have expanded pension coverage dramatically in recent years. From the UN:

At the same time, a number of countries have registered positive trends in their social protection systems. China, Lesotho, Thailand, Timor-Leste, and Tunisia, for instance, have experienced what the ILO described as “remarkable successes” in the reach of their coverage with gains ranging from 25 to more than 70 per cent of the population.

Pointing to China, in particular, Ms. Ortiz observed that the country had achieved nearly universal coverage of pensions and increased wages while other countries, such as Argentina, Bolivia, Chile, Hungary, Kazakhstan, and Poland, were reversing the earlier privatization of their pension systems as they were too expensive and had not expanded coverage.

“Public social security systems with strong social protection floors are essential for economic recovery, inclusive development and social justice, and therefore must be an integral part of the post-2015 development agenda,” concluded Ms. Ortiz, referring to the new development agenda that will succeed the landmark Millennium Development Goals (MDGs), set to expire in 2015.

Read the full report here.

United Nations Appoints New Officer To Head Pension Investments

The United Nations has hired a new top investment officer to manage the investments of its $54 billion pension fund. The position — officially titled Representative of the Secretary-General for Investments — will be manned by Carol Boykin, who has worked on the investment staff of numerous public pension funds over the last two decades. From Ai-CIO:

As representative of the secretary-general for investments—a role created in March—Carol Boykin will be responsible for overall asset management strategy, policy, and oversight.

She has spent the last several years as president of Bolton Partners Investment Consulting, an independent Baltimore-based benefits practice.

Boykin served as CIO of the Maryland State Retirement and Pension System from 1999 through 2003, before leaving abruptly. She had come to the then-$25.2 billion public fund from Lucent Technologies, where she spent two years as deputy CIO.

She began her career in 1995 at the New York State Teachers’ Retirement System, where she spent three and half years as a securities investment officer.

The UN’s defined benefit fund has a highly complex governance structure and is entirely internally managed.

Carol Boykin’s biography from Bolton Partners’ website reads:

Ms. Boykin is a CFA charterholder, and she is a member of CFA Institute. She is a past president of the Baltimore CFA Society, and she currently serves on their Advisory Board. She holds a Master of Science in Finance from Loyola University Maryland and a Bachelor of Arts in Economics from Emory University.

According to Chief Investment Officer magazine, the United Nations was actively looking to hire a woman or minority to lead the pension fund’s investments.