The Fund has received queries from participants, retirees and beneficiaries about its stability during times of uncertainty. All clients can be assured that the Fund remains financially strong and that their UNJSPF benefits are secure. The following questions and answers have been compiled to explain the current position of the Fund. 

How would the Fund’s solvency be impacted if a large number of participants were to leave and no new participants joined?  

This is not expected to have a significant impact on the Fund’s solvency.  

The Fund formally appraises its solvency position through: 

• an actuarial valuation conducted every two years; and 
• an asset liability management (ALM) study conducted every four years, an in-depth analysis of its financial condition. 

Through these studies, the Fund considers multiple scenarios, including a scenario where the number of participants falls. The studies show that the Fund’s solvency is not particularly sensitive to changing participant numbers. This is because the Fund is not over-reliant on future contributions to fund the benefits already accrued.  

How likely is it that the Fund will still be able to pay my pension for the rest of my life? 

The ability for the Fund to pay benefits is the key priority for the Pension Board, which had previously stated that the “Fund has very low appetite for the risk of losing its long-term sustainability and not being able to meet its long-term financial commitments”¹. 

Based on the results of the last actuarial valuation (at 31 December 2023) and the 2023 ALM study, the Fund is confident that it will be able to pay all future benefits.   

What would happen if the Fund were not able to achieve the investment returns required to sustain it over the long term?  

The Fund has a number of mechanisms in place to monitor, measure and manage the future sustainability of the Fund over the long term (in excess of 30 years). A key tool is the regular ALM study that is usually carried out every four years. This allows the Fund to consider a range of scenarios and the optimal asset allocation to maximize investment returns with the desired level of risk. It is important to highlight that historically the Fund has consistently generated a real rate of return well above the rate used in the actuarial valuation. 

In the event that the Fund were to experience a number of years of actuarial valuations reporting a deficit, it would commission additional ALM studies to identify a course of action with the assets to manage this risk. 

What would be the impact of a large fall in the financial markets on the Fund’s solvency position? 

The Fund invests in a diversified portfolio of assets to maximize return within an acceptable level of risk. This inevitably means investing in assets that may experience fluctuations from time to time. However, the focus remains on investment returns over the long-term. The historical experience is that the Fund consistently delivers the minimum required rate of return, even after several crises throughout more than seven decades. 

If the Fund’s assets experience a downturn at the time of an actuarial valuation, it is possible that the reported solvency may be lower and may even exhibit a deficit at that point in time. Nevertheless, the Fund’s solvency is considered over a longer period of time and not just from the results of one actuarial valuation. Short term shocks do not affect the ability of the Fund to fulfill its commitments.