The importance of transfer, validation or restoration of contributory service when joining the United Nations Joint Staff Pension Fund (UNJSPF) and the eventual integration of the AMFIE Provident Savings Plan (PEP)

Within the U.N. System, the granting of programme appointments, indefinite appointments or indefinitely renewed fixed-term contracts has been gradually eroded since the turn of the century. Most newcomers are now recruited under contracts with little or no benefits beyond the salary. The granting of a type of employment with a full range of benefits has almost become a privilege and may take years. As a priority, those colleagues who will have survived these long stretches of contractual precariousness before reaching the holy grail, should be aware of the ways to wholly or partially make-up for the lost time with respect to their future pension.

The UNJSPF was established in 1949, by a resolution of the General Assembly (GA), to provide retirement, death, disability and related benefits for staff upon cessation of their services with the United Nations. The scheme was set up as a defined benefit pension plan where the Investment risk and investment rewards are assumed by the employer and not by the individual, consequently ensuring a benefit based upon the employee’s earnings history, contributory service and age. Unfortunately due to budget cuts and “managerial” considerations, the personnel policies of many organisations have been radically altered, resulting in the proliferation of so called “non-staff” contracts with little or no contributions to employees’ welfare benefits.

At the same time, in view of required qualifications and experience at the time of hiring, employees join the UNJSPF at a later stage in their working life, with consequent effects on their eventual benefits at retirement age. This is due to a shorter period of contributory service and slower career progression which are key to the calculation of a pension benefit.

When joining the UN, recruits are provided with information pertaining to the various elements of working in the UN but too often vital information might be overlooked. Sometimes the information gap is related to the participation in the UNJSPF.

This short article aims at increasing awareness of newly appointed and re-appointed staff of the possibility of transferring or purchasing contributory service. We will touch upon three important aspects : Transfer Agreements, Restoration and Validation.

As many are aware the rules and regulations of the UNJSPF foresee that staff join the Fund with a regular contract of six months or more OR upon completing 6 months of continuous service without an interruption of more than 30 days, whichever occurs first.

Transfer Agreements: 

In some cases, staff are brought onboard from other international organizations and perhaps they had been participating in some form of pension package, be it a provident fund or a pension plan. It is very important to enquire when transferring, if there is an agreement signed between the UNJSPF and the previous employer. As each agreement may vary, I would suggest that staff transferring from an International Organisation to the UN, enquire with both the releasing and the hiring employer if a transfer agreement has been signed. These  agreements are available on the UNJSPF’s web site. These agreements are also applicable when leaving the UNJSPF so well worth having a look. (https://www.unjspf.org/existing-transfer-agreements/)

PEP

If there is no Transfer agreement between the releasing and the receiving organisation, the PEP can serve as an independent solution. If asked to close your pension account with your organization, or for other reasons, you may contribute 100% of a lump sum received from the releasing IGO to your PEP, even if the PEP is set up after you have left the releasing organization, but no later than 12 months after contract end. *
*In some cases depending on acceptance of the PEP by the releasing IGO.

Whatever the IGO you are working with, as an independent complementary pension savings solution the PEP will follow you to your new job with no interruption in contributions.

Validation

What is perhaps less known is the possibility of validating for pension fund purposes. This option allows the staff member to retroactively pay contributions for period(s) of employment, prior to the date on which participation commenced. This usually applies to periods of short-term contracts of less than six months. There are nevertheless some requirements under article 23 of the UNJSPF rules and regulations that need to be met:

• Validation must be requested within 12 months of joining the UNJSPF.
• The prior period(s) of employment should not have been expressly excluded from participation in the Fund (e.g. Consultancy contracts)
• Participation commenced within 2 years after the end of prior non-contributory service.
• All eligible periods of prior employment must be validated.
• Participation has not been interrupted by a break of more than one year.

An important feature of validation is that, if approved, the employee will pay his contributions and the employer will pay its share. Validation is very interesting for staff working in organizations where short-term contracts are often interrupted by breaks over a long period of time.
Please also refer to the link (https://www.unjspf.org/documents/validation/)

PEP

If validation is not possible, start a PEP and choose higher monthly contributions to compensate for lost time. PEP is flexible; you can contribute up to 40% of your monthly salary (as well as a lump sum).

Restoration

A second important question the newcomer should ask when joining the UNJSPF is: have I ever contributed to the Fund previously and at that time did I withdraw my benefit? If so, the staff member may be entitled to re-purchase the period of contributory services, increasing his total number of years and months of contributions, and thus increase his future pension.

This is called Restoration and once again, it involves specific requirements which need to be observed. It is only available for those who elected to be paid a withdrawal settlement upon separation, or if separated prior to 01 April 2007, elected (or are deemed to have elected), a deferred retirement benefit, which has not yet been paid at the time of electing to restore. Staff must apply for restoration within 12 months from the date of re-entry into the Fund. 
Please also refer to the link (https://www.unjspf.org/documents/restoration)

PEP

If the restoration is not possible the lump sum from a previous IGO employer can be invested in the PEP.

As can be seen from above, there are possibilities of increasing contributory service and eventual retirement benefits upon joining the UNJSPF. For the three points above, requests need to be submitted in writing by completing the appropriate forms. Unfortunately, the text is often difficult to understand because of the “legal language”. My advice would be to request assistance from your local Staff Pension Committee or directly from the UNJSPF which also offers a very user friendly and updated web page with all the needed information.

If in doubt regarding your eligibility to apply, remember to ask and get a reply in writing. Transfer, validation and restoration are ways of increasing your contributory service and thus the eventual benefit payable upon separation, but they are complicated processes which require reactivity and concentration.

In the event where a transfer, validation or restoration of previous contributions is not possible, it may be worth while exploring the possibility of transferring funds to the AMFIE PEP in order to create an integrative pension plan should the UNJSPF benefit be insufficient.
Also, it is worthwhile noting that participation in the PEP can be continued once you leave the UN common system and is certainly a way of ensuring another source of income replacement at the time of retiring. However, specific rules on transferring these amounts also apply and one should seek guidance through the AMFIE Secretariat.

In the event where a transfer or restoration of previous contributions is not possible it may be worth while exploring the possibility of transferring funds to the AMFIE PEP in order to create an integrative pension plan.

Validation is very attractive and wherever it is possible you should seize the opportunity as not only your contribution is paid retroactively
but also the employer’s part. However, you cannot foresee, if validation will be possible in the future. Better be prepared and start a PEP independently as soon as you start working with an IGO.

Also it is worthwhile noting that participation in the PEP can be continued once you leave the UN common system and is certainly a way of ensuring another source of income replacement at the time of retiring. However, specific rules on transferring these amounts also apply and one should seek