UN pension fund incurs $13 billion loss in 2022

Despite a challenging year, the UNJSPF rebounds with over half of the losses reclaimed by July

UN pension fund incurs $13 billion loss in 2022

The United Nations Joint Staff Pension Fund (UNJSPF) recorded a 14.7% decrease in market value during 2022, resulting in a loss exceeding $13 billion. The fund's annual report highlighted its value dwindling from $91.5 billion in 2021 to $77.9 billion by the end of 2022. 

However, a positive turn of events unfolded as the pension fund managed to recuperate a significant portion of its losses, marking its value at $85.5 billion by July 20. Pedro Guazo, the overseer of the fund's investments, shared this update during the pension fund's 75th session. 

The asset allocation of the UNJSPF was divided as follows by the end of 2022: 50.63% in public equities, 28.73% in fixed income, 9.19% in real estate, 8.33% in private equity, 2.65% in cash and cash equivalents, and 0.47% in real assets. 

Every four years, the pension fund undergoes an asset liability management assessment, conducted by an external consultant. This evaluation aims to forecast the sustainability of the current contribution rate and the future solvency metrics. The study also delves into present and alternative asset distributions and evaluates the expected achievement of the assumed investment return over the long term. 

The results of this study guide the UNJSPF's investment strategy through its office of investment management. Furthermore, the board utilizes these insights to understand potential adjustments to the pension plan's structure and to anticipate forthcoming demographic trends. 

The latest asset-liability management study, disclosed during the recent pension board session that concluded on July 31 in London, took into account various scenarios for the future, incorporating the potential impact of climate risk. In a scenario of moderate growth and a suitable asset distribution, the UNJSPF predicts that the required contribution rate will remain between 21.7% and 25.7% of pensionable remuneration, without necessitating a change in the contribution rate. 

The study also factored in the repercussions of a financial crisis stemming from the world's failure to transition to net zero carbon emissions. The analysis indicated that such a scenario could pose more significant challenges for the fund. As a result, the fund plans to closely monitor the long-term effects of climate risk

The pension board intends to submit the report from its 75th session to the United Nations General Assembly in the upcoming weeks. The comprehensive report is scheduled for publication in the next month.