text: Reduced cost-of-1iving adjustment ofbenefitsinpayment andofdeferred retirement benefits. 20.Thetablesinparagraphs 15and16aboveshowthattheimprovement inthe ..actuarial balance oftheFundhasbeenbrought aboutlargely because ofthemeasures takenbytheGeneral Assembly inrecentyearsontherecommendation ofthePension Board. Thesemeasures havecomprised economies andtheinfusion ofadditional resources. Theeconomy measures havereduced theimbalance by4.28percentofpensionable remuneration, asfollows: Useofhigherdiscount ratesfor lump-sum commutation0.39 Othereconomy measures 21.Theinfusion ofadditional resources hasreduced theactuarial imbalance by1.27percent,ofwhich0.75percentrelates totheincrease intherateofcontribution effective 1January 1984(including 0.25percentpaidbytheparticipants), and0.52totheabolition ofrefunds totheorganizations underformerarticle 26oftheRegulations oftheFund.&1 22.Sothatanassessment couldalsobemadeoftheposition oftheFundonacurrent, ratherthanaprojected basis,theconsulting actuary calculated theactuarial valueofaccrued benefits onthevaluation date.ThisvaluerepresentstheamountofassetsthattheFundwouldhavetohaveonhandinordertomeetitspresent obligations. Theseobligations consist of:(a)thecontinuation oftheexistinq pensions payable tocurrent pensioners andbeneficiaries, and(b)theestablishment ofthenecessary resarve tomeetbenefit payments onbehalfofpresent activeparticipants ontheassumption thattheywouldterminate employmentonthevaluation date.TheFund'sliability fortheseaccrued benefits willbeverymuchinfluenced bytherateofinterest usedtodiscount futurebenefitpayments tothevaluation dateandbytherateatwhichpensions willbeassumed to increase afteraward(ifasystemofadjustment ofpensions continues. toexistindefinitely). Assuming arateofinterest of9percentandinflation of6percentayear(i.e.asinthe"regular valuation"), theconsulting actuary'scalculations indicate thattheFundisfullyfundedifnoprovision ismadefor.increases inbenefits afteraward;ifitisassumed thatbenefits willcontinue tobeadjusted afteraward,theFund'sassetsasatthevaluation datewereequalto56.1percentofitsliabilities. Boththesefunding ratiosarebetterthantheonesrevealed bythevaluation asat31December 1982. -8-23.Onthebasisofitsanalysis oftheresults oftheactuarial valuation asat 31December 1984,theBoardconcluded that,sUbject totheobservations in paragraph 18above,theFundisnowinamuchimproved actuarial position andthat, conseauently, thereiscurrently noneedforfurther changes inthebenefit system orthepension adjustment systemofthekindmadeinrecentyears. B.Investments oftheFund 1.Management oftheinvestments 24.TheBoardreviewed theinvestments oftheFundonthebasisofareportand accompanying statistical datapresented bytherepresentatives ofthe Secretary-General. Thereportdescribed theprevailing economic andmarket conditions andtheinvestment returns achieved duringthe12monthsto 31March1985.TheBoardalsoheardstatements bytherepresentatives ofthe Secretary-General andmembers oftheInvestments Committee whoattended theBoard meeting andre~ponded toauestions fromBoardmembers. 25.ThemarketvalueoftheFund's aS~ctsasat31March1985was$3,926million, $329million morethanayearearlier. Theinvestment returnwascalculated, as before, usingthestandard methodwhichincluded income·frominterest anddividend payments, aswellasrealized profits, andalsoaccounted forunrealized profits andlossesduetomarketfluctuationa. Thereturnfortheyearended31March1985 was8.1percent.Thatcompared withthetotalreturns overafive-year periodas follows: Yearended31March Percentage return 1985. 8.09 1984 13.01 1983 27.05 1982 7.85 1981 26.60 26.TheBoardnotedthefluctuations oftheresults fromoneyeartothenext, whichwerereflections otshort-term marketconditions andcurrency movements. The dataprovided inthereportillustrated that,inviewofthelong-term objectives oftheFund,investment returns shouldbeassessed overlongerperiods ratherthan onthebasisofshort~term trends, whichwereoftenmisleading andtherefore might obscure anunderlying long-term positive ornegative trend. Theaverage annual return, beforeadjustment forinflation, overthepast five-yea~ periodhadbeen 12.6percent,overthepast10years9.5percentandoverthepast25years 6.9percent. 27.Historically, eauities hadgenerated ,betterreturns thanbonds,whichwasthe reasonwhytheportfolio had had aweighting of50to60percentforequity securities. Asat31March1985,54percentoftheportfolio waseauity investmentsJ 33percentbondinvestments and10percentreal-estate-related investments; short-term cashequivalents accounted for3percentoftheassets. -9-Although thelong-term guideline rangesfortheweighting ofthecomponents inthe portfolio hadnotbeenaltered, thecomposition oftheportfolio waschanging continually, reflecting thejudgement oftheSecretary-General andtheInvestments Committee astochanging economic, marketandcurrency trends.
analysis: The text appears to be discussing the financial management and actuarial valuation of a pension fund, including the investment returns and actuarial balance of the fund. It does not seem to be related to any specific sector or industry, but rather focuses on the financial aspects of the fund.