 RESTRICTED  
  
WT/L/1064  
 
8 July 2019 
(19-4462) Page: 1/18 
General Council  
23-24 July 2019  
 Original: English  
 
  
WTO PENSION PLAN  
 
REPORT OF THE INDEPE NDENT EXTERNAL AUDIT OR ON THE AUDIT OF THE FINANCIAL 
STATEMENTS OF THE WO RLD TRADE ORGANIZATI ON PENSION PLAN (WTO PP) 
FOR THE YEAR ENDED 3 1 DECEMBER  2018  
 
 
The Report of the Independent External Auditor  on the Audit of  the Financial Statements of the WTO 
Pension Plan for 2018  is attached.  The Report include s 13 pages plus an Annex "List of 
Recommendations".  
 
_______________  
 
 
 WT/L/ 1064 
 
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Page 1 / 13  
 REPORT OF THE INDEPENDENT EXTERNAL AUDITOR  
 
ON THE AUDIT OF THE FINANCIAL STATEMENTS  
OF THE WORLD TRADE ORGANIZATION  
PENSION PLAN (WTOPP)  
FOR  THE YEAR ENDED 31 DECEMBER 2018  
Chapter  
 Title  Paragraph/s  
1 Executive Summary  1 - 9 
2 Scope and Approach of the Audit  10 - 16 
2.1 Scope of the Audit  10 - 13 
2.2 Audit Objective and Approach  14 - 15 
2.3 Audit Conclusion  16 
3 Comments / Audit Findings  17 - 53 
3.1 General Overview  17 - 27 
3.2 Investment Policy and Breakdown of  
Assets  28 – 32 
3.3 Gains and Losses  33 – 37 
3.4 Commission Fees  38 - 40 
3.5 Withholding Taxes  41 - 48 
3.6 Administrative Costs  49 - 52 
3.7 Internal Auditor’s Comment  53 
4 Acknowledgement  54 
 Annex / List of Recommendations    WT/L/ 1064  
  
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Page 2 / 13  
 1 Executive Summary   
My team and I have 
audited the financial 
statements of the WTO 
Pension Plan.  1. My team and I have audited the financial statements of the World 
Trade Organization (hereinafter “WTO”) Pension Plan for the financial 
period from 1  January to 31  December  2018.  
Responsibility of 
Management  2. The Management Board of the WTO Pension Plan i s responsible for 
preparing the financial statements in accordance with the Financial 
Regulations of the Plan.  
Responsibility of the 
External Auditor  3. My responsibility is to express an opinion on these financial 
statements based on my audit.  
Scope of the audit  4. The audit included the examination of evidence supporting the 
amounts and disclosures in the financial statements. It also included an 
assessment of the underlying accounting principles and significant 
estimates made by the Management Board.  
I conducted my audit 
in conformity with the 
International 
Standards on Auditing.  5. I conducted my audit in conformity with the International Standards 
on Auditing (ISAs) as adopted and amended by the International 
Organization of Supreme Audit Institutions (INTOSAI) and issued as 
International Standards for Supreme Audit Institutions (ISSAI). These 
standards oblige me to comply with ethical requirements and to plan    
and carry out the audit to obtain reasonable assurance that the financial 
statements are fr ee from material misstatement.  
The financial 
statements present 
fairly the financial 
position.  6. As a result of my audit, I am of the opinion that the financial 
statements present fairly, in all material respects, the financial position 
as of 31  December  2018.  
I placed an unqualified 
opinion on the 
financial statements.  7. The audit revealed no weaknesses or errors which I considered 
material to the accuracy, completeness and validity of the financial 
statements as a whole. I have placed an unqualified audit  opinion on     
the financial statements of the WTO Pension Plan for the year ended 
31 December  2018.  
Areas covered by this 
report  8. My report includes observations and recommendations intended to 
contribute to the improvement of financial management. For 2018, my 
audit work has mainly covered the areas described in the following 
paragraphs.  
Acknowledgement  9. I wish to convey my appreciation for the cooperation and assistance 
extended by the Management Board, Management and staff of the 
Secretariat. I am ver y grateful for their assistance during the entire 
external audit process.  WT/L/ 1064 
 
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Page 3 / 13 
 2 Scope and Approach of the Audit  
2.1 Scope of the Audit  
Principles governing 
my audit  10. My staff and I have audited the financial statements of the WTO 
Pension Plan for the financial period from 1  January to 
31 December  2018. We also examined the related financial accounts  
and transactions in WTO Headquarters in Geneva as well as in  the 
offices of the contracted accounting company - TRIANON - at        
Renens/Lausanne for supporting documents.  
Responsibility of 
Management  11. The Management Board of the WTO Pension Plan is responsible 
for the preparation and fair presentation of these f inancial statements in 
accordance with the Financial Regulations of the Plan, and with such 
internal controls as Management determines are necessary to permit the 
preparation of financial statements that are free from material 
misstatement, whether due to fraud or error.   WT/L/ 1064  
  
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Page 4 / 13 
 Responsibility of the 
External Auditor  12. My objectives are to obtain reasonable assurance as to whether the 
financial statements as a whole are free from material           
misstatements, whether due to fraud or error, and to issue an audito r’s 
report with audit opinion. Reasonable assurance is a high level of 
assurance, but is not a guarantee that an audit conducted in accordance 
with ISAs will always detect each and every material misstatement. 
Misstatements can arise from fraud or error an d are considered material 
if, individually or in the aggregate, they could reasonably be expected    
to influence the economic decisions of users taken on the basis of these 
financial statements.  
As part of an audit in accordance with ISAs, I exercise profe ssional 
judgement and maintain professional scepticism throughout the audit.  
I also:  
• identify and assess the risks of material misstatement of the 
financial statements, whether due to fraud or error, design and 
perform audit procedures responsive to those risks, and obtain 
audit evidence that is sufficient and appropriate to provide a    
basis for our opinion. The risk of not detecting a material 
misstatement resulting from fraud is higher than for one    
resulting from error, as fraud may involve collusion, forgery, 
intentional omissions, misrepresentations, or the override of 
internal con trol;  
• obtain an understanding of internal control relevant to the audit    
in order to design audit procedures that are appropriate in the 
circumstances, but not for the purpose of expressing an opinion 
on the effectiveness of the WTO Pension Plan’s intern al control;  
• evaluate the appropriateness of underlying accounting policies  
and the reasonableness of accounting estimates and related 
disclosures made by Management;  
• evaluate the overall presentation, structure and content of the 
financial statements, in cluding the disclosures, and whether the 
financial statements represent the underlying transactions and 
events in conformity with the principles of fair presentation.  
My team communicated with those charged with governance the planned 
scope and timing of the audit and significant audit findings, including 
any significant deficiencies in internal control that we identify during our 
audit.  
Audit of the financial 
statements  13. The financial statements of the WTO Pension Plan, together with 
my audit report and the audit opinion, were discussed with the 
Management Board. The Board took note of the contents of my report.  
 
 
 WT/L/ 1064 
 
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2.2 Audit Objective and Approach  
Objective of financial 
audit:  
Forming the audit 
opinion  14. The objective of the audit was to enable me to form an opinion        
on whether the expenditures recorded for the year had been incurred for 
the purposes approved, whether expenses were properly categorized    
and recorded in accordance with Financial Regulations; and whether     
the financial statements present fairly the f inancial position as of 
31 December  2018.  
Testing convinced me 
of the correctness of 
the financial 
statements.  15. My audit opinion is based on the testing of transactions recorded   
in the financial statements. The examination was carried out to ensure 
that the financial statements accurately reflect the accounting records 
and present fairly the financial situation of the WTO Pension Plan.  
 
2.3 Audit Conclusion  
I found no material 
weaknesses. I placed 
an unqualified opinion 
on the financial 
statements.  16. Notwithstanding the observations in this report, my examination 
revealed no weaknesses or errors which I considered material to the 
accuracy, completeness and validity of the financial statements as a 
whole. In accordance with normal practice, my team reporte d    
additional findings to the Management of the Secretariat in the course  
of the audit. I have placed an unqualified audit opinion on the financial 
statements of the WTO Pension Plan for the year ended 
31 December  2018.  
  WT/L/ 1064  
  
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Page 6 / 13  
 3 Comments / Audit Findings  
3.1 General Overview of the Plan’s Financial Situation  
The result of income 
over expenditure as at 
31 December  2018 is 
a loss of 
CHF  31.3 million.  17. The Income and Expenditure Statement shows a loss (result of 
income over expenditure) of CHF  31.3 million as at 31  December  2018 
(2017: CHF 61.0  million), thus a decrease of CHF  92.3 million.  
This is a result of significant losses on securities of CHF  34.2 million 
and losses on currency revaluation of CHF 0.268 million in 2018. The 
total income decreased to CHF  -3.6 million1 (2017: CHF  90.3 million), 
a decrease of CHF  93.9 million.  
However, income from contributions slightly increased to 
CHF  30.1 million (+ CHF  1.1 million). The regular contributions by   
the organization and by participants amounted to CHF  28.7 million       
(2017: CHF 28.6  million).  
Periodic benefits in 
2018: 
CHF  22.3 million.  
 
 
 
 18. Benefits paid out consisted of periodic benefits and to taled 
CHF  22.3 million in 2018; this amount included benefits for retirement 
of CHF  13.1 million (58.74  per cent), early retirement benefits of 
CHF  7.0 million (31.40 per cent), disability benefits of CHF  1.4 million 
(6.28 per cent) and surviving spouse an d child benefits of CHF 0.8 
million (3.58 per cent).   
Lump sum benefits in 
2018:  
CHF 3.4 million.  19. In addition, the WTO Pension Plan paid out lump sum benefits 
amounting to CHF  3.4 million in 2018, mostly for commutations 
(CHF  2.4 million) and withdrawal settlements (CHF 0.8 million).  
Total expenditure 
decreased to 
CHF  27.7 million.  20. Total expenditure (except losses on securities and currency 
revaluation) in 2018 decreased to CHF  27.7 million (2017: 
CHF  29.3 million) and was almost covered by the contribut ions 
(2018:  CHF  30.1 million).  
Negative interests 
totalled CHF  96,631 
in 2018.   21. CHF  96,631 (2017: CHF  106,247) losses on investment incurred 
due to negative credit interests, owing to the policy of the Swiss   
National Bank (SNB). Negative interests coul d be reduced in 2018 by 
lower cash balances.   
Administrative 
expenses slightly 
decreased to 
CHF  836,280.  22. Investment and other administrative expenses decreased to a       
total of CHF  836,280 (2017: CHF  840,662).  
Securities decreased 
by CHF  34.2 million.  23. Total assets decreased from CHF  596.2  million (as at 
31 December  2017) to CHF  564.8  million (as at 31  December  2018), 
mainly due to the decrease in securities by CHF  34.2 million.  
As at 
31 December  2018, 
the Plan served 369 
beneficiaries.  24. As at 31  December  2018, the Plan served 369 beneficiaries and 
accounted for 702 active participants.  
 
                                                
1 Total income of CHF  30.82 9 million netted by losses on securities CHF 34.195 million and currency 
revaluation CHF  0.268 million.  WT/L/ 1064 
 
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Page 7 / 13  
  25. These 369 beneficiaries comprise 164 retirees (44.44  per cent),   
119 persons who took early retirement (32.25  per cent), 25    
beneficiaries of deferred retirements (6.78  per cent), 18 beneficiaries of 
survivor’s pensions (4.88  per cent), 20 children of beneficiaries and 
orphans (5.42  per cent), and 23 persons receiving partial or total 
disability benefits (6.23  per cent).  
Audit findings and 
recommendations.  26. The following paragraphs contain audit findings and 
recommendations and provide further background information.  
Actuarial rate o f 
return:  -6.56 per cent.  27. The actuarial rate of return on investment, net of inflation           
(- 6.56 per cent) was negative.  
 
 
 
 
Table 1: Calculation of the actuarial rate of return, net of inflation (in CHF)  
 
Actuar ial rate of return  2014  2015  2016  2017  2018  
a. Valu e of assets as of 
1°January  440,342,527  486,697,204  495,898,233  535,529,801  596,165,379  
b. Value of assets as of 
31 Decem ber 486,697,204  495,898,233  535,529,801  596,165,379  564,847,436  
i. Adjusted2 Investment 
income 36,486,230  -930,196  33,792,675  59,947,702  -35,026,625  
Avera ge assets = (a+b-
i)/2 445,276,751  491,762,817  498,817,680  535,873,739  598,019,720  
Actuarial rate of return  
in nominal terms = 
i/average  assets  8.19%  -0.19%  6.77%  11.19%  -5.86 
Consumer Price Index  
for Switzerland3 -0.30%  -1.30%  0.00%  0.80%  0.70%  
Actuarial  rate of 
return,  net of 
inflation 8.49%  1.11%  6.77%  10.39%  -6.56%  
 
Source:  External  Auditor, on the basis of information provided by the WTO Pension Plan  Secretariat. 
 
 
 
Table 2: Trend in actuarial rates of return  in nominal terms (%)  
 
2010  2011  2012  2013  2014  2015  2016  2017  2018  
+3.52%  -1.10%  +9.70%  +8.33%  +8.19%  -0.19%  +6.77%  +11.19%  -5.86%   
 
Source:  External  Auditor, on the basis of information provided by the WTO Pension Plan  Secretariat. 
 
                                                
2 Investment income according to the Income and Expenditure Statement - including negative interests 
- minus management fees and bank charges.  
 
3 Rate of variatio n in the Consumer Price Index (CPI) for December compared to December of the 
previous year, as reported by the Swiss Federal Office of Statistics.   WT/L/ 1064  
  
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Page 8 / 13  
 3.2 Investment Policy and Breakdown of Assets  
 
 
Management Board 
defined an investment 
policy for asset 
allocation.  28. Asset allocation is the main source of portfolio returns.      
Therefore, the WTO Pension Plan’s Management Board defined and      
implemented an investment policy for the Plan. The WTO Pension Plan 
assigned an advisor to give quarterly performance reports about the 
funds. In the financial statements, the WTO Pension Plan gives only a 
brief overview of the performance of the classes of assets.  
Asset allocation: 
equities, CHF bonds, 
real estate and cash.  29. The Management Board of the WTO Pension Plan adopted the 
following portfolio breakdown:  
• equities: 40  per cent (of which 32  per cent in developed market 
securities and 8  per cent in emerging market securities);  
• CHF bonds: 36  per cent (bonds hedged in CHF);  
• real estate: 20  per cent;  
• cash: 4 per  cent.  
 
Asset allocation as of 
31 December  2018 is 
close to the targets.  
 
 
 
 30. The asset allocation as of 31  December  2018 of the Plan’s   portfolio 
is close to the targets:  
• 38.0 per cent in equities (of which 30.8  per cent in developed 
markets and 7.2  per cent in emerging markets);  
• 37.6 per cent in CHF bonds;  
• 20.3 per cent in real estate; and  
• 4.1 per cent in cash.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 WT/L/ 1064 
 
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Page 9 / 13  
 Table 3: Breakdown of assets and investment performance  
(in nominal terms) of the classes of assets in 2018  
 
Assets  Value  of 
assets  
end of 2017  
(CHF 
millions)  Value  of 
assets  
end of 2018  
(CHF 
millions)  Asset 
allocation  
(strategy)  Performance  
(in nominal 
terms over  
1 year ) Performance  
(in nominal 
terms over  
3 years ) 
Equities  253.1 
(42.5%)  214.3 
(38.0%)  40%  -10.0%  5.7%  
Developed 
markets  200.5 (33.7%)  173.6 (30.8%)  32% -9.2%   
Emerging 
markets  52.6 (8.8%)  40.7 (7.2%)  8% -13.7%   
CHF bonds  
 200.5 
(33.7%)  211.7 
(37.6%)  36%  -4.4%  1.6%  
Investment 
grade bonds 
USD 76.3 (12.8%)  86.0 (15.3%)  14% -2.4%   
Emerging 
countries 
bonds  80.2 (13.5%)  80.6 (14.3%)  14% -7.3%   
Senior loans  44.1 (7.4%)  45.0 (8.0%)  8% -2.9%   
Real estate  107.2 
(18.0%)  114.4 
(20.3%)  20%  -0.9%  4.2%  
Cash  34.6 (5.8%)  23.1 (4.1%)  4% n/a n/a 
Total  595.4 
(100%)  563.6 
(100%)   -5.8%  3.8%  
 
Source: External Auditor, on the basis of information provided by the WTO Pension Plan Secretariat.   
 
3.3 Gains and Losses  
  31. To improve transparency, I would appreciate more information     
on the performance of the individual investments (performance of       
funds).  
 
I recommend that 
WTOPP show its 
main assets more 
detailed.  32. I recommend that the WTO Pension Plan show the breakdown of 
its main assets in a more detailed way. In this context,  the WTO 
Pension  Plan should state the value and the performance of each 
invested  fund.  
 
 
WTOPP realized 
losses of 
CHF  5 million in the 
portfolio of two funds.  33. The WTO Pension Plan realized losses because of currency  
hedging  of its bond -portfolio managed by Northern Trust (WTO08 and 
WTO11). The realized loss as of 31  December  2018 was                                              
CHF  -5,082,753 (CHF  -1,637,781 as of 31  December  2017).    WT/L/ 1064  
  
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3.4 Commission Fees  
                                                
4 The hedged amount as at 15 January 2019 was USD 136.6 million.    
WTOPP is hedging 
80 per cent of its non -
CHF investments: 
USD  170 million  
 34. The WTO Pension Plan was assigning Northern Trust to hedge 
USD against CHF on a quarterly basis to minimize foreign  exchange 
risks for its bond portfolio. Currently, the WTO Pension Plan is     
hedging 80  per cent of its non -CHF fixed income investments on the 
accounts WTO 02 (Pictet), WTO 08 and WTO 11 (Northern Trust) of 
approx.  USD 170 million4. 
I recommend that 
WTO PP review the 
current hedging 
process.  35. I recommend that the WTO Pension Plan review the hedging of 
foreign exchange risks. In this context, the WTO Pension Plan should 
evaluate if the current hedging process is effective and efficient to    
avoid currency losses and to provide required assurance for its strategic 
asset  allocation in long -term investments.  
Losses on securities 
and currency 
revaluation stated 
under the position 
“Expenditure”.  
 36. In its Statement 1: Income and expenditure statement 2018, 
WTOPP states losses on securities (CHF  34,194,746) and currency 
revaluation (CHF  268,024) under the position “Expenditure”. This 
reporting assignment represents an improper netting of income and 
expenditures (IPSAS 1). It also makes it difficult to compare these 
positions over several years.  
I recommend that 
WTOPP state profits 
as well as losses on all 
of its investments 
under the position 
“Investment income”.  37. I recommend that the WTO Pension Plan  state profits and losses    
on securities, currency evaluation or other income from its investments 
under the position “Investment income”.  
Credit Suisse 
commission fees for 
Credit Suisse 
investments.  38. Credit Suisse is the main bank of the WTO Pension Plan and is 
managing all payments of the Pension Plan. In 2018, the WTO Pension 
Plan invested in Credit Suisse managed investment funds. For these 
investments, Credit Suisse charged its normal commission fees to the 
WTO Pension Plan. In 201 8, the WTO Pension Plan additionally paid 
bank charges of CHF  24,492. The WTO Pension Plan recorded the 
commission fees as acquisition cost.  
 39. Due to the long and effective relationship with Credit Suisse as     
the main bank of the WTO Pension Plan, it might be useful to discuss 
with the bank the status as just a “normal” customer.   
I recommend that 
WTOPP negotiate for 
special conditions.  40. I recommend that the WTO Pension Plan negotiate special 
conditions with C redit Suisse to avoid normal fees on Credit Suisse 
investment funds.  WT/L/ 1064 
 
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Page 1 1 / 13 
 3.5 Withholding Taxes  
 
WTO/WTOPP tax 
status  
 
 
 41. Due to the Marrakech agreement establishing WTO (Article   VIII, 
Status of WTO), WTO is as a specialized agency exempt from  all direct 
taxes. Therefore, WTO/WTOPP should not pay any income taxes and reclaim 
all taxes paid. If WTO/WTOPP earns income, it sh ould inform the tax 
authorities in the countries concerned about its special status. Whenever 
possible, WTO/WTOPP should avoid paying withholding  taxes.  
Withholding taxes 
paid in Switzerland 
2018: CHF  978,509  
 42. The WTO Pension Plan generates income from i nvestments in various 
countries. Because of the status of WTO, it should not be subject to any 
withholding taxes. Nevertheless, the WTO Pension Plan paid withholding 
taxes in various countries. For withholding taxes  paid in Switzerland, the 
WTO Pension Pl an reclaimed CHF  978.509.  
Withholding taxes 
paid outside 
Switzerland: 2017 
and 2018: 
CHF  246,370  43. For investment income generated outside Switzerland, the WTO 
Pension Plan effectively paid withholding taxes of CHF  246,370  in 2017 and 
2018 (2017: CHF  115,13 8; 2018: CHF  131,232).  
WTOPP has recorded 
and claimed only 
CHF  105,049 for 
2017 and 2018.  
 44. So far, the WTO Pension Plan has recorded for tax refund of 
withholding taxes paid outside Switzerland CHF  46,522 in 2017 and 
CHF  58,527 in 2018. Therefore, only CHF  105,049  of withholding taxes 
paid have been claimed against the national tax authorities.  
Reimbursement not 
yet claimed for 2017 
and 2018: CHF 
141,321  
 45. The remaining potential tax refund for withholding taxes paid in 2017 
and 2018 totals CHF 141,321  (CHF 246,370 – CHF 105,049).  
Withholding taxes not 
completely recorded 
as claim.  
 46. In all cases where the WTO Pension Plan could not be      exempted 
from paying withholding taxes, the Plan’s Secretariat should strictly monitor 
withholding taxes paid spli t by country. Thus, the WTO Pension Plan should 
ensure that all taxes paid will be completely claimed in time. All income 
subject to tax should be recorded gross  and the withholding tax paid 
separately split by country (effective monitoring of withholding  taxes paid).  
I recommend that 
WTOPP recognize 
and reclaim all 
withholding taxes 
paid.  47. I recommend that the WTO Pension Plan promptly recognize and 
reclaim all withholding taxes paid for recent years (as much as possible). A 
limitation of claims should be  avoided.  
I recommend that 
WTOPP implement 
an effective 
monitoring of all 
income subject to tax 
to ensure full tax 
recovery.   48. Additionally, I recommend that the WTO Pension Plan   implement  an 
effective monitoring of all income subject to tax and all withholding taxes 
paid by country. The WTO Pension Plan should ensure that all taxes paid will 
be completely claimed in time (full tax recovery).   WT/L/ 1064  
  
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Page 12 / 13  
 3.6 Administrative Costs  
Expenditure for 
invest ment and other 
administrative 
expenses: 
CHF  836,280.  49. In the income and expenditure statement, the WTO Pension Plan 
states the following costs under investment and other administrative 
expenses: management fees (CHF  442,732), cost for the accounting 
company  TRIANON and other administrative cost (CHF  199,780), 
consultancy fees (CHF  120,000), actuarial expenses (CHF  30,000),   
legal fees (CHF  19,276), and bank charges (CHF  24,492). According to 
the WTO Pension Plan, the administrative cost incurred in the gener al 
administration of the Pension Plan.  
 
Costs incurred by the 
WTO in providing a 
Secretariat in support 
of the Plan shall be 
excluded.  50. They do not include the costs for the Plan’s Secretariat, which       
are borne by the WTO (Article 5  (f) of the Plan Re gulations). Pursuant 
to Article 5 (f) of the Regulations, the costs incurred by the WTO in 
providing a Secretariat in support of the Plan are excluded. This 
treatment of costs was clarified in an amendment to the Regulations in 
November 2015. All other exp enses incurred in administering the Plan, 
investing Plan assets, and employing the services of provisional    
advisers shall be borne by the Plan. Each element of these expenses                    
borne by the Plan shall be identified separately in the annual report.  
In total, the costs of 
providing a Secretariat 
might be 
approximately 
CHF  690,000 per 
year.  
 
 
 
 
 
 
 
 
 
 51. In 2018, WTO funded 3.5 staff positions to manage the Pension 
Plan and to supervise external service providers and consultants 
supporting the Pension Plan in accounting, advisory and actuary  
services and providing client services to staff and retirees of the WTO. 
Remuneration (salaries and entitlements) for these 3.5 staff including  
the employer charges totalled CHF  600,000 in 2018; for office, 
equipment, trainings and other support 15  per cent of additional costs 
should be added. In total, WTO bears cost s of approximately 
CHF  690,000 per year for services provided by the Pension Plan 
Secretariat. We consider these costs to be additional contributions from 
WTO to the Pension Plan, which also have an impact on the  
performance evaluation of the Plan and its  long-term returns. All costs 
borne by the Plan’s Secretariat should be reported separately by WTO 
and WTOPP on an annual basis.  
I recommend that 
WTOPP annually 
report the cost of the 
Pension Plan 
Secretariat.  
 
 
 52. I recommend that the WTO Pension Plan add itionally report the 
activities and costs of the Pension Plan Secretariat on an annual basis.  WT/L/ 1064 
 
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Page 13 / 13  
 3.7 Internal Auditor’s Comment  
No internal auditor’s 
comments in 2018.  53. WTO’s internal audit service has not conducted an audit of the 
WTO Pension Plan in 2018.  
 
4 Acknowledgement  
I am grateful for the 
support received 
during the audit.  54. I wish to express my appreciation for the cooperation and 
assistance extended by the Secretariat of the Pension Plan, the 
Management and staff of WTO. I am very grateful for their assistance 
during the entire external audit process.   
  WT/L/1064  
 
- 15 - Annex:  
List of Recommendations  
No. Issue  Reference: 
Chapter, Year  Recommendation  WTO’s Comment / 
Implementation  Status  
1 Value of pension 
commitments  3.2 / 2014  I recommend that the financial statements of the 
WTOPP include the value of pension commitments 
(liabilities) as this is an essential element in assessing 
the situation of a pension plan.  The WTOPP Secretariat accepted the 
recommendation and amended the 
notes and added a footnote.  done  
2 Reserve / 
provision for 
operating costs  3.3 / 2014  I recommend that some further detail on  the WTO 
costs be provided and a more up -to-date estimate be 
made. Further, I recommend that the regulations be 
reviewed with the intention of clarifying the situation 
and, if necessary, specifying a procedure for 
settlement or waiver.  In November 2015, th e General 
Council adopted revised regulations 
for the Pension Plan. According to 
the regulations, the expenses borne 
by the Plan exclude "costs incurred 
by the WTO in providing a 
Secretariat in support of the Plan".  done  
3 Reimbursement 
of withholding 
tax 3.4 / 2014 and 
3.4 / 2015  I reiterate the recommendation that the Secretariat 
make further efforts to recover debts related to 
withholding tax not reimbursed by the tax authorities 
of the countries concerned.  Efforts to recover withholding taxes 
are on -going.  
A follow -up table of the process for 
recovering such taxes is available.  
In recent years, the Plan’s investments 
have not been subject to further 
unrecoverable withholding taxes. 
However, all withholding taxes 
considered  unrecoverable refer  to 
taxes paid prior to 2011 and chances 
to  obtain  a refund are very limited.  overtaken by 
events  
Also see our 
current 
findings       
and 
recommend -
dations no. 10 
& 11 (report 
3.5.)     
  
  WT/L/1064  
 
- 16 - No. Issue  Reference: 
Chapter, Year  Recommendation  WTO’s Comment / 
Implementation  Status  
4 Market value / 
securities  3.3 / 2015  We noted that the current market value of one 
position was approx. CHF  0.5 million higher than 
stated.  
The Secretariat agreed and amended the financial 
statements during our audit.  
I recommend reviewing and aligning the reporting 
and documentin g process of WTO and funds to avoid 
misunderstandings or different results concerning 
market value of positions in the financial statements.  The financial statements were 
corrected to take into account the 
most recent valuation of the position 
concerned.  
Most of the other WTOPP assets are 
invested in funds for which market 
valuations are promptly available at 
year-end: They are less likely to be 
affected by similar discrepancies.  
Nonetheless, the Secretariat will 
reinforce reviewing reports prepared 
by the  WTOPP’s service providers 
against reports received directly 
from fund managers.   done  
   
  WT/L/1064  
 
- 17 - 5 Withholding 
taxes  3.3 / 2016  The 2016 financial statements of the WTO Pension 
Plan include a position “Withholding taxes to be 
recorded” with an amount of CHF 615,662 as 
“Current Assets”. On the liability side, WTOPP 
states as “Reserves” a position “Unrecoverable 
withholding taxes” with an amount of CHF 
396,000.  
Related to my recommendation concerning 
withholding taxes, I recommend writing off the 
positions “Wit hholding taxes to be recorded” and 
“Unrecoverable withholding taxes” with the same 
amount of CHF 396,000. Possible tax refunds by 
political means or other agreements shall be 
considered as miscellaneous income in the 
respective year of the effective paymen t. The WTOPP Secretariat accepted the 
recommendation and implemented it 
in its 2017 financial statements.  done  
6 Withdrawal 
settlement  3.3 / 2017  I recommend that the WTO review its Pension Plan 
Regulations regarding the withdrawal settlement 
for staff not entitled to benefit from the Pension 
Plan (less than five years). In this context, the 
WTOPP should compare the regulations regarding 
all repayments from the Pension Plan as part of a 
benchmarking.  
 
 
 
  The WTOPP Secretariat looked at 
similar provision schemes of the 
OECD, the EU institutions, the IMF 
and the BIS and found that in all 
cases the withdrawal settlement was 
significantly higher than the 
participant’s own contributions.  
The Management Board r eviewed the 
audit recommendation as well as the 
Secretariat’s survey results and 
confirmed that the withdrawal 
settlement calculation was 
deliberately discussed when 
designing the Plan.  done  
   
  WT/L/1064  
 
- 18 - 7 Investment 
Policy and 
Breakdown of 
Assets  3.2 / 2018  I recommend that WTOPP show the breakdown of 
its main assets in a more detailed way. In this 
context, WTOPP should state the value and the 
performance of each invested fund.    
8 Gains and 
Losses  3.3 / 2018  I recommend that WTOPP state profits and 
losses on securities, currency evaluation or 
other income from its investments under the 
position “Investment income”.    
9 Commission 
Fees 3.4 / 2018  I recommend that WTOPP negotiate special 
conditions with Credit Suisse to avoid normal 
fees on Credit Suisse investment funds.    
10 Withholding 
Taxes  3.5 / 2018  I recommend that WTOPP promptly recognize 
and reclaim all withholding taxes paid for 
recent years (as much as possible). A limitation 
of claims should be avoided.    
11 Withholding 
Taxes  3.5 / 2018  I recommend that WTOPP implement an 
effective monitoring of all realized income 
subject to tax and all withholding taxes paid by 
country. WTOPP should ensure that all taxes 
paid will be completely claimed in time (full 
tax recovery).    
12 Administrative 
Costs  3.6 / 2018  I recommend that WTOPP additionally report 
the activities and costs of the Pension Plan 
Secretariat on an annual basis.    
 
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