Cocktail with MS Delegations Briefing Pension Fund

2 Ambassadors / March 2011 nº ProposalOrg.Currentstaff Future staff CurrentpensionerFuturepensioner 1 Increase contribution rate - from 30,88% to 34% XX 2 Freeze pensions until individual purchasing power loss reaches 8% X 3 Add Special Contributions - CERN: 60 MCHF/yr until full funding - ESO: 3 MCHF/yr until full funding X 1st package – decision in December 2010, implemented as of January nd package – decision in June 2011 for implementation in January 2012nº ProposalOrg.Currentstaff Future staff CurrentpensionerFuturepensioner4 Modify benefits package X 5 Introduce transitory measures - relating to indexation of pensions X Where are we now?

3 Ambassadors / March 2011 Weight of CERN Council’s past decisions CERN has a dual role: “Employer + State” Employer: it decides on various elements of a staff policy State: it must compensate the financial impact for the cost of these elements of staff policy in particular also for the Pension Fund Balancing more fairly the efforts made by parties involved substantial efforts had already been agreed on by the “employee” college Mechanism of under-indexation of pensions for Staff recruited after 1987 have a pension reduction factor between the ages of 60 (by -30%) and 64 (by -7%) and hence contribute more than enough for their pension plan. no substantial effort had been agreed on by CERN in the meantime What does 60MCHF/yr stand for ?

4 Ambassadors / March nd package: management proposals Drastically reduced benefits for future staff (similar to former proposal given by the MS advisory group): Age limit from 65y to 67yAge limit from 65y to 67y Accumulation rate from 2% to 1.75%Accumulation rate from 2% to 1.75% Maximal pension at 70 % after 40yr instead of 35yrMaximal pension at 70 % after 40yr instead of 35yr 1/3 – 2/3 share becomes 40%-60 %  Organization contribution rate reduced by 25%, while Staff contribution rate is maintained1/3 – 2/3 share becomes 40%-60 %  Organization contribution rate reduced by 25%, while Staff contribution rate is maintained Pensionable salary calculated on basis of the average of the salaries of the last 5 years, instead of the last basic salaryPensionable salary calculated on basis of the average of the salaries of the last 5 years, instead of the last basic salary Transitory measures Transitory measures Remain to be defined Remain to be defined

Comparing International Organizations pensions schemes The level of conditions

6 Ambassadors / March 2011 Recent changes in PF of other I.O. Org.When Type of pension plan Contributions Full pension Years to full pension Age limit Annual adjustment TotalEmployeeEmployer EPO Before Jan.09 DB share = 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries 27.3% =9.1%+18.2% From Jan.09 Mixedshare= 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries DB 21.0%=7.0%+14.0% DC 6.3%=2.1%+4.2% EIB Before Jan.09 DB share = 1/3+ 2/3 70%ofLast salary30yr60yrAs COL 30.0% =10.0%+20.0% From Jan.09 DB Share = 1/3+ 2/3 70%of Average salaries of last 10 years 35yr65yrAs COL 30.0% =10.0%+20.0% WTO Before Jan.10 DB share = 1/3+ 2/3 70%ofLast salary35yr62yrAs COL 22.5% =7.5%+15.0% From Jan.10 DB share = 1/3+ 2/3 70%ofLast salary35yr65yrAs COL 23.7% =7.9%+15.8% ESA Before July.10 DB share = 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries 25.1% =8.4%+16.7% From July.10 DB share =40%+60% 70%ofLast salary35yr63yrAs COL 23.3% =9.3%+14.0% EUMETSAT Before Jan.11 DB share = 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries 27.0% =9.0%+18.0% From Jan.11 DB share =40%+60% 70%ofLast salary35yr63yrAs COL 23.3% =9.3%+14.0% CERN / ESO Before Jan.12 DB share = 1/3+ 2/3 70%ofLast salary35yr65yr Freeze (-8%) then as COL 34.0% =11.3%+22.7% From Jan.12 Mixed DB/DC ? share =40%+60% 70%of Average salaries of last 5 years 40yr67yr? 28.3% =11.3%+17.0%

Comparing International Organizations pensions schemes The modifications recently introduced

8 Ambassadors / March 2011 Recent changes in PF of other I.O. Org.When Type of pension plan Contributions Full pension Years to full pension Age limit Annual adjustment TotalEmployeeEmployer EPO Before Jan.09 DB share = 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries 27.3% =9.1%+18.2% From Jan.09 Mixedshare= 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries DB 21.0%=7.0%+14.0% DC 6.3%=2.1%+4.2% EIB Before Jan.09 DB share = 1/3+ 2/3 70%ofLast salary30yr60yrAs COL 30.0% =10.0%+20.0% From Jan.09 DB share = 1/3+ 2/3 70%of Average salaries of last 10 years 35yr65yrAs COL 30.0% =10.0%+20.0% WTO Before Jan.10 DB share = 1/3+ 2/3 70%ofLast salary35yr62yrAs COL 22.5% =7.5%+15.0% From Jan.10 DB share = 1/3+ 2/3 70%ofLast salary35yr65yrAs COL 23.7% =7.9%+15.8% ESA Before July.10 DB share = 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries 25.1% =8.4%+16.7% From July.10 DB share =40%+60% 70%ofLast salary35yr63yrAs COL 23.3% =9.3%+14.0% EUMETSAT Before Jan.11 DB share = 1/3+ 2/3 70%ofLast salary35yr60yrAs salaries 27.0% =9.0%+18.0% From Jan.11 DB share =40%+60% 70%ofLast salary35yr63yrAs COL 23.3% =9.3%+14.0% CERN / ESO Before Jan.12 DB share = 1/3+ 2/3 70%ofLast salary35yr65yr Freeze (-8%) then as COL 34.0% =11.3%+22.7% From Jan.12 Mixed DB/DC ? share =40%+60% 70%of Average salaries of last 5 years 40yr67yr? 28.3% =11.3%+17.0%

9 Ambassadors / March 2011 Comparison with current staff Hypothesis: 35 yr contribution, retirement at 67 yr Hypothesis: 35 yr contribution, retirement at 67 yr Income: CERN 22.67%  17 %, employee still at 11.33% Income: CERN 22.67%  17 %, employee still at 11.33% Benefits: Benefits: leveragesreduction factorcomments Age limit 65  67yr0.9 Pension after 35 yr0.875(35 x 1.75% = 61.25% compared to 70 %) Average of last 5 years0.92 TOTAL0.72Pension cut by 28%

10 Ambassadors / March 2011 Our position Recent changes of pension systems in other IOs show that: Recent changes of pension systems in other IOs show that: CERN modifies 5 parameters instead of 2 in other IOs CERN modifies 5 parameters instead of 2 in other IOs CERN degrades scheme far below levels achieved in other IOs CERN degrades scheme far below levels achieved in other IOs Many MS delegates are the same in other IOs. Why this treatment for CERN? Many MS delegates are the same in other IOs. Why this treatment for CERN? Highest contribution rates for CERN employees Highest contribution rates for CERN employees Drastically reduced benefits for future staff: unacceptable Drastically reduced benefits for future staff: unacceptable New recruits have no responsibility in the PF current deficit New recruits have no responsibility in the PF current deficit No significant effect before 30 years ! No significant effect before 30 years ! The worst PF scheme of all IO’s The worst PF scheme of all IO’s Reduced PF scheme = reduced attractiveness of CERN Reduced PF scheme = reduced attractiveness of CERN CERN S. II 1.03, 1.04: CERN must be able to attract and retain the most competent staff from all the member states CERN S. II 1.03, 1.04: CERN must be able to attract and retain the most competent staff from all the member states Attractiveness = package of job interest, salary conditions, welfare systems Attractiveness = package of job interest, salary conditions, welfare systems By reducing so drastically the PF scheme, the Member states are working against the interests of the Organization! By reducing so drastically the PF scheme, the Member states are working against the interests of the Organization!

11 Ambassadors / March 2011Conclusions Must objectively compare CERN pensions to other IOs Must objectively compare CERN pensions to other IOs 1 st package concerning current actives & pensioners was a hard negotiation, but is accepted 1 st package concerning current actives & pensioners was a hard negotiation, but is accepted 2 nd package proposal is unjustified and inacceptable 2 nd package proposal is unjustified and inacceptable Concertation process must start again: Concertation process must start again: The SA proposed a better 2 nd package which was deemed “interesting” but was not further discussed The SA proposed a better 2 nd package which was deemed “interesting” but was not further discussed New recruits have no responsibility in and should not pay for the PF current deficit New recruits have no responsibility in and should not pay for the PF current deficit CERN is an International Organization and should not be treated differently from its pairs CERN is an International Organization and should not be treated differently from its pairs