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UN Pay and Perks: After two years of US study, still a mystery

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This file photo shows the United Nations headquarters building. (Reuters)

How much are the U.N.’s highly-compensated and notoriously inefficient staffers really paid? The U.S. government has been trying to solve that mystery for the past two years, even as the Obama Administration refuses to reveal how much the U.S. contributes to the bloated and not-very-effective organization.

According to a new report by the U.S. Government Accountability Office (GAO) however, the full answer to the U.N. pay-and-perks puzzle is unknown –-and may stay that way for years to come. 

As the GAO report delicately puts it, the U.N. review “does not incorporate all key elements of total compensation.”

And without that information, on such items as U.N. pensions and health insurance, the GAO notes that the U.N. General Assembly and its dues-paying member states “will not be able to make fully informed decisions about proposed changes to the compensation system.”

Translation: if you don’t know what the costs are going to be, you can’t properly control them.

That is no small matter for the U.S., which pays 22 percent of the basic U.N. budget that is covered by member state dues, but also “voluntary” contributions to a huge array of U.N. organizations, not to mention the roughly half of the $5.4 billion New York-based Secretariat budget that is not encompassed in the basic plan.

Just how much the U.S. itself pays is, in fact, another mystery: in 2011 the Obama Administration stopped publishing the overall total of American contributions to the sprawling world organization, which were even then considered by many experts to be a low-ball figure. The last official tally of U.S. contributions in 2010 was about $7.6 billion.

U.N. costs are largely personnel costs, since it is an organization that often doesn’t produce anything except ill-defined “services.” According to the GAO report, spending on staff has consumed as much as two-thirds of the U.N. Secretariat’s regular budget, though that ratio has recently dipped lower—largely because of increased U.N. spending on items such as peacekeeping .

Nonetheless, according to the GAO report, staff-related spending at the U.N. rose at a formidable clip of about 3.5 percent annually from 2002 to 2011, the latest year of increase the study records. During the same period, various U.S. Administrations have struggled to keep federal salary cost increases much lower—finally resorting to an outright pay freeze from 2011-2013, a pause that ended with a 1 percent increase this year.

Whatever the current overall percentage of U.N. staff-related spending, the staffing numbers are even more formidable than the GAO study makes them out to be. The GAO cites a U.N. study from 2013 to assert that the U.N. Secretariat employed 41,273 people, with about 30 percent of them—12,220—falling into the high-paid professional ranks.

But those numbers do not include the professional staff of the large and still expanding array of U.N. funds, organizations and programs that do much of the U.N.’s work around the world, and that employ professional employees using the unified salary scales as the Secretariat. 

According to a U.N.-wide report prepared six months before the study cited by GAO, the total number of U.N. professionals system-wide was nearly 31,600, or nearly treble the GAO tally.

CLICK HERE FOR THE SYSTEM-WIDE TOTALS           

U.S. “voluntary” contributions to those other U.N. organizations are also substantial, and in some cases reach the 22 percent level of its regular Secretariat annual dues.

Learning anything at all about U.N. personnel costs has been an arduous struggle for GAO, largely because, it reports, the U.N. pay system makes comparisons with anyone else difficult.

After much effort, GAO in 2013 produced an analysis of U.N. salary scales, minus benefits, and determined that U.N. professional staffers were paid roughly 116-120 percent of the salaries of their U.S. Foreign Service counterparts—and perhaps as much as 130 percent--with the added plus of being tax free.

The U.N. still disputes that analysis, and in fact, the GAO said then—as it does now—that U.N. calculations were murky and that its salary-setting commission “does not clearly state all of its assumptions” in its lengthy annual reports. 

In its follow-up report, issued last Saturday, the GAO now adds that when it comes to overall benefits, many of the U.N. perks are in many ways comparable to those received by their U.S. counterparts—except, for one thing, that there are more of them. Among the unique U.N. perks are additional support for dependents, incentives to make them move to different posts around the world, and “repatriation allowances” to send households back to their native countries after retirement.

CLICK HERE FOR THE REPORT

But as always, even when elements like pensions seem roughly the same as those offered to U.S. diplomats, U.N. staffers manage to come out better. After laborious calculation, GAO declares that, U.S. retirees with 30 years’ service retain between 63 and 69 percent of salary through pension and retirement packages, while the U.N. Pension Fund supplies between 63 and 68 percent of salary.

But then the report notes that “U.N. staff generally earn higher salaries than U.S. civil service employees in comparable jobs.” So while U.N. pensions may not cover as much income, “in some cases [they may have the same or greater estimated monetary value.”

The U.N. also pays less in the way of hardship allowances for tough postings—about $3,700 per person less, according to the GOA findings. But on the other hand, U.N. cost of living allowances are baked into every U.N. salary as a so-called “post-adjustment”—including in the U.S.—while American foreign service personnel only get those allowances when living abroad.

And, of course, all U.S. civil servants pay income taxes.

The GAO gives the U.N. credit for taking a look at some of its staffing expenses, and making fitful efforts to correct them. (The report does not, however, point to the pressure from donor nations in a climate of global austerity as a cause for the attack of financial virtue.)

Among other things, the report notes, the U.N. General Assembly has raised the retirement age for new hires from 62 to 65 to bring its pension fund out of deficit, froze professional allowances like education grants for a year, and then freezing—and unfreezing—the politically sensitive cost-of-living allowance for New York-based staffers. But it promptly rose thereafter, to its current roughly 68 percent. (CK)

Moreover, the U.N.’s salary setting International Civil Service Commission has promised to make more recommendations after a review of U.N. “total compensation” that began in 2013 and is suppose to finish in 2015.

Except, the review by no means includes everything. Some very important things, such as pensions, health insurance costs and post-retirement health care—are being left off the list.

The post-retirement health care costs are particularly notable, because the U.N. is rapidly aging. The U.N. Pension Fund already pays benefits to 67,000 retirees and their families. But as the report notes, another 121,000 “active participants from 23 organizations in the U.N. system” are currently accumulating new pension benefits.

The gap between potential payout and reserve funding for U.N. pensioners’ health insurance payments has already caused “grave concern” in the U.N. General Assembly. 

A Secretary General’s report last year said that those liabilities alone had ballooned to $3.9 billion by the end of 2012, up $200 million from the previous year and roughly triple the amount of a decade earlier.

The report notes that in the U.N. Secretariat, those liabilities were being funded on a pay-as-needed basis, which the report diplomatically says “is not considered to be a sustainable option in the long term.”

In fact, the pay-go costs are estimated over the next decade to soar to nearly $1 billion a year.

The Secretary General proposed a variety of complicated fixes to the problem, including the requirement, since adopted to have U.N. retirees who live in the U.S. enroll in Medicare Part B, with the U.N. picking up the tab.

But some suggestions, like making retirees pick up a larger portion of the cost, simply fell by the wayside as legally complicated and financially complex, and the U.N. is currently continuing on substantially the same pay-go course.

The Secretary General’s report contained a strong hint that the issue needed more detailed study—of the sort that its pay-setting commission was giving to the salary issue.

Instead, as the GAO discovered, nothing of the sort is happening. The only solution it recommended is that “the Secretary of State should work with other member states” to make sure that the health-insurance time bomb and other staffing cost challenges also get examined.

For its part, the State Department says it “remains committed” to trying.

George Russell is editor-at-large of Fox News and can be found on Twitter @GeorgeRussell

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