International Civil Service Commission (ICSC). Joint Staff Pension Fund Board. While the UN and the U.S. Government Offer Generally Similar Benefits and Allowances, Each Provides Certain Benefits and Allowances with Higher Monetary Values than the Other

Benefits and allowances offered by the UN and the U.S. government are  generally similar, and each provides certain benefits or allowances with  greater monetary value than the other. Similar UN and U.S. benefits  include retirement plans and health insurance for staff and retirees, while  similar allowances include hardship pay and education grants. Where  comparable data were available, our comparisons of UN and U.S.  government benefits and allowances show that each entity provided  some benefits or allowances of greater monetary value than those  provided by the other. Second, UN staff generally earn higher  salaries than U.S. civil service employees in comparable jobs. The UN Has Begun to Address Concerns about the Long-Term Sustainability of Rising Compensation Costs, but Its Review of Total Compensation Does Not Incorporate Key Elements

The UN has begun to take action to address concerns about the long- term sustainability of its rising total compensation costs, but its ongoing  effort to review total compensation does not incorporate the costs of key  elements, such as pensions and health insurance. According to budget data provided by the  UN Secretariat, staff-related expenditures rose steadily from $1.95 billion  in 2002-2003 to $2.98 billion in 2010-2011, at an average rate of about 7  percent per 2-year budget, when adjusted for inflation. We previously reported that the  margin between UN and U.S. civil service salaries increased from 109.3  percent in 2002 to 116.9 percent in 2012.again to 119.6 percent, also raising the 5-year average above 115  percent to 115.7 percent. For instance, to address the rising costs of  salaries and allowances, the General Assembly and the ICSC have taken  steps such as freezing allowance amounts for at least 1 year, freezing the  post adjustment for New York in 2014, raising the retirement age for new  hires from 62 to 65, and conducting a review of the UN total  compensation package for professional staff. In addition, the UN has initiated a review of its total compensation  package. The study is scheduled for completion in  2015. The General Assembly’s 2013 resolution  commenting on the ICSC’s total compensation review noted that the  ICSC should review all elements of total compensation holistically,  including both monetary and nonmonetary elements. ICSC officials told us that their  review will focus only on the elements of compensation—salary and  allowances—that are within their area of responsibility. Until all aspects of UN total compensation have been reviewed by the  ICSC and other relevant entities, the General Assembly and member  states will not have a comprehensive set of information with which to  make fully informed decisions about proposed changes to address  concerns about the compensation system. For  example, the unfunded liability of the UN’s retiree health insurance plan  was estimated in 2012 to be almost $4 billion. Recommendation for Executive Action

To assist member states in their oversight of the budgetary implications  and financial sustainability of UN total compensation, the Secretary of  State should work with other member states to ensure that the costs of  key elements of total compensation are reviewed to address rising staff  costs and sustainability. Appendix I: Objectives, Scope, and Methodology

We were asked to review the structure of United Nations (UN) total  compensation, including benefits and allowances, and how it compares  with that of U.S. government employees. In this report, we (1) examine  similarities between the UN and U.S. government benefits and  allowances and compare their monetary values, and (2) examine UN  efforts to address concerns about the sustainability of total compensation  costs. Appendix II: Additional Information on GAO’s Estimates of Income Replacement Rates for United Nations Staff and U.S. Federal Civilian Employees

To compare the UN and U.S. government retirement systems, we  estimated income replacement rates for UN staff and U.S. federal civilian  employees at various salary levels and under different scenarios,  including varying years of UN or U.S. government employment and  retirement contribution rates for U.S. federal civilian employees. See  “Serving in a hardship duty station” above.
Why GAO Did This Study

The UN General Assembly has expressed concerns about the relatively large and growing portion of the UN budget spent on total compensation. The United States contributes 22 percent of the UN's regular budget.
UN total compensation consists of salary, benefits, and allowances. Since its inception in 1945, the UN has based salaries for its professional employees on salaries for the U.S. civil service. In 2013, GAO reported that the UN sets its salaries between 110 to 120 percent of U.S. civil service salaries, and that UN salaries were 116.9 percent of U.S. civil service salaries in 2012. UN salaries increased to 119.6 percent in 2013. GAO also recommended that the UN clarify its process for comparing salaries for UN professional staff with U.S. civil service salaries.
GAO was asked to review the structure of UN total compensation and how it compares with that of U.S. federal employees. This report (1) examines similarities between UN and U.S. government benefits and allowances and compares their monetary values, and (2) examines UN efforts to address concerns about the sustainability of total compensation costs. GAO reviewed UN and U.S. government documents and data, and interviewed UN and U.S. officials.

What GAO Found

Benefits and allowances offered by the United Nations (UN) and the U.S. government are generally similar, and GAO found that each provided certain benefits or allowances with greater monetary value than the other. Similar UN and U.S. benefits include retirement plans and health insurance, while similar allowances include hardship and danger pay. Where comparable data were available, GAO found that each organization provided some benefits or allowances of greater monetary value than the other. For example, under a scenario where UN and U.S. staff retire at 62 with 20 years of service, the U.S. Federal Employees Retirement System replaces a higher percentage of pre-retirement salary than the UN Joint Staff Pension Fund. However, when these staff retire with 30 years of service, similar percentages of pre-retirement salary are replaced. In contrast, the UN allowance for staff serving in dangerous duty stations with families at separate locations had a higher average monetary value per recipient in 2012 than the comparable U.S. allowance.
The UN has begun to address concerns about the sustainability of its rising total compensation costs, including initiating a review of total compensation, but that review does not include key elements. GAO analysis of UN data shows that staff-related expenditures rose steadily from $1.95 billion in 2002-2003 to $2.98 billion in 2010-2011, at an average rate of about 7 percent per 2-year budget, when adjusted for inflation. To help address costs, the UN raised its retirement age from 62 to 65 for new hires and froze rates paid for allowances for at least 1 year. In addition, the UN's International Civil Service Commission (ICSC) began a review of UN compensation, to be completed in 2015. The UN General Assembly requested that the ICSC review consider all elements of UN total compensation holistically, including both monetary and non-monetary elements. However, according to ICSC officials and documents, the review focuses only on elements within the ICSC's area of administrative responsibility, such as salary and allowances. Other key elements with significant costs, such as pensions and retiree health insurance, fall outside the ICSC's authority and therefore the study's focus. For example, the unfunded liability of the UN's retiree health insurance plan was estimated in 2012 at almost $4 billion. Without including all elements of total compensation in its review, member states will not have a complete set of information with which to make fully informed decisions about changes to the compensation system.

What GAO Recommends

The State Department (State) should work with other UN member states to ensure that the costs of key elements of UN total compensation are reviewed to address rising staff costs and sustainability. State concurred with this recommendation.