Court of Audit blasts French scheme CIPAV, calls for board changes

The French Court of Audit will today single out the multi-occupation public insurance pension fund for poor governance in its annual update to the country.

The Court of Audit, a quasi-judicial body known locally as Cours des comptes is responsible for auditing central government, public and private institutions and other bodies.

In a speech tonight, the Court will provide its annual update, singling out the near 500,000 member pension fund Caisse Interprofessionnelle de Prevoyance et d’Assurance Vieillesse (CIPAV) for poor governance.

President of the Court, Didier Migaud, is set to provide a detailed list of failures at the fund that have affected governance, investments and member services.

The pension fund manages the retirement savings for architects, professional consultants, engineers and the self-employed.

Migaud is to recommend that a provisional administrator, who will oversee future transitions, replace the board of the pension fund.

The Court’s report suggested assets held by the fund had been poorly managed – stemming from a lack of proper financial management – until 2010.

It rebuked the fund for failing to use appropriate procurement procedures in line with requirements for public bodies, and for shirking legal duties.

The report also suggested the fund had "significantly" failed its members, providing pensioners with poor service.

On the fund’s assets, the Court pointed out that the annual return rate of 6% between 1989 and 2012 was significantly below benchmark bond rates over the same time period, highlighting poor investment management.

The Court's report said the cause of the poor performance was a lack of financial management, and the fact investments were managed by a committee that did not employ a code of ethics, even though this has been required by law since 2004.

Prior to 2010, the scheme also placed 75% of its investments with a single investment manager. Even after CIPAV hired a CFO, the single investment manager still oversaw more than one-third of investments at the end of 2012.

In line with its requirements for a provisional administrator replacing the board, the Court highlighted that 80% of procurement was acquired outside of the framework public bodies are required to follow.

More than half of retirees within the scheme face severe delays in receiving their pension, the report added.

CIPAV’s call centre can only process 25% of received phone calls, resulting in at least three months of delays for pensioners.