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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

June 2014: 

United Nations: 

Key Compensation Elements Should Be Reviewed to Address Costs and 
Sustainability: 

GAO-14-546: 

GAO Highlights: 

Highlights of GAO-14-546, a report to congressional requesters. 

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. 

Table: United Nations and U.S. Benefits and Allowances That GAO 
Reviewed: 

Compensation element: Retirement benefits; 
Result: Benefits varied depending on years of service and other 
factors. 

Compensation element: Health insurance; 
Result: The average cost per employee was higher for eligible U.S. 
government employees than for UN staff. 

Compensation element: Allowances; 
Result: The UN and the U.S. government each provided certain 
allowances with higher monetary value than those provided by the other. 

Source: GAO analysis of United Nations (UN) and U.S. data. GAO-14-546. 

[End of table] 

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. 

View [hyperlink, http://www.gao.gov/products/GAO-14-546]. For more 
information, contact Thomas Melito at (202) 512-9601 or 
melitot@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

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: 

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: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Additional Information on GAO's Estimates of Income 
Replacement Rates for United Nations Staff and U.S. Federal Civilian 
Employees: 

Appendix III: Comparison of Allowances for United Nations Secretariat 
Staff and U.S. Civil Service Staff Overseas and Foreign Service 
employees: 

Appendix IV: Leave Benefits: 

Appendix V: Comments from the Department of State: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Comparison of Benefits for United Nations (UN) Professional 
Staff and U.S. Civil Service Employees: 

Table 2: United Nations (UN) and U.S. Government Benefits and 
Allowances That GAO Reviewed: 

Table 3: United Nations (UN) and U.S. Retirement Income Replacement 
Rates under Different Scenarios: 

Table 4: Comparison of 2012 Allowance Payments to United Nations (UN) 
Secretariat Professional Staff, State Foreign Service Employees and 
Civil Service Employees Serving Overseas, and Department of Defense 
(DOD) Civil Service Employees Serving Overseas: 

Table 5: Number of Recipients, Total Monetary Value, and Average 
Monetary Value per Recipient in 2012 for Unique United Nations (UN) or 
U.S. Government Allowances: 

Table 6: United Nations (UN) Actions Taken in Response to Concerns 
over the Sustainability of UN Compensation Costs: 

Table 7: Eligibility Requirements and Plan Provisions for the United 
Nations (UN) Joint Staff Pension Fund and the Federal Employees 
Retirement System (FERS): 

Table 8: United Nations (UN) Professional Staff Retirement Income and 
Income Replacement Rates in the First Year of Retirement for Staff 
Retiring at Age 62 with 30 Years of UN Service: 

Table 9: U.S. Civil Service Federal Employees Retirement System (FERS) 
Employee Retirement Income and Income Replacement Rates in the First 
Year of Retirement for Employees Retiring at Age 62 with 30 Years of 
Federal Service: 

Table 10: United Nations (UN) Professional Staff Retirement Income and 
Income Replacement Rates in the First Year of Retirement for Staff 
Retiring at Age 62 with 20 Years of UN Service: 

Table 11: U.S. Civil Service Federal Employees Retirement System 
(FERS) Employee Retirement Income and Income Replacement Rates in the 
First Year of Retirement for Employees Retiring at 62 with 20 Years of 
Federal Service: 

Table 12: U.S. Civil Service Federal Employees Retirement Service 
(FERS) Employee Retirement Income and Income Replacement Rates in the 
First Year of Retirement for Employees Who Retire at Age 62 with 30 
Years of Federal Service and Contribute 8.5 Percent of Gross Salary to 
the Thrift Savings Plan (TSP) Annually: 

Table 13: U.S. Civil Service Federal Employees Retirement Service 
(FERS) Employee Retirement Income and Income Replacement Rates, for 
Employees Who Retire at Age 62 with 30 Years of Service and Contribute 
0 Percent of Gross Salary to the Thrift Savings Plan (TSP) Annually: 

Table 14: Retirement Income and Income Replacement Rates in the First 
Year of Retirement for United Nations (UN) Staff Who Retire at Age 62 
and Who Are U.S. Citizens Employed in the United States with 20-Years 
of UN Service: 

Table 15: Comparison of Leave Benefits for United Nations (UN) 
Secretariat Staff and U.S. Civil Service Employees: 

Figures: 

Figure 1: Comparison of Selected Allowances Offered to Eligible United 
Nations (UN) Professional Staff and U.S. Foreign Service Employees and 
Civil Service Employees Serving Overseas: 

Figure 2: United Nations (UN) Secretariat Staff-Related Expenditures, 
2002-2003 to 2010-2011: 

Abbreviations: 

CEB: United Nations System Chief Executives Board for Coordination: 

CPI-W: Consumer Price Index for Urban Wage Earners and Clerical 
Workers: 

CSRS: Civil Service Retirement System: 

DOD: Department of Defense: 

FERS: Federal Employees Retirement System: 

FMLA: Family and Medical Leave Act: 

FRTIB: Federal Retirement Thrift Investment Board: 

GS: General Schedule: 

ICSC: International Civil Service Commission: 

IRS: Internal Revenue Service: 

OASDI: Old-Age, Survivors, and Disability Insurance: 

OPM: Office of Personnel Management: 

SMA: Separate Maintenance Allowance: 

TSP: Thrift Saving Plan: 

UN: United Nations: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

June 26, 2014: 

Congressional Requesters: 

United Nations (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. national civil 
service. In May 2013, we reported that the UN sets its salaries 
between 110 and 120 percent of U.S. civil service salaries, and that 
UN salaries were 116.9 percent of U.S. civil service salaries in 2012. 
We recommended that the UN clarify its process for comparing salaries 
for professional staff in the UN with U.S. civil service salaries. 
[Footnote 1] 

In addition, several UN organizations and member states, including the 
United States, have expressed concern regarding the large and growing 
portion of the UN budget spent on the total compensation of its staff. 
The UN Board of Auditors reported that staff costs for the 2010-2011 
biennium were the UN's single largest item of expenditure, with costs 
rising because of higher salaries and related staff benefits. The UN 
Secretary-General and the General Assembly have also raised concerns 
about the long-term sustainability of compensation costs. The United 
States contributes 22 percent of the UN's regular budget. 

You asked us to review the structure of 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 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. 

To compare UN and U.S. government benefits and allowances, we reviewed 
relevant UN and U.S. documents and interviewed UN and U.S. officials. 
We examined the similarity of these compensation elements by comparing 
the purpose, structure, and eligibility requirements in the UN and 
U.S. systems. To compare the monetary value of UN and U.S. government 
benefits and allowances, we collected available salary, benefits, and 
allowance data for UN Secretariat professional staff for calendar year 
2012 from the UN's Payroll Operations Unit. We also collected data for 
U.S. employees from the Office of Personnel Management (OPM), the 
Department of State (State), and the Department of Defense (DOD). 
Using these data, we calculated average benefit and allowance amounts 
provided to UN staff and U.S. employees. For data on allowances, we 
collected data from State for State Foreign Service employees and 
civil service employees serving overseas and data from DOD for civil 
service employees serving overseas, because these employees are 
comparable to UN Secretariat professional staff. Data from State and 
DOD were for calendar year 2012.[Footnote 2] We also calculated 
examples of retirement benefits paid by UN and U.S. retirement 
programs, as well as the average cost of health care benefits for both 
UN staff and U.S. government employees. Because of variations in the 
structure, administration of payments, and data availability for 
individual compensation elements, we calculated monetary value for 
individual compensation elements using different approaches. As a 
result, individual calculations cannot be summed into a single total 
for all benefits, allowances, or compensation. 

To assess the reliability of these data, we (1) interviewed officials 
from the UN, and officials from OPM, State, and DOD; (2) reviewed 
available technical documentation; and (3) performed basic 
reasonableness checks for obvious inconsistency errors and 
completeness. When we found discrepancies, we brought them to the 
attention of relevant agency officials and worked with them to correct 
the discrepancies before conducting our analyses. We determined that 
these data were sufficiently reliable for the purposes of determining 
the monetary value of included payroll transactions, retirement 
contributions, staff costs, and the number of UN, U.S. civil service, 
State, and DOD staff receiving benefits and allowances. However, these 
data do not include information on certain allowances that are not 
captured by the UN's, State's, and DOD's central payroll systems. 

To examine UN efforts to address concerns about the long-term 
sustainability of total compensation costs, we reviewed UN documents 
and interviewed UN officials regarding the long-term costs of UN 
benefits and allowances and actions taken to address them. In 
addition, we analyzed UN General Assembly resolutions that direct UN 
organizations to perform further actions to address these concerns. 
Appendix I provides more information on our scope and methodology. 

We conducted this performance audit from June 2013 to June 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Role of the UN Secretariat and Its Professional Staff: 

The UN Secretariat administers the programs and policies established 
by the other principal entities of the UN, including the General 
Assembly and the Security Council. The duties of the Secretariat 
include administering peacekeeping operations, mediating international 
disputes, surveying economic and social trends and problems, and 
preparing studies on human rights and sustainable development. The 
Secretariat is headquartered in New York City and has employees at 
other locations throughout the world. According to the UN, as of June 
30, 2013, the Secretariat employed 41,273 people, of which about 30 
percent (12,220) were professional staff.[Footnote 3] 

Elements of the UN Total Compensation Package: 

The total compensation package for UN employees consists of salary, 
benefits, and allowances. UN salaries consist of a base salary and 
post adjustment added to account for the cost of living at individual 
posts. The UN administers a staff assessment, which is used to 
contribute to a tax equalization fund, and which does not affect take-
home pay. This fund is used to compensate UN employees from countries 
that require them to pay taxes on their UN income.[Footnote 4] UN 
benefits consist of items including retirement, health insurance, and 
retiree health insurance. In addition, about 20 allowances are 
available to UN professional Secretariat staff, including danger pay, 
hardship pay, mobility allowance, education grants, and others. 
Receipt of these allowances is based on whether a UN staff member 
meets the eligibility criteria established by the UN for each 
allowance. Our 2013 report on UN compensation provides more detailed 
information on benefits and allowances available to UN professional 
staff.[Footnote 5] 

Administration of UN Compensation Elements: 

Separate bodies within the UN administer the different elements of 
total compensation or provide information to the General Assembly 
about staff demographics and trends in compensation. 

* International Civil Service Commission (ICSC). The General Assembly 
established the ICSC in 1974 as an independent expert body with a 
mandate to regulate and coordinate the conditions of service of staff 
in the UN common system.[Footnote 6] As a part of its mandate, the 
ICSC makes recommendations or determinations for certain compensation 
elements for employees within the UN common system, such as salary and 
allowances. On some matters, the ICSC can act independently, while on 
others its decisions are subject to General Assembly approval. For 
example, the ICSC can determine changes to the post adjustment, or 
cost-of-living adjustment portion of UN salaries, without prior 
approval from the General Assembly. In addition, the ICSC can set some 
allowances, such as the hardship allowance for employees serving at 
posts where living conditions are considered difficult, without 
General Assembly approval. However, proposed ICSC changes to UN base 
salary must be approved by the General Assembly. The ICSC is also 
responsible for annually reviewing the percentage difference between 
UN professional salaries and those of U.S. civil service employees in 
a process called the margin calculation. The UN's process uses net 
salary, rather than total compensation, to compare UN and U.S. staff 
salaries because the General Assembly has directed the ICSC to conduct 
the margin calculation only using salaries.[Footnote 7] 

* Joint Staff Pension Fund Board. The UN Joint Staff Pension Fund 
provides retirement and related benefits to UN staff and is 
administered by the Joint Staff Pension Fund Board in accordance with 
regulations adopted by the General Assembly. The Joint Staff Pension 
Fund is a defined benefit fund that provides benefits to more than 
67,000 retirees and beneficiaries. As of 2013, approximately 121,000 
active participants from 23 organizations in the UN system are 
accumulating pension benefits under the Joint Staff Pension Fund. 

* Health and Life Insurance Section. This office is part of the UN 
Office of Program Planning, Budget, and Accounts, and administers 
health plans, after-service health insurance, and life insurance for 
UN Secretariat staff. 

* United Nations System Chief Executives Board for Coordination (CEB). 
The CEB provides coordination and strategic guidance, and prepares 
reports on staff demographics and other compensation issues for use by 
UN organizations. The Human Resources Network of the CEB brings 
together directors of human resources departments from more than 30 UN 
and related organizations at biannual meetings. 

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. We did not compare some benefits and 
allowances, such as danger pay and retiree health benefits, because of 
the limited availability of comparable data. 

Benefits and Allowances Offered to UN Staff Are Generally Similar to 
Those Offered to U.S. Employees, with Some Differences in Structure: 

The UN and the U.S. government offer generally similar benefits, with 
some minor differences. For example, both the UN and the U.S. 
government offer health, dental, and retiree health insurance to their 
staff. Table 1 compares the benefits available to eligible UN 
professional staff and U.S. civil service employees. 

Table 1: Comparison of Benefits for United Nations (UN) Professional 
Staff and U.S. Civil Service Employees: 

Type of benefit: Retirement income; 
UN professional staff: UN Joint Staff Pension Fund; 
U.S. civil service employees: Federal Employees Retirement System or 
Civil Service Retirement System. 

Type of benefit: Health insurance; 
UN professional staff: UN-sponsored health insurance; 
U.S. civil service employees: Federal Employees Health Benefits[A]. 

Type of benefit: Retiree health insurance; 
UN professional staff: After-service health insurance; 
U.S. civil service employees: Federal Employees Health Benefits and 
Medicare. 

Type of benefit: Life insurance; 
UN professional staff: UN group life insurance plan[B]; 
U.S. civil service employees: Federal Employees' Group Life Insurance. 

Type of benefit: Dental insurance; 
UN professional staff: UN-sponsored dental insurance; 
U.S. civil service employees: Federal Employees Dental and Vision 
Insurance Program. 

Type of benefit: Vision insurance; 
UN professional staff: No separate benefit, but vision benefits 
included in UN-sponsored health insurance; 
U.S. civil service employees: Federal Employees Dental and Vision 
Insurance Program. 

Type of benefit: Payment to survivor upon death of employee; 
UN professional staff: Death grant; 
U.S. civil service employees: Survivor benefit. 

Source: GAO analysis of UN and U.S. documents. | GAO-14-546: 

[A] Most federal employees who are eligible for Federal Employees 
Health Benefits are also eligible to apply for coverage under the 
Federal Long Term Care Insurance Program. 

[B] The UN offers an optional life insurance plan, but does not 
contribute to its cost. U.S. civil service employees are automatically 
enrolled in group life insurance, unless they waive the coverage. The 
U.S. government covers one-third of the cost of this insurance. 

[End of table] 

While similar in purpose, some of the benefits offered by the UN and 
the U.S. government differ in design and structure. For instance, 
while both the UN and the U.S. government offer retirement benefits, 
the UN offers its professional staff a pension plan that provides 
retirees a defined benefit, based on factors including an employee's 
age, years of participation in the plan, and salary history. The UN 
pension plan provides benefits similar to the Civil Service Retirement 
System (CSRS), a retirement plan providing U.S. federal civilian 
retirees with a defined benefit. CSRS was created in 1920 and was the 
only retirement plan for most federal civilian employees until 1984. 
However, most current U.S. civil service employees, including all 
those hired after 1984, are covered by the Federal Employees 
Retirement System (FERS).[Footnote 8] FERS is a three-part retirement 
plan consisting of (1) a basic defined benefit pension, (2) Social 
Security benefits, and (3) the Thrift Saving Plan (TSP)--a retirement 
savings and investment plan in which employee contributions are 
matched by the employer up to a certain percentage of salary. Compared 
with participants in the UN Pension Fund or CSRS, U.S. civil service 
employees participating in the FERS plan receive a smaller defined 
benefit pension, but receive Social Security and earnings from 
accumulated TSP investments upon retirement.[Footnote 9] Further 
information on eligibility requirements and key plan provisions of the 
UN Pension Fund and FERS can be found in appendix II. 

Many allowances offered by the UN to its professional staff are 
similar to those offered by the U.S. government, but both entities 
also offer allowances unique to their own employees. Figure 1 compares 
similar allowances provided by both the UN and the U.S. government to 
eligible staff, as well as allowances offered by one but not the 
other.[Footnote 10] 

Figure 1: Comparison of Selected Allowances Offered to Eligible United 
Nations (UN) Professional Staff and U.S. Foreign Service Employees and 
Civil Service Employees Serving Overseas: 

[Refer to PDF for image: overlapping spheres] 

Types of UN allowances not offered to U.S. staff: 
* Support of dependents (including children, disabled children, and 
other qualifying secondary dependents)[A]; 
* Incentive to change duty stations[B]; 
* Repatriation after service. 

Types of U.S. allowances not offered to UN staff: 
* Student loan repayment. 

Types of allowances offered by both organizations: 
* Serving in a dangerous duty station; 
* Allowances, based on duty station, for cost of living; 
* Travel for education, security and medical evacuation, rest and 
recuperation, home leave, and family visit; 
* Maintaining a family at a separate location from a duty station; 
* Serving in a hardship duty station; 
* Relocation and moving expenses; 
* Representation expenses; 
* Compensation for termination[C]; 
* Education subsidies; 
* Housing subsidy. 

Source: GAO analysis of UN and U.S. documents. GAO-14-546. 

Notes: In figure 1, we do not discuss U.S. allowances, such as transit 
benefits, that are available only to U.S. civil service employees 
serving domestically. 

[A] The UN also pays employees with dependents at a higher salary rate 
than those without dependents. According to the International Civil 
Service Commission, this practice is similar to the practice of member 
states that provide a tax advantage for having dependents. Many UN 
employees are not eligible for these tax advantages, as they might be 
if they were employed in their national civil service, because most UN 
employees are not required to pay income taxes on their UN earnings in 
their home country. The UN also has separate allowances specifically 
related to dependents, including the children's allowance and the 
secondary dependent's allowance. 

[B] While the amount of the UN mobility allowance varies depending on 
the level of hardship of the duty station to which the staff member is 
moving, UN staff members moving between nonhardship duty stations also 
receive the allowance. The U.S. government also offers certain 
relocation incentives. However, these incentives are either for 
hardship duty stations only or require an employee to sign an 
agreement to complete a specified period of service with the agency 
granting the incentive. 

[C] In cases of unsatisfactory service, payment of the UN's 
compensation-for-termination allowance is at the discretion of the 
Secretary-General for up to half of what is otherwise payable. The 
Office of Personnel Management does not permit the payment of the 
compensation-for-termination allowance in cases of unsatisfactory 
service. 

[End of figure] 

As shown in figure 1, both the UN and the U.S. government, for 
example, provide allowances to compensate staff for serving in a 
dangerous or hardship duty station and to account for the cost of 
living at particular duty stations. However, the UN and the U.S. 
government each offer some allowances to staff that are not offered by 
the other. For example, eligible UN professional staff may receive a 
dependents allowance, to compensate for having a child or other 
qualifying dependent; or a mobility allowance, to provide incentive 
for staff to change duty stations. Similar allowances are not part of 
the compensation package for U.S. Foreign Service employees and civil 
service employees serving overseas. In addition, U.S. government 
employees can be eligible for student loan repayments, at the 
discretion of each agency, if the employee signs a service agreement 
to remain with the agency for at least 3 years. Appendix III provides 
more detailed information on UN and U.S. allowances. 

The UN and the U.S. Government Each Provided Certain Benefits and 
Allowances of Greater Monetary Value than Those Provided by the Other: 

Using available data, we compared specific benefits and allowances 
provided by the UN and the U.S. government, and found that each entity 
provided certain benefits and allowances of greater monetary value 
than those provided by the other. However, the lack of available or 
comparable data prevented us from making a monetary comparison of all 
UN and U.S. benefits and allowances. 

UN and U.S. Benefits and Allowances That Were Comparable: 

We were able to compare certain UN and U.S. compensation elements, 
including retirement benefits, health insurance, and allowances such 
as hardship pay. Table 2 summarizes the benefits and allowances that 
we compared and the results of our analysis. 

Table 2: United Nations (UN) and U.S. Government Benefits and 
Allowances That GAO Reviewed: 

Compensation element: Retirement benefits; 
Result: The results of our estimates varied depending on years of 
service and other factors. For example, under a scenario where UN 
staff and U.S. federal civilian employees retire at age 62 with 20 
years of service, the Federal Employees Retirement System (FERS) 
replaced a higher percentage of preretirement salary than the UN Joint 
Staff Pension Fund. When these employees retire at age 62 with 30 
years of service, FERS and the UN Pension Fund replaced similar 
percentages of preretirement salary[A]. 

Compensation element: Health insurance; 
Result: The average cost per employee was higher for eligible U.S. 
government employees than for UN staff. 

Compensation element: Allowances; 
Result: The UN and the U.S. government each provided certain 
allowances with higher monetary value than those provided by the other. 

Source: GAO analysis of UN and U.S. data. GAO-14-546: 

[A] We compared the UN Joint Staff Pension Fund and FERS as of 
December 2012. Both plans have recently changed in ways that we did 
not model. For instance, effective January 2014, the General Assembly 
increased the normal retirement age from 62 to 65 for new UN staff. 
For U.S. federal civilian employees, contribution rates for the FERS 
pension increased for those hired on January 1, 2013, or later. 
Employees enrolled in FERS and first hired in 2013 contribute 3.1 
percent of gross salary toward their pension plan, while employees 
first hired in 2014 or later contribute 4.4 percent. 

[End of table] 

Retirement Benefits: 

To compare the UN and U.S. civil service retirement systems, we 
estimated income replacement rates for UN employees and U.S. civil 
service employees covered by FERS under different scenarios, including 
differing work histories, and retirement contribution rates.[Footnote 
11] Income replacement rates provide a method of comparing retirement 
programs that describe how much of a worker's preretirement salary is 
replaced in the first year of retirement by a retirement plan. For 
example, an employee with a preretirement salary of $100,000 who 
received $60,000 in the first year of retirement from his or her 
retirement plan has an income replacement rate of 60 percent. Our 
scenarios had varying results. One scenario showed that income 
replacement rates under FERS were higher than for the UN Pension Fund, 
given the economic conditions of the time periods we analyzed. 
[Footnote 12] In another scenario, the income replacement rates for 
the two systems were similar. Both scenarios are summarized in table 
3.[Footnote 13] One of our scenarios compares UN staff and U.S. civil 
service employees covered by FERS who retire at age 62, contribute an 
equivalent percentage of salary to their retirement, and have 30 years 
of service.[Footnote 14] Our estimates show that the FERS retirement 
package replaces between 63 and 69 percent of salary, while the UN 
Pension Fund replaces between 63 and 68 percent of salary. We also 
compared UN staff and U.S. employees with 20 years of service who 
retire at age 62 and contribute an equivalent percentage of salary to 
their retirement. Our estimates show that FERS replaces between 48 and 
55 percent of salary, and the UN Pension Fund replaces between 40 and 
44 percent of salary.[Footnote 15] 

Table 3: United Nations (UN) and U.S. Retirement Income Replacement 
Rates under Different Scenarios: 

Scenario: U.S. federal civilian employees and UN staff with 30 years 
of service who retire at age 62 and contribute similar proportions of 
take-home pay toward retirement; 
Salary range: 
UN[A]: $65,272-$176,274; 
U.S. government[B]: $47,413-$120,347; 
Income replacement rate (percent): 
UN: 63%-68%; 
U.S. government: (FERS): 63%-69%. 

Scenario: U.S. federal civilian employees and UN staff with 20 years 
of service who retire at age 62 and contribute similar proportions of 
take-home pay toward retirement; 
Salary range: UN[A]: 
$65,272-$176,274; 
U.S. government[B]: $47,413-$120,347; 
Income replacement rate (percent): 
UN: 40%-44%; 
U.S. government: (FERS): 48%-55%. 

Source: GAO analysis of UN and U.S. data. | GAO-14-546: 

Notes: The income replacement rate we calculated for UN staff divided 
total (gross) retirement income in the first year of retirement by net 
remuneration (take-home pay) in the last year of work. The income 
replacement rate we calculated for U.S. federal civilian employees 
divided total (gross) retirement income in the first year of 
retirement by net salary (take-home pay after taxes) in the last year 
of work. We use this measure for the purpose of comparing the Federal 
Employees Retirement System (FERS) and the UN Joint Staff Pension 
Fund; it is not meant to assess the absolute generosity or 
appropriateness of either retirement plan. 

These salary ranges represent the administrative salary ranges of the 
UN and U.S. professional systems, and attempt to show the minimum and 
maximum of each system. Unlike the UN's margin calculation, they do 
not reflect consideration of the distribution of employees or the 
individual or average pay of employees within the systems. 

[A] For UN staff, the salary range represents UN net remuneration in 
New York City at the dependency rate of salary, a rate of salary paid 
by the UN to staff members with dependents. Net remuneration is 
defined by the UN as net base salary plus post adjustment. This 
represents take-home pay for a staff member with dependents, and is 
consistent with the UN's method for calculating income replacement 
rates in retirement. 

[B] The salary range for U.S. federal employees is gross salary in New 
York, net of U.S. federal and New York state taxes. We estimated taxes 
assuming employees were married and filing jointly, with no children. 
We used this measure of salary to ensure comparability with take-home 
pay at UN headquarters. 

[End of table] 

While our analysis of income replacement rates showed varying results, 
several factors affected our estimates. First, to achieve higher 
income replacement rates than UN staff, U.S. employees have to make 
voluntary contributions to their retirement plan and accept a higher 
degree of risk in their retirement income because of their TSP 
investments. TSP investment risks include both individual ability and 
willingness to defer income and to make appropriate asset allocation 
choices, as well as market risk on returns. Because the amount that 
U.S. civil service employees contribute to their TSPs affects the 
income replacement rate, we also analyzed scenarios for U.S. employees 
who make different contributions to their TSPs. For example, we 
analyzed a scenario where U.S. civil service employees who have 30 
years of government service, retire at age 62, and contribute the 
average contribution rate among FERS employees who made elective 
contributions to the TSP in 2012, and found that FERS replaced between 
77 to 82 percent of their salaries.[Footnote 16] In contrast, if 
employees make no elective contribution to the TSP throughout their 
careers, our estimates show income replacement rates from 57 to 64 
percent. Second, UN staff generally earn higher salaries than U.S. 
civil service employees in comparable jobs. Therefore, UN pensions may 
not replace as great a percentage of preretirement salary as the FERS 
retirement plan, but in some cases may have the same or greater 
estimated monetary value. Last, the income replacement rates we 
obtained for FERS employees reflect the economic conditions over the 
30-year period from 1983 to 2012, with relatively high wage growth and 
asset fund returns in the early years of this period. Scenarios using 
different economic conditions would have obtained different income 
replacement rates.[Footnote 17] 

Health Insurance: 

We compared the costs of health care plans for UN staff based in New 
York City, New York, and U.S. civil service employees, and found that 
the average organizational cost per employee in 2012 was 5 percent 
higher for U.S. employees than for UN staff. The average health care 
subsidy for UN professional staff in New York who participated in a 
plan in 2012 was $6,228, according to UN payroll data. Approximately 
98 percent of UN professional staff in New York received a health care 
subsidy, and when we included both participants and nonparticipants, 
we found that the overall average cost per UN staff member in New York 
was approximately $6,100.[Footnote 18] According to OPM, the average 
agency cost of providing health care plans to U.S. employees who 
participated in federal employee health benefit plans in 2012 was 
$8,022, excluding employees of the U.S. Postal Service.[Footnote 19] 
When we accounted for the 80 percent participation rate in federal 
employee health benefit plans,[Footnote 20] we found that the average 
agency cost per employee, excluding U.S. Postal Service employees, was 
approximately $6,417, including both participants and 
nonparticipants.[Footnote 21] 

Allowances: 

Comparing allowances, we found that the UN and the U.S. government 
both provide certain allowances with higher monetary value than those 
provided by the other. Using available data, we were able to compare 
three allowances with similar purposes. Table 4 provides a summary of 
our analysis of these allowances. 

Table 4: Comparison of 2012 Allowance Payments to United Nations (UN) 
Secretariat Professional Staff, State Foreign Service Employees and 
Civil Service Employees Serving Overseas, and Department of Defense 
(DOD) Civil Service Employees Serving Overseas: 

Type of allowance: Serving in a hardship duty station; 
Allowance names: 
UN: Hardship pay; 
U.S. government: Hardship differential; 
Average amount per recipient--UN: $10,294; 5,299 recipients; 
Average amount per recipient--State: $13,902; 7,018 recipients; 
Average amount per recipient--DOD: $9,248; 11,858 recipients. 

Type of allowance: Maintaining family at a separate location from a 
duty station; 
Allowance names: 
UN: Additional hardship allowance for nonfamily duty station; 
U.S. government: Separate maintenance allowance (SMA)[A]; 
Average amount per recipient--UN: $12,141; 2,928 recipients; 
Average amount per recipient--State: $8,831; 876 recipients; 
Average amount per recipient--DOD: $9,446; 622 recipients. 

Type of allowance: Relocation and moving expenses; 
Allowance names: 
UN: Nonremoval allowance; 
U.S. government: Foreign transfer allowance; 
Average amount per recipient--UN: $1,918; 7,541 recipients; 
Average amount per recipient--State: No data available; 
Average amount per recipient--DOD: $1,785; 1,118 recipients. 

Source: GAO analysis of UN, State, and DOD data. | GAO-14-546: 

[A] The U.S. government offers three kinds of SMA: (1) involuntary 
SMA, which is granted because of dangerous, unhealthful, or adverse 
living conditions at the employee's post; (2) voluntary SMA, granted 
to employees who face special needs or hardship involving the employee 
or family members; and (3) transitional SMA, granted to employees 
whose family members require temporary, post-evacuation housing or in 
connection with an unaccompanied assignment. According to the UN, the 
involuntary SMA is more comparable to the UN's additional hardship 
allowance for nonfamily duty stations. However, we were not able to 
disaggregate involuntary, voluntary, and transitional SMA based on the 
data provided by State and DOD. 

[End of table] 

As shown in table 4, UN staff received higher average dollar amounts 
for additional hardship allowance for nonfamily duty stations than 
State and DOD staff received for the separate maintenance allowance. 
UN staff also received a higher average dollar amount for the 
nonremoval allowance than DOD staff did for the foreign transfer 
allowance. Finally, State staff received higher average dollar amounts 
for hardship differentials than UN staff did for hardship pay, but UN 
dollar amounts were higher than those paid to DOD staff. 

We also compared other allowances that are unique to either the UN or 
the U.S. government. Table 5 shows the allowances, total number of 
recipients, total spent by the UN or U.S. government on each allowance 
in 2012, and average monetary value per recipient. 

Table 5: Number of Recipients, Total Monetary Value, and Average 
Monetary Value per Recipient in 2012 for Unique United Nations (UN) or 
U.S. Government Allowances: 

Unique UN allowances: 

Type of allowance: Support of dependents; 
Allowance name: Dependents[A]; 
Number of recipients: 6,126; 
Total monetary value: $28,724,961; 
Average monetary value per recipient: $4,689. 

Type of allowance: Incentive to change duty stations; 
Allowance name: Mobility; 
Number of recipients: 1,065; 
Total monetary value: $8,557,920; 
Average monetary value per recipient: $8,036. 

Type of allowance: Return to home country after service; 
Allowance name: Repatriation grant; 
Number of recipients: 478; 
Total monetary value: $10,736,110; 
Average monetary value per recipient: $22,460. 

Unique U.S. government allowances: 

Type of allowance: Supplement repayment of student loans; 
Allowance name: Student loan repayment; 
Number of recipients: 4,643[B]; 
Total monetary value: $32,937,786[B]; 
Average monetary value per recipient: $7,094. 

Source: GAO analysis of UN Payroll and State and DOD data. | GAO-14-
546: 

[A] UN allowances specifically related to dependents, include the 
children's allowance and the secondary dependents' allowance. The UN 
also pays employees with dependents at a higher salary rate than those 
without dependents. According to the International Civil Service 
Commission (ICSC), this is similar to the practice of member states 
that provide a tax advantage for having dependents. Many UN employees 
are not eligible for these tax advantages, as they might be if they 
were employed in their national civil service, because most UN 
employees are not required to pay income taxes on their UN earnings in 
their home country. 

[B] Data on student loan repayments are for State and the Department 
of Defense (DOD) only. Other U.S. federal agencies also offer this 
allowance to eligible U.S. civil service employees. 

[End of table] 

As shown in table 5, the UN provides allowances to its staff that are 
not provided by the U.S. government to Foreign Service employees and 
civil service employees serving overseas. For example, the UN provides 
a mobility allowance as an incentive for its staff to move among duty 
stations, including moving to more difficult duty stations.[Footnote 
22] UN staff who received this allowance received an average amount of 
$8,036 in 2012. As shown in table 5, the U.S. government also provides 
some eligible Foreign Service employees and civil service employees 
serving overseas, in addition to employees serving domestically, with 
a student loan repayment incentive, but the UN does not provide a 
similar allowance to its professional staff. According to State 
officials, the agency spent approximately $12 million in 2012 on 1,337 
employees serving both domestically and abroad for student loan 
repayments.[Footnote 23] According to DOD, the agency spent 
approximately $20.9 million in 2012 on 3,306 employees for student 
loan repayments. 

Other Benefits and Allowances That Could Not Be Compared: 

The lack of available and, in some cases, comparable data prevented us 
from comparing certain other UN and U.S. benefits and allowances, 
including the costs to fund retirement benefits and retiree health 
insurance, certain allowances, and leave benefits. 

* Costs to fund retirement benefits and retiree health insurance. 
While we compared income replacement rates for the UN Pension Fund and 
FERS, we were unable to estimate future costs to the UN and the U.S. 
government of providing retirement benefits or retiree health 
insurance because of the lack of comparable data. For instance, while 
both the UN and OPM conduct regular studies to estimate the future 
costs of their respective retirement systems, these studies use 
differing methods and assumptions to determine future costs, including 
different assumptions on key factors such as investment growth rates 
and rates of inflation as well as different actuarial methods of 
assigning retirement costs across years of employee service. Because 
of these differences, the UN's and OPM's current estimates cannot be 
used to produce a valid comparison of future costs. 

* Allowances, including danger pay and education grants. Comparable 
data were not available for certain allowances, including danger pay 
and education grants. Payroll data on these allowances are maintained 
at individual duty stations and are not linked to the State, UN, and 
DOD central payroll systems. Therefore, these allowances were not 
reflected in the payroll data that we collected. 

* Leave benefits. While we previously reported that UN Secretariat 
staff are eligible for more generous leave benefits than those 
received by U.S. civil service employees,[Footnote 24] we were unable 
to compare the monetary value of leave used by UN staff and U.S. 
employees because the UN and U.S. agencies were unable to provide 
comparable data on leave amounts used by their employees. See appendix 
IV for more information on UN and U.S. civil service leave benefits. 

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. Staff-
related expenditures rose steadily from $1.95 billion in 2002-2003 to 
$2.98 billion in 2010-2011, the most recent period for which data were 
available, at an average rate of about 7 percent per 2-year budget, 
when adjusted for inflation. Concerns about the level of total 
compensation costs and long-term sustainability have been raised by 
the Secretary-General, General Assembly, member states, and other UN 
organizations. In response, the General Assembly, the ICSC, the UN 
Joint Staff Pension Fund, and others have taken actions aimed to 
address these concerns, such as freezing current allowance amounts. 
Efforts to study and revise the total compensation package include the 
ICSC's review of total compensation and the CEB's baseline study of 
compensation costs. The General Assembly has called upon the ICSC to 
include all elements of total compensation in its review. However, we 
found that the ICSC review does not incorporate key elements of total 
compensation, such as retiree health insurance. 

The UN Has Begun to Take Action to Address the Long-Term 
Sustainability of Its Rising Total Compensation Costs: 

The UN has recently begun taking action in response to concerns about 
its total compensation costs raised by the General Assembly, member 
nations including the United States, and various UN organizations. 
These concerns have focused on the long-term sustainability of UN 
total compensation, as well as the present and historical costs of 
specific elements of UN compensation. 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.[Footnote 25] Figure 2 shows that staff-related 
expenditures accounted for over half of the regular budget during this 
period. Between 2004-2005 and 2010-2011, growth in staff-related 
expenditure was accompanied by faster growth in the Secretariat's 
regular budget, causing a decline in the share of staff-related 
expenditures in the regular budget over this time period. 

Figure 2: United Nations (UN) Secretariat Staff-Related Expenditures, 
2002-2003 to 2010-2011: 

[Refer to PDF for image: multiple line graph] 

Budget cycle: 2002-2003; 
Staff-related expenditure (percent of regular budget): 65.6%; 
Staff-related expenditure (inflation adjusted): $2.31 billion; 
Staff-related expenditure: $1.95 billion. 

Budget cycle: 2004-2005; 
Staff-related expenditure (percent of regular budget): 61.3%; 
Staff-related expenditure (inflation adjusted): $2.51 billion; 
Staff-related expenditure: $2.24 billion. 

Budget cycle: 2006-2007; 
Staff-related expenditure (percent of regular budget): 58.2%; 
Staff-related expenditure (inflation adjusted): $2.59 billion; 
Staff-related expenditure: $2.44 billion. 

Budget cycle: 2008-2009; 
Staff-related expenditure (percent of regular budget): 55.9%; 
Staff-related expenditure (inflation adjusted): $2.77 billion; 
Staff-related expenditure: $2.68 billion. 

Budget cycle: 2010-2011; 
Staff-related expenditure (percent of regular budget): 55.0%; 
Staff-related expenditure (inflation adjusted): $2.97 billion; 
Staff-related expenditure: $2.98 billion. 

Source: GAO analysis of UN data. GAO-14-546. 

[End of figure] 

Concerns have also been raised in regard to specific elements of the 
UN total compensation package. For instance, the General Assembly has 
brought attention to the growing margin, or percentage difference, 
between average UN salaries and average U.S. civil service salaries. 
The General Assembly has stipulated that the UN salaries should be 
between 110 and 120 percent of U.S. civil servant salaries, with a 
desirable midpoint of 115 percent over 5 years. 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.[Footnote 26] In 
2013, the margin rose again to 119.6 percent, also raising the 5-year 
average above 115 percent to 115.7 percent. 

Additionally, the General Assembly has raised questions regarding the 
long-term sustainability of other elements of UN compensation, such as 
retiree health insurance. In 2013, the Secretary-General reported the 
unfunded liability for its after-service health insurance program to 
be almost $4 billion. The General Assembly expressed "deep concern" 
over these costs, and the Secretary-General noted that the UN lacks 
the assets to settle this liability. The Secretary-General further 
reported that a long-term funding strategy is needed. In 2012, a 
General Assembly resolution noted that the UN Joint Staff Pension Fund 
ran a deficit for a second consecutive biennium, and emphasized the 
need to ensure the long-term sustainability of the fund. 

The General Assembly, the ICSC, and others have taken actions to 
address these concerns. 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. UN actions taken in 
response to specific concerns are summarized in table 6. 

Table 6: United Nations (UN) Actions Taken in Response to Concerns 
over the Sustainability of UN Compensation Costs: 

Element(s) of UN compensation: Allowance amounts; 
Concern: The General Assembly expressed concern about increases in 
claims for the education grant, resulting in a 35 percent increase in 
education grant payments between 2009 and 2011; 
Action: In 2013, the General Assembly froze all UN professional 
allowances amounts for at least 1 year. 

Element(s) of UN compensation: After-service health insurance; 
Concern: The General Assembly expressed "deep concern" about the long-
term sustainability of its after-service health insurance program. The 
Secretary-General reported that the UN lacks the assets to settle 
these unfunded liabilities and that a long-term funding plan is needed 
to address them; 
Action: In 2011, the UN required eligible participants to enroll in 
Medicare Part B, with the UN reimbursing the required premium, which 
was estimated to lower actuarial liabilities by $258 million. It also 
increased deductibles to health care plans in 2009 and 2013 to further 
contain health care costs. 

Element(s) of UN compensation: Pensions; 
Concern: The actuarial value of the UN Joint Staff Pension Fund 
declined from a surplus of 4.25 percent in 1999 to a deficit of 1.87 
percent in 2011 (second consecutive 2-year deficit). While this 
deficit is within the safety margin of plus or minus 2 percent 
established by the UN's Committee of Actuaries, the General Assembly 
has raised concerns over the fund's financial sustainability, as the 
increasing longevity of UN staff has increased its liabilities; 
Action: Effective January 2014, the General Assembly raised the normal 
retirement age from 62 to 65 for new staff. 

Source: GAO analysis of UN documents. GAO-14-546. 

[End of table] 

In addition, the UN has initiated a review of its total compensation 
package. Specifically, in 2012, the ICSC began a review of UN total 
compensation, and the General Assembly endorsed this action. The ICSC 
added the total compensation review to its 2013-2014 work plan and has 
begun collecting data related to many elements of the UN compensation 
package. The CEB has assisted the ICSC with this data collection 
effort.[Footnote 27] As a result of its review, the ICSC plans to 
issue several recommendations to the General Assembly on changes to 
the overall compensation structure. The study is scheduled for 
completion in 2015. 

The ICSC's Total Compensation Review Does Not Incorporate Key Elements 
of Total Compensation: 

While the UN is undertaking efforts to examine its compensation 
package, we found that the ICSC's review does not incorporate all key 
elements of total compensation. 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. Further, the ICSC 
has reported that a holistic review of all elements of compensation is 
important to prevent fragmentation of the UN compensation system. 
However, according to ICSC officials and documents, the ICSC's review 
of total compensation will not incorporate all key elements of total 
compensation. Instead, the ICSC review will focus on certain 
compensation elements, such as salary and allowances. Other key 
elements of compensation with significant costs, including benefits 
such as pensions, health insurance, and after-service health 
insurance, will not be incorporated into the ICSC review. 

According to the ICSC, the compensation review will result in the 
development of a compensation calculator and a series of 
recommendations to the General Assembly about possible changes to the 
UN compensation structure. The calculator will be based on a series of 
estimates about the current and future costs of individual elements of 
compensation. For example, an estimate of danger pay might multiply 
the total number of staff serving at duty stations eligible for that 
allowance by the danger pay rate of $1,600 per month as of 2013. 
However, according to ICSC officials, the calculator will not generate 
estimates for key elements of compensation, including pensions, health 
insurance, and retiree health insurance. 

ICSC officials noted that because the various elements of compensation 
affect one another, their study may have effects on elements of 
compensation not directly included in their review. For example, any 
changes proposed to the salary structure could affect other items that 
are linked to salary, such as pensions. However, ICSC officials stated 
that, as part of their review, they will not make specific 
recommendations related to compensation elements outside of their area 
of administrative responsibility. Within the UN system, several 
different entities have administrative responsibility for the various 
elements of total compensation. The ICSC is responsible for matters 
pertaining to salary and allowances, the Joint Staff Pension Fund 
Board administers the pension fund, and the Health and Life Insurance 
Section administers health and retiree health insurance plans. 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. In addition, ICSC officials told us that issues 
related to elements outside their responsibility will be flagged for 
separate review by the UN entities with responsibility for their 
administration, such as the UN Joint Staff Pension Fund and the UN 
Health and Life Insurance Section. 

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. The cost to the UN of some of 
the elements not fully incorporated in either study is significant. 
For example, the unfunded liability of the UN's retiree health 
insurance plan was estimated in 2012 to be almost $4 billion. In 
addition, according to the UN Secretariat, contributions to the Joint 
Staff Pension Fund and health insurance plans totaled $419 million in 
2010-2011, which was 8 percent of the 2-year regular budget. 

Conclusions: 

We found that the UN and the U.S. government offer generally similar 
benefits and allowances to their employees, with some differences. Our 
comparisons of the monetary value of certain UN and U.S. benefits and 
allowances show that each offered compensation elements of higher 
value than the other. However, the lack of available or comparable 
data prevented a comparison of other UN and U.S. benefits and 
allowances. 

The Secretary-General; General Assembly; member states, including the 
United States; and other UN organizations have expressed concerns 
about the rising costs and long-term sustainability of the UN's total 
compensation package. Many of these concerns relate to the 
organization's retiree health insurance system and its pension fund. 
The retiree health insurance system, for example, has a large unfunded 
liability that may place the long-term viability of the program at 
risk. The UN has recognized these issues and begun taking actions to 
address the costs of its compensation package. The ICSC's ongoing 
review of total compensation and the CEB's baseline compensation cost 
study are important steps in understanding the current costs of the 
compensation package, with the ICSC study making recommendations about 
possible changes to the structure of the system and developing a cost 
calculator that could be used to estimate the impact of these possible 
changes. However, because various entities within the UN system have 
administrative responsibility over different elements of the 
compensation package, the ICSC review will not include key elements of 
compensation, particularly pensions, health insurance, and retiree 
health insurance. Without a holistic evaluation of its compensation 
package that incorporates all key elements of compensation, the 
General Assembly and member states will not be able to make fully 
informed decisions about proposed changes to the compensation system. 

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. 

Agency Comments and Our Evaluation: 

We provided a draft of this report for comment to the Secretary of 
State, the Secretary of Defense, the Director of OPM, the Executive 
Director of the Federal Retirement Thrift Investment Board (FRTIB), 
and the UN. State, OPM, and the UN provided us with technical 
comments, which we incorporated into the report as appropriate. State 
also provided written comments, which we reprinted in appendix V. 

State agreed with our recommendation and stated that it generally 
accepts and endorses our findings. State noted that our report reveals 
that several elements of compensation, including pension benefits and 
after-service health benefits, are not included in the ICSC's 
compensation review. State further commented that the ICSC review 
faces inherent challenges, including complexities associated with the 
Noblemaire Principle, which requires that compensation for UN 
professional staff be set in comparison to the highest compensated 
national service, which the UN has considered to be the U.S. federal 
civil service. State commented on ambiguities with the Noblemaire 
Principle, including ambiguities over the comparison group and which 
elements of compensation should be included in the comparison. We 
agree that there are ambiguities associated with the Noblemaire 
Principle and therefore we did not use it as the basis for our 
comparison of UN and U.S. government benefits and allowances. As we 
discuss in the report, the UN General Assembly has directed that only 
salaries be used as part of the margin calculation, rather than total 
compensation, which would include benefits and allowances in addition 
to salaries. It was beyond the scope of our review to comment on how 
the Noblemaire Principle should be applied, and our comparisons of UN 
and U.S. government benefits and allowances should not be interpreted 
as a statement or opinion on how Noblemaire comparisons should be 
conducted. 

We are sending copies of this report to the appropriate congressional 
members, the Secretary of State, the Secretary of Defense, the 
Director of OPM, the Executive Director of the FRTIB, the UN, and 
other interested parties. In addition, the report is available at no 
charge on the GAO website at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-9601 or melitot@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix VI. 

Signed by: 

Thomas Melito: 
Director, International Affairs and Trade: 

List of Requesters: 

The Honorable Bob Corker: 
Ranking Member: 
Committee on Foreign Relations: 
United States Senate: 

The Honorable Lindsay Graham: 
Ranking Member: 
Subcommittee on State, Foreign Operations, and Related Programs: 
Committee on Appropriations: 
United States Senate: 

The Honorable John Barrasso: 
United States Senate: 

The Honorable Richard Burr: 
United States Senate: 

The Honorable Tom Coburn: 
United States Senate: 

The Honorable James Inhofe: 
United States Senate: 

The Honorable Johnny Isakson: 
United States Senate: 

The Honorable Mike Lee: 
United States Senate: 

The Honorable James Risch: 
Unites States Senate: 

The Honorable Marco Rubio: 
United States Senate: 

[End of section] 

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. 

To compare UN and U.S. government benefits and allowances, we reviewed 
relevant UN data and interviewed UN officials to determine the 
elements of the UN total compensation package available to UN 
Secretariat professional staff in 2012. Similarly, we reviewed 
relevant U.S. data and interviewed U.S. officials to determine similar 
elements of total compensation offered in 2012 to U.S. civil service 
employees, and for U.S. civil service employees serving overseas for 
the Departments of State (State) and Defense (DOD), and State Foreign 
Service employees. We examined the similarity of these compensation 
elements by comparing the purpose, structure, and eligibility 
requirements in the UN and U.S. systems. 

To compare the monetary value of elements of the UN total compensation 
package with similar elements of the U.S. government total 
compensation package, we collected available salary, benefit, and 
allowance data for UN Secretariat professional staff from the UN's 
Payroll Operations Unit for calendar year 2012. We also collected 
available data for U.S. government employees, including civil service 
employees serving overseas and Foreign Service employees, from the 
Office of Personnel Management (OPM), State, and DOD. For data on 
health insurance, life insurance, and retiree health care benefits, we 
collected data from OPM on U.S. civil service employees, because OPM 
does not disaggregate these data by salary scale, occupation, or 
location. For data on retirement benefits, we collected data on the 
cost of the Federal Employees Retirement System (FERS) pension plan 
from OPM on U.S. civil service employees hired under FERS, because OPM 
does not disaggregate these data by salary scale or occupation; and we 
collected data on Thrift Saving Plan (TSP) participation rates and 
deferral rates from the Federal Retirement Thrift Investment Board 
(FRTIB) for U.S. civil service employees who are enrolled in the FERS 
retirement plan, because the FRTIB does not disaggregate these data by 
salary scale or occupation. For data on allowances, we collected data 
from State and DOD for Foreign Service employees and civilians serving 
overseas, because these employees are comparable to UN Secretariat 
professional staff. Data from State and DOD were for calendar year 
2012.[Footnote 28] Because of variations in the structure, 
administration of payments, and data availability for individual 
compensation elements, we calculated monetary value for individual 
elements using different approaches. As a result, individual 
calculations cannot be summed into a single total for all benefits, 
allowances, or compensation. 

To assess the reliability of UN data, we interviewed UN officials, 
reviewed available technical documentation, and performed basic 
reasonableness checks of the data for obvious inconsistency errors and 
completeness. When we found discrepancies, we brought them to the 
attention of relevant agency officials and worked with these officials 
to correct the discrepancies before conducting our analyses. We 
determined that these data were sufficiently reliable for our 
analyses, including determining the monetary value of available UN 
payroll transactions, and the number of employees receiving these 
benefits and allowances in calendar year 2012; determining the 
monetary value of retirement contributions for UN staff for income 
replacement rate scenarios that we conducted and for determining the 
UN pension benefit formula; and for discussing UN staff-related costs 
and the level of these costs as a percentage of the regular budget. 
However, these data do not include complete information on certain 
allowances that are not captured in the UN's central payroll system, 
such as danger pay allowances. 

To assess the reliability of U.S. data, we interviewed officials from 
OPM, State, DOD, and the FRTIB; reviewed available technical 
documentation; and performed basic reasonableness checks for obvious 
inconsistency errors and completeness. When we found discrepancies, we 
brought them to the attention of relevant agency officials and worked 
with officials to correct the discrepancies before conducting our 
analyses. We determined that these data were sufficiently reliable for 
our analyses. However, these data do not include information on 
certain allowances that are not captured by State's and DOD's central 
payroll systems, such as danger pay. 

Using these data, we calculated benefit and allowance amounts provided 
to UN staff and U.S. government employees. 

We also estimated benefit amounts UN and U.S. retirement programs 
would pay to employees--which we expressed in the form of income 
replacement rates--under different scenarios, including differing 
years of service and contributions toward retirement. We note, 
however, that these are illustrative examples, which do not represent 
actual or average benefits received by UN staff or U.S. government 
employees. We calculated these income replacement rates for UN staff 
and for U.S. civil service employees covered by FERS. The income 
replacement rates we calculated divided a workers' gross retirement 
income in the first year of retirement by the worker's net salary in 
his or her final year of work. We use this measure for the purpose of 
comparing FERS and the UN Joint Staff Pension Fund; it is not meant to 
assess the absolute generosity or appropriateness of either retirement 
plan.[Footnote 29] For more information on our assumptions and 
methodology in estimating income replacement rates, see appendix II. 

To identify health care costs for the UN, we used data on health care 
subsidies from the UN payroll system. UN payroll data contain the 
amount of health care subsidy that each employee receives from the 
organization. We examined the mean and median values of the health 
care subsidy for professional staff located in New York, first for the 
entire staff population, and then for staff members who participate in 
a health care plan. Because approximately 98 percent of UN staff 
members receive a health care subsidy, there is little difference 
between average plan costs for the entire staff population, and 
average plan costs per participant. We also examined the mean and 
median values of the health care subsidy for participants with and 
without dependents. 

To identify health care costs for U.S. civil service employees, we 
used data provided by OPM about the average cost to the agency of 
providing health insurance. OPM provided the average cost per 
participant, overall, and broken down into participants in self-only 
plans and participants in self-and-family plans. We multiplied this 
average cost by the participation rate in 2012, approximately 80 
percent, to obtain the average cost to federal agencies of providing 
health insurance to U.S. civil service employees. A limitation of 
using OPM health care cost data to compare U.S. civil service 
employees with UN staff is that OPM's data are not restricted to 
professional employees. To the extent that professional civil service 
employees choose different plans or have different patterns of health 
care usage than nonprofessional employees, federal agency costs to 
provide health insurance to professional employees may differ from the 
overall average. 

To show growth in UN staff costs over time, we collected data on staff-
related expenses from the UN Secretariat. We adjusted these figures 
for inflation using the annual U.S. gross domestic product deflator 
from the U.S. Bureau of Economic Analysis, which we normalized to use 
2011 as the base year. 

To examine UN efforts to address concerns about the long-term 
sustainability of total compensation costs, we reviewed UN documents 
and interviewed UN officials regarding the long-term costs of UN 
benefits and allowances and actions taken to address them, including 
the International Civil Service Commission's total compensation review 
and the UN Chief Executive Board's baseline compensation cost study. 
In addition, we analyzed UN General Assembly resolutions that direct 
other UN organizations to perform further actions to address these 
concerns. 

We conducted this performance audit from June 2013 to June 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

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. 
Income replacement rates are a method of comparing retirement programs 
that describe how much of a worker's preretirement salary is replaced 
in the first year of retirement by a retirement plan. We focused our 
analysis on U.S. federal civilian employees hired under FERS, which 
covers approximately 89 percent of current federal civilian employees 
and all federal civilian employees hired since 1984. 

Eligibility Requirements and Plan Provisions for the UN Pension Fund 
and FERS: 

Retirees from the UN receive a pension, while the vast majority of 
active U.S. federal civilian employees receive retirement benefits 
under FERS. The UN Joint Staff Pension Fund and FERS have some 
structural differences. The UN Joint Staff Pension Fund provides 
retirees a defined benefit, based on factors including an employee's 
age, length of participation in the plan, and salary history. The UN 
pension is similar to the Civil Service Retirement System (CSRS), 
which also provides U.S. federal civilian retirees with a defined 
benefit.[Footnote 30] FERS is a three-part retirement plan consisting 
of (1) a basic defined benefit pension, (2) Social Security, and (3) 
the TSP--a tax-advantaged retirement savings and investment plan in 
which employee contributions are matched by the employer up to a 
certain percentage of salary. Compared with participants in the UN 
Pension Fund or CSRS, U.S. federal civilian employees participating in 
the FERS plan receive a smaller defined benefit pension, but receive 
Social Security and earnings from accumulated TSP investments upon 
retirement. 

Table 7 provides additional information on the eligibility 
requirements and other plan provisions of the UN Pension Fund and 
FERS, including retirement age, contribution rates, and benefits 
formulas. 

Table 7: Eligibility Requirements and Plan Provisions for the United 
Nations (UN) Joint Staff Pension Fund and the Federal Employees 
Retirement System (FERS): 

Retirement age; 
UN Joint Staff Pension Fund: The retirement age is 60 for employees 
who began working at the UN before January 1, 1990. Normal retirement 
age is 62 for employees who began working at the UN after January 1, 
1990. The retirement age for UN employees hired on or after January 1, 
2014 is 65; 
FERS: The retirement age is 60 with at least 20 years of service or 62 
with at least 5 years of service. A person with 30 years or more of 
service may retire earlier; the minimum retirement age ranges from 55 
to 57. 

Retirement contribution; 
UN Joint Staff Pension Fund: Defined benefit; 
The current rate of contribution to the fund is 23.7 percent of 
pensionable remuneration. The employee pays one-third, or 7.9 percent, 
of that amount. The UN pays the remaining two-thirds, or 15.8 percent; 
FERS: Defined benefit; 
The current contribution rate to FERS is 12.7 percent of gross 
salary.[A] For employees hired before January 1, 2013, employees pay 
0.8 percent of their gross salary and agencies pay the remainder, or 
11.9 percent. For employees hired in 2013, the employee contribution 
is 3.1 percent of gross salary, and the employer contribution is 9.6 
percent. For employees hired on or after January 1, 2014, the employee 
contribution is 4.4 percent of gross salary; 
Thrift Savings Plan (TSP) (U.S. employees only); 
The U.S. agency contributes 1 percent of pay automatically to the TSP. 
Employees may contribute pre- or post-tax income to the TSP up to the 
federal limit ($17,500 in 2013). The government matches up to 4 
percent of gross salary; 
Social Security (U.S. employees only); 
The employer and the employee each contribute 6.2 percent of earnings 
to Social Security up to the Social Security income threshold 
($113,700 in 2013).[B]. 

Benefits formula; 
UN Joint Staff Pension Fund: For employees who reach full retirement 
age and have at least 5 years of service, the annual pension is 
calculated as 1.5 percent of the final average remuneration for each 
of the first 5 years of service, plus 1.75 percent of the final 
average remuneration for each of the next 5 years of service, plus 2 
percent of the final average remuneration for each year of service 
between year 10 and year 35 of service; plus an additional 1 percent 
of final average remuneration for any years of service above 35, up to 
a maximum total accumulation rate of 70 percent of final average 
remuneration. Final average remuneration generally means the highest 
average pensionable remuneration for 36 months of the last 5 years of 
service; 
FERS: Employees who meet the age and service requirements receive an 
annual pension benefit equal to the following formula: 1.1 percent of 
their average "high-3" salary for each year of service. For employees 
who retire under age 62, or with less than 20 years of service, the 
formula is 1 percent of their average high-3 salary for each year of 
service. Thus, an employee, retiring above age 62, who worked 30 years 
receives an annual pension benefit equal to 33 percent of his or her 
high-3 salary. "High-3" is an employee's average salary in the three 
highest-paid consecutive years of service. 

Source: GAO analysis. GAO-14-546. 

[A] Certain groups of federal employees have different retirement 
contribution levels under FERS. For example, law enforcement officers 
and firefighters, congressional employees, and members of Congress 
have higher contribution rates. We are not including these groups of 
federal employees in our estimates of income replacement rates under 
FERS. 

[B] In 2011 and 2012, employees contributed up to 4.2 percent of wages 
to Social Security, up to the Social Security income threshold, 
because of a temporary reduction in payroll taxes. 

[End of table] 

Key Assumptions for Estimates of Income Replacement Rates: 

When analyzing income replacement rates for UN staff and U.S. federal 
civilian employees under FERS, we made several simplifying 
assumptions. We assumed that staff (1) retired at the end of December 
2012 at age 62, and (2) started collecting retirement income in 
January 2013.[Footnote 31] Additionally, we assumed wages grew at the 
same rate for both UN staff and U.S. federal civilian employees. In 
certain scenarios, we assumed that staff worked for 30 years at their 
respective UN or U.S. government employers, and in others we assumed 
that staff had 20-year work histories. Both UN and U.S. staff are 
assumed to be married at retirement, and U.S. employees are assumed to 
select a FERS pension with a 50 percent benefit for their surviving 
spouse.[Footnote 32] When estimating Social Security benefits, we 
assumed that all employees had a 35-year Social Security work history, 
as Social Security benefits are based on a person's highest 35 years 
of earnings. Thus, we assumed that employees receiving Social Security 
have a work history prior to their years of service with the federal 
government or the UN. 

We made the following additional assumptions for estimating retirement 
income from TSP portfolios for U.S. federal civilian employees: 

1. We assumed that employees participated in the TSP for each year of 
their 20-or 30-year work histories. 

2. We assumed that TSP investments were fully invested in the TSP's G 
fund,[Footnote 33] and we allowed the TSP rate of return to vary each 
year,[Footnote 34] reflecting the annual rate of return of the G fund 
for the years 1988-2012.[Footnote 35] We applied these rates of return 
to an individual's TSP contributions to calculate his or her final TSP 
balance. 

3. We assumed that FERS retirees purchased an annuity using their 
entire TSP balance at the end of 2012.[Footnote 36] We used an annuity 
interest rate of 1.95 percent, which was the annual average rate in 
2012. We also assumed that the retiree's spouse was the same age as 
the retiree and that the retiree selected an annuity with a 50 percent 
survivor benefit with increasing payments to adjust for the cost of 
living. 

Methodology for Estimating Income Replacement Rates: 

We calculated income replacement rates for UN staff and U.S. federal 
civilian employees at various levels of take-home pay in their final 
year of work. We focused on take-home pay, rather than gross salary, 
because for UN staff there is no measure that directly corresponds to 
U.S. federal civilian employees' gross salary, since most UN member 
states do not require their citizens who work for the UN to pay income 
taxes. UN staff members' take-home pay is termed net remuneration, 
which is obtained from the UN's published salary scales, and is equal 
to the base salary for an employee's assigned grade and step, an 
allowance for staff members with dependents, and a post adjustment 
reflecting the cost of living for the location where the staff member 
is posted. In our scenarios, we define "salary" for UN staff as the 
net remuneration for a staff member of the assigned grade and step, 
living in New York City, New York, receiving salary at the dependent 
rate. For U.S. federal civilian employees, take-home pay is calculated 
by applying federal and New York state tax rates to the General 
Schedule gross salary scale for New York.[Footnote 37] 

Estimating Equivalent Contribution Rates: 

First, we estimated the income replacement rates for UN staff and U.S. 
federal civilian employees who contribute an equivalent percentage of 
salary to their retirement. Obtaining this equivalent contribution 
rate involves identifying the percentage of net remuneration that UN 
staff contribute to their retirement, and identifying the comparable 
contribution rate from take-home pay made by U.S. employees. To 
identify the percentage of net remuneration that UN staff contribute 
to their retirement, we first calculated the dollar value of the 
pension contribution that UN staff at each grade and step must make, 
and then divided that dollar value by the appropriate level of net 
remuneration. UN staff are required to contribute 7.9 percent of their 
pensionable remuneration to their pension plan.[Footnote 38] To obtain 
the dollar value contributed to the pension plan at each grade and 
step, we multiplied the appropriate level of pensionable remuneration 
by 7.9 percent. We then divided this dollar value by the appropriate 
level of net remuneration, resulting in the percentage of net 
remuneration contributed to pensions by UN workers who live in New 
York City and are paid at the dependent rate, at various grade and 
step levels. UN workers who are posted in New York City and paid at 
the dependent rate contribute between 8.9 percent and 9.8 percent of 
net remuneration to their pension plans. The mean and median 
contribution rate, across all grade and step levels (not weighted by 
population), is 9.4 percent. 

To obtain an equivalent contribution rate for U.S. civil service 
employees, we estimated income replacement scenarios for U.S. civil 
service employees who contribute 9.4 percent of their net salary to 
retirement. We defined net salary for U.S. employees as gross salary, 
net of U.S. federal and New York state taxes. We used net salary as a 
measure for U.S. employees, as it was more comparable to UN net 
remuneration, or take-home pay. After we converted gross salary to net 
salary, we obtained the corresponding dollar value U.S. employees 
contributed to retirement. When applying the U.S. federal tax code and 
the New York tax code, we assumed that our U.S. civil service 
employees were married, filing jointly, with no children. Once we 
obtained the dollar value of the worker's contribution to retirement, 
we converted this into a percentage of gross income that each worker 
contributes to retirement.[Footnote 39] 

TSP Contributions: 

Once we obtained the percentage of gross salary that each U.S. civil 
service worker in our scenarios contributes to retirement, we were 
able to determine the worker's contribution rate to the TSP in each 
year. In our scenarios in which UN staff and U.S. federal civilian 
employees have equivalent contribution rates, we determined the TSP 
contribution rate as a residual result of the other calculations. As a 
result, the TSP contribution rate equals the total contribution rate 
to retirement, minus the mandatory Social Security contribution rate 
each year, minus the mandatory 0.8 percent contribution rate to the 
FERS pension plan.[Footnote 40] For example, in the scenarios in which 
we set equivalent retirement contributions between UN staff and U.S. 
federal civilian employees, an employee is assumed to contribute 0.8 
percent of gross pay to a FERS pension, 4.2 percent of gross pay to 
Social Security, and between 2.7 to 3.5 percent of gross pay to the 
TSP depending on salary.[Footnote 41] 

In addition to this indirect approach, where TSP contributions are 
identified as a residual, we also present scenarios where we directly 
set the level of TSP contribution. In the direct approach shown in 
tables 12 and 13, we entered a TSP contribution as a constant 
percentage of gross salary and multiplied this contribution rate by 
each year's salary, to obtain an annual contribution to the TSP for 
each employee. 

Once we calculated each employee's annual contribution rate to the 
TSP, through either the indirect or the direct method, we then 
calculated the employing agency's matching contribution rate to the 
TSP.[Footnote 42] We then summed the employee and employer 
contribution to the TSP, to obtain the total dollar value of 
contributions to the TSP for each employee in each year. Once we 
determined each employee's annual contributions to the TSP fund, 
including both the employee and employer contributions, we calculated 
the employee's final TSP balance. As stated earlier, we assumed that 
employees invest their entire TSP balance in the G fund.[Footnote 43] 
Once the final TSP balance was obtained, we calculated a lifetime TSP 
annuity for each worker using the TSP Annuity Calculator Worksheet, 
published by the FRTIB, along with accompanying tables from the FRTIB, 
including monthly annuity factors and interest adjustment factors. 
[Footnote 44] 

In directly setting the level of TSP contribution, we presented income 
replacement rates for U.S. federal civilian employees with two 
different TSP contribution levels: 8.5 percent of gross salary, and 0 
percent of gross salary. We selected 8.5 percent of gross salary 
because, according to an FRTIB report, the contribution deferral rate 
to the TSP among FERS participants in 2012 was 8.5 percent of salary. 
[Footnote 45] We selected 0 percent in order to present the lower 
bound on income replacement rates for U.S. FERS employees. 

Our scenarios examine workers retiring at the end of December 2012. 
However, changes have been made to the FERS retirement system for U.S. 
federal civilian employees hired on January 1, 2013, or later. 
Employees enrolled in FERS and first hired in 2013 contribute 3.1 
percent of gross salary toward their pension plans, while employees 
first hired in 2014 or later contribute 4.4 percent.[Footnote 46] The 
benefit formula remains unchanged; thus, employees are funding a 
larger portion of their retirement income. In addition, although 
employees may choose not to contribute to the TSP, the default 
contribution rate was set at 3 percent for employees hired after 
August 2010. FERS employees who contribute 4.4 percent of gross salary 
toward their pension plan contribute more toward their retirement 
plans than UN employees, even when they contribute nothing to their 
TSP accounts. Under our scenario 4 below, we estimated income 
replacement rates for U.S. federal civilian employees who did not 
defer any of their salary to the TSP in any years of service. 

Social Security Benefits: 

To estimate Social Security benefits, we assumed that each employee 
has a 35-year total employment history (1978 to 2012), which includes 
employment years in addition to the employees' 30-year or 20-year U.S. 
government work histories in our scenarios.[Footnote 47] We estimated 
each employee's wage history, starting with the employee's final 
salary in 2012, and then determining salaries for earlier years. To 
set wage growth rates, we used the annual salary growth rate 
assumptions for various years that are listed in OPM's assumptions for 
the Civil Service Retirement and Disability Fund. Wage growth rates 
varied over the 35-year period, ranging from 5.5 percent in 1979 to 
3.25 percent in 2012. We applied the same salary growth rates to both 
the UN staff and U.S. civil service employees. 

To estimate Social Security contributions, we calculated the dollar 
value of employee contributions to Social Security each year by 
multiplying each year's Old-Age, Survivors, and Disability Insurance 
(OASDI)[Footnote 48] tax rate by the lesser of the employee's salary 
[Footnote 49] in that year or the Social Security maximum taxable 
earnings. We show income replacement rates for U.S. federal civilian 
employees who retire at age 62. Employees who retire at age 62 in 2013 
have not reached Social Security's full retirement age for 2013, and 
therefore receive a reduced Social Security benefit that is 25 percent 
lower than the benefit received by employees retiring at the full 
retirement age (66 in 2013) with equivalent earnings histories. 

Calculating Income Replacement Rates: 

Our income replacement rate estimates are defined as gross retirement 
income divided by take-home pay in the final year of work. 
Specifically, we estimated the income replacement rate as follows: 

* The income replacement rate for U.S. employees equals gross 
retirement income in the first year of retirement divided by net 
salary in the final year of work. 

* The income replacement rate for UN staff equals gross retirement 
income in the first year of retirement divided by net remuneration in 
the final year of work. 

In order to compare the employee and employer contributions to 
retirement plans, we also calculated the amount of retirement income 
attributable to employee contributions, and the amount of retirement 
income attributable to employer contributions. In conducting these 
calculations, 

* For the UN pension, we attributed one-third of the pension benefit 
to the employee contributions and two-thirds of the pension benefit to 
employer contributions, based on the UN contribution rates. 

* For the FERS pension, we attributed 6 percent of pension income to 
employee contributions and 94 percent to employer contributions, based 
on the percentage of salary that employees contribute (0.8 percent) 
and the percentage of salary that agencies contribute (11.9 percent). 

* For Social Security, we attributed half of the Social Security 
income to employee contributions and one-half to employer 
contributions, because in most years of the program, employees and 
employers contribute equally to Social Security. 

* For the TSP annuity, we attributed a percentage of the annuity to 
employee contributions that equaled the sum of all TSP contributions 
made by the employees over their working lives divided by the sum of 
all TSP contributions made by the employer and the employee combined 
over the employee's working life. We attributed a percentage of the 
annuity to employer contributions that equaled the sum of all TSP 
contributions made by the employer over the employee's working life 
divided by the sum of all TSP contributions made by the employer and 
the employee combined over the employee's working life. 

Using these calculations, we constructed the income replacement rates 
for the employee and employer, where: 

* the income replacement rate (employee) equals retirement income 
attributable to the employee's contributions divided by final year 
salary, and: 

* the income replacement rate (employer) equals retirement income 
attributable to the employer's contributions divided by final year 
salary. 

Below we present income replacement rates for UN staff or U.S. federal 
civilian employees under five scenarios. 

Scenario 1--UN Staff and U.S. Federal Civilian Employees with 30-Year 
Work Histories Making Equivalent Contributions: 

In our first scenario, UN staff and U.S. federal civilian employees 
have worked for 30 years at their respective UN organization or U.S. 
government agency and contribute an equivalent percentage of their 
salaries to their retirement. Because UN staff contribute, on average, 
9.4 percent of net remuneration to their pensions, in this scenario we 
assume that U.S. federal civilian employees also contribute 9.4 
percent of take-home pay to their retirement. This corresponds to 7.3 
to 8.3 percent of gross salary, allocated across contributions to the 
FERS pension, Social Security, and the TSP. U.S. federal civilian 
employees' TSP contributions in this scenario therefore range from 2.7 
to 3.5 percent of 2012 gross pay. Table 8 shows our estimates of 
income replacement rates for UN staff who retire at age 62, while 
table 9 shows our estimates of income replacement rates for U.S. FERS 
employees who retire at age 62. 

In each table, we also show the percentage of salary replaced by the 
employee's and employer's contributions to the retirement package. As 
can be seen in table 8, the total income replacement rates for UN 
staff range from 63 percent to 68 percent, and the portion of income 
replaced by the UN ranges from 42 percent to 45 percent. As shown in 
table 9, the total income replacement rates for U.S. federal civilian 
employees who retire at age 62 range from 63 to 69 percent, and the 
portion of income replaced by the U.S. government ranges from 48 to 49 
percent. 

Table 8: United Nations (UN) Professional Staff Retirement Income and 
Income Replacement Rates in the First Year of Retirement for Staff 
Retiring at Age 62 with 30 Years of UN Service: 

Grade/step[A]: P1/1; 
2012 net remuneration[B]: (A): $65,272; 
UN gross pension: (B): $40,861; 
Income replacement rate: (C = B/A): 63%; 
Income replacement rate (employee): (D): 21%; 
Income replacement rate (employer): (E = C - D): 42%. 

Grade/step[A]: P1/5; 
2012 net remuneration[B]: (A): $73,575; 
UN gross pension: (B): $46,476; 
Income replacement rate: (C = B/A): 63%; 
Income replacement rate (employee): (D): 21%; 
Income replacement rate (employer): (E = C - D): 42%. 

Grade/step[A]: P2/6; 
2012 net remuneration[B]: (A): $93,254; 
UN gross pension: (B): $59,775; 
Income replacement rate: (C = B/A): 64%; 
Income replacement rate (employee): (D): 21%; 
Income replacement rate (employer): (E = C - D): 43%. 

Grade/step[A]: P3/8; 
2012 net remuneration[B]: (A): $116,358; 
UN gross pension: (B): $75,391; 
Income replacement rate: (C = B/A): 65%; 
Income replacement rate (employee): (D): 22%; 
Income replacement rate (employer): (E = C - D): 43%. 

Grade/step[A]: P4/8; 
2012 net remuneration[B]: (A): $138,197; 
UN gross pension: (B): $91,293; 
Income replacement rate: (C = B/A): 66%; 
Income replacement rate (employee): (D): 22%; 
Income replacement rate (employer): (E = C - D): 44%. 

Grade/step[A]: P5/7; 
2012 net remuneration[B]: (A): $160,050; 
UN gross pension: (B): $107,327; 
Income replacement rate: (C = B/A): 67%; 
Income replacement rate (employee): (D): 22%; 
Income replacement rate (employer): (E = C - D): 45%. 

Grade/step[A]: P5/13; 
2012 net remuneration[B]: (A): $176,274; 
UN gross pension: (B): $119,467; 
Income replacement rate: (C = B/A): 68%; 
Income replacement rate (employee): (D): 23%; 
Income replacement rate (employer): (E = C - D): 45%. 

Source: GAO Analysis of UN data. GAO-14-546. 

Notes: The income replacement rate is defined as total retirement 
income in the first year of retirement divided by net remuneration 
(take-home pay) in the last year of work. 

[A] This column presents UN grade levels at the UN Professional (P1-
P5) grade levels. We selected step levels for each grade, ranging from 
the lowest step for P1 to the highest step for P5, in order to 
represent the full range of salary levels from P1 to P5. For the other 
grade levels, we include the step level at the midpoint of each grade. 

[B] This column presents UN net remuneration in New York City at the 
dependency rate of salary. Net remuneration is defined by the UN as 
net base salary plus post adjustment. This represents take-home pay 
for a worker with dependents, and is consistent with the UN's method 
for calculating income replacement rates. 

[End of table] 

Table 9: U.S. Civil Service Federal Employees Retirement System (FERS) 
Employee Retirement Income and Income Replacement Rates in the First 
Year of Retirement for Employees Retiring at Age 62 with 30 Years of 
Federal Service: 

Grade/step[A]: 9/1; 
2012 net salary[B]: (A): $47,413; 
FERS pension: (B): $15,322; 
Social Security: (C): $14,384; 
Thrift Savings Plan (TSP) annuity: (D): $2,807; 
Total gross retirement income: (E = B + C +D): $32,513; 
Income replacement rate: (F = E/A): 69%; 
Income replacement rate (employee): (G): 19%; 
Income replacement rate (employer): (H = F - G): 49%. 

Grade/step[A]: 9/5; 
2012 net salary[B]: (A): $53,022; 
FERS pension: (B): $17,364; 
Social Security: (C): $15,750; 
Thrift Savings Plan (TSP) annuity: (D): $3,016; 
Total gross retirement income: (E = B + C +D): $36,131; 
Income replacement rate: (F = E/A): 68%; 
Income replacement rate (employee): (G): 19%; 
Income replacement rate (employer): (H = F - G): 49%. 

Grade/step[A]: 10/5; 
2012 net salary[B]: (A): $57,847; 
FERS pension: (B): $19,124; 
Social Security: (C): $16,928; 
Thrift Savings Plan (TSP) annuity: (D): $3,190; 
Total gross retirement income: (E = B + C +D): $39,241; 
Income replacement rate: (F = E/A): 68%; 
Income replacement rate (employee): (G): 19%; 
Income replacement rate (employer): (H = F - G): 49%. 

Grade/step[A]: 11/5; 
2012 net salary[B]: (A): $63,020; 
FERS pension: (B): $21,010; 
Social Security: (C): $18,015; 
Thrift Savings Plan (TSP) annuity: (D): $3,396; 
Total gross retirement income: (E = B + C +D): $42,420; 
Income replacement rate: (F = E/A): 67%; 
Income replacement rate (employee): (G): 18%; 
Income replacement rate (employer): (H = F - G): 49%. 

Grade/step[A]: 12/5; 
2012 net salary[B]: (A): $74,465; 
FERS pension: (B): $25,182; 
Social Security: (C): $19,316; 
Thrift Savings Plan (TSP) annuity: (D): $3,808; 
Total gross retirement income: (E = B + C +D): $48,307; 
Income replacement rate: (F = E/A): 65%; 
Income replacement rate (employee): (G): 17%; 
Income replacement rate (employer): (H = F - G): 48%. 

Grade/step[A]: 13/5; 
2012 net salary[B]: (A): $86,092; 
FERS pension: (B): $29,945; 
Social Security: (C): $20,767; 
Thrift Savings Plan (TSP) annuity: (D): $3,951; 
Total gross retirement income: (E = B + C +D): $54,663; 
Income replacement rate: (F = E/A): 63%; 
Income replacement rate (employee): (G): 16%; 
Income replacement rate (employer): (H = F - G): 48%. 

Grade/step[A]: 14/5; 
2012 net salary[B]: (A): $98,816; 
FERS pension: (B): $35,386; 
Social Security: (C): $22,141; 
Thrift Savings Plan (TSP) annuity: (D): $4,264; 
Total gross retirement income: (E = B + C +D): $61,791; 
Income replacement rate: (F = E/A): 63%; 
Income replacement rate (employee): (G): 15%; 
Income replacement rate (employer): (H = F - G): 48%. 

Grade/step[A]: 15/5; 
2012 net salary[B]: (A): $113,472; 
FERS pension: (B): $41,625; 
Social Security: (C): $22,323; 
Thrift Savings Plan (TSP) annuity: (D): $7,104; 
Total gross retirement income: (E = B + C +D): $71,052; 
Income replacement rate: (F = E/A): 63%; 
Income replacement rate (employee): (G): 14%; 
Income replacement rate (employer): (H = F - G): 48%. 

Grade/step[A]: 15/10; 
2012 net salary[B]: (A): $120,347; 
FERS pension: (B): $44,534; 
Social Security: (C): $22,323; 
Thrift Savings Plan (TSP) annuity: (D): $8,616; 
Total gross retirement income: (E = B + C +D): $75,473; 
Income replacement rate: (F = E/A): 63%; 
Income replacement rate (employee): (G): 14%; 
Income replacement rate (employer): (H = F - G): 48%. 

Source: GAO analysis of U.S. data. GAO-14-546. 

Notes: The income replacement rate is defined as total retirement 
income in the first year of retirement divided by net salary (take-
home pay after taxes) in the last year of work. Employees in this 
scenario contribute 9.4 percent of net pay toward retirement, which is 
equivalent to 7.3 to 8.3 percent of gross salary. In 2012, employees 
in this scenario contribute between 2.7 and 3.5 percent of gross 
salary to their TSP accounts. 

[A] This column presents U.S. government grade levels on the General 
Schedule (GS) scale from grade 9 to grade 15. We selected step levels 
for each grade, ranging from the lowest step for GS-9 to the highest 
step for GS-15, in order to represent the full range of salary levels 
from GS-9 to GS-15. For the other grade levels, we include the step 
level at the mid-point of each grade. 

[B] This column presents U.S. civil service net salary in New York, 
New York, to ensure comparability with take-home pay at UN 
headquarters. 

[End of table] 

Scenario 2--UN Staff and U.S. Federal Civilian Employees with 20-Year 
Work Histories Who Make Equivalent Retirement Contributions: 

Tables 10 and 11 reflect the assumptions made under our second 
scenario, where UN staff and U.S. federal civilian employees have 
worked for 20 years at their respective employers and contribute an 
equivalent percentage of their salaries to their retirement. Table 10 
provides our estimates of income replacement rates for UN staff who 
retire at age 62, and table 11 shows our estimates of income 
replacement rates for U.S. FERS employees who retire at age 62. In 
each table, we also show the percentage of salary replaced by the 
employee's and employer's contributions to the retirement package. As 
can be seen in table 10, the total income replacement rates for UN 
staff range from 40 percent to 44 percent, and the portion of income 
replaced by the UN range from 27 to 29 percent. As shown in table 11, 
the total income replacement rates for U.S. federal civilian employees 
who retire at age 62 range from 48 percent to 55 percent, and the 
portion of income replaced by the U.S. government ranges from 35 
percent to 38 percent. 

Table 10: United Nations (UN) Professional Staff Retirement Income and 
Income Replacement Rates in the First Year of Retirement for Staff 
Retiring at Age 62 with 20 Years of UN Service: 

Grade/step[A]: P1/1; 
2012 net remuneration[B]: (A): $65,272; 
UN gross pension: (B): $26,333; 
Income replacement rate: (C = B/A): 40%; 
Income replacement rate (employee): (D): 13%; 
Income replacement rate (employer): (E = C - D): 27%. 

Grade/step[A]: P1/5; 
2012 net remuneration[B]: (A): $73,575; 
UN gross pension: (B): $29,951; 
Income replacement rate: (C = B/A): 41%; 
Income replacement rate (employee): (D): 14%; 
Income replacement rate (employer): (E = C - D): 27%. 

Grade/step[A]: P2/6; 
2012 net remuneration[B]: (A): $93,254; 
UN gross pension: (B): $38,522; 
Income replacement rate: (C = B/A): 41%; 
Income replacement rate (employee): (D): 14%; 
Income replacement rate (employer): (E = C - D): 28%. 

Grade/step[A]: P3/8; 
2012 net remuneration[B]: (A): $116,358; 
UN gross pension: (B): $48,585; 
Income replacement rate: (C = B/A): 42%; 
Income replacement rate (employee): (D): 14%; 
Income replacement rate (employer): (E = C - D): 28%. 

Grade/step[A]: P4/8; 
2012 net remuneration[B]: (A): $138,197; 
UN gross pension: (B): $58,833; 
Income replacement rate: (C = B/A): 43%; 
Income replacement rate (employee): (D): 14%; 
Income replacement rate (employer): (E = C - D): 28%. 

Grade/step[A]: P5/7; 
2012 net remuneration[B]: (A): $160,050; 
UN gross pension: (B): $69,166; 
Income replacement rate: (C = B/A): 43%; 
Income replacement rate (employee): (D): 14%; 
Income replacement rate (employer): (E = C - D): 29%. 

Grade/step[A]: P5/13; 
2012 net remuneration[B]: (A): $176,274; 
UN gross pension: (B): $76,990; 
Income replacement rate: (C = B/A): 44%; 
Income replacement rate (employee): (D): 15%; 
Income replacement rate (employer): (E = C - D): 29%. 

Source: GAO Analysis of UN data. GAO-14-546. 

Notes: The income replacement rate is defined as total retirement 
income in the first year of retirement divided by net remuneration 
(take-home pay) in the last year of work. 

[A] This column presents UN grade levels at the UN Professional (P1-
P5) grade levels. We selected step levels for each grade, ranging from 
the lowest step for P1 to the highest step for P5, in order to 
represent the full range of salary levels from P1 to P5. For the other 
grade levels, we include the step level at the midpoint of each grade. 

[B] This column presents UN net remuneration in New York City at the 
dependency rate of salary. Net remuneration is defined by the UN as 
net base salary plus post adjustment. This represents take-home pay 
for a worker with dependents, and is consistent with the UN's method 
for calculating income replacement rates. 

[End of table] 

Table 11: U.S. Civil Service Federal Employees Retirement System 
(FERS) Employee Retirement Income and Income Replacement Rates in the 
First Year of Retirement for Employees Retiring at 62 with 20 Years of 
Federal Service: 

Grade/step[A]: 9/1; 
2012 net salary[B]: (A): $47,413; 
FERS pension: (B): $10,215; 
Social Security: (C): $14,384; 
Thrift Savings Plan (TSP) annuity: (D): $1,597; 
Total gross retirement income: (E = B + C +D): $26,195; 
Income replacement rate: (F = E/A): 55%; 
Income replacement rate (employee): (G): 18%; 
Income replacement rate (employer): (H = F - G): 38%. 

Grade/step[A]: 9/5; 
2012 net salary[B]: (A): $53,022; 
FERS pension: (B): $11,576; 
Social Security: (C): $15,750; 
Thrift Savings Plan (TSP) annuity: (D): $1,713; 
Total gross retirement income: (E = B + C +D): $29,040; 
Income replacement rate: (F = E/A): 55%; 
Income replacement rate (employee): (G): 17%; 
Income replacement rate (employer): (H = F - G): 37%. 

Grade/step[A]: 10/5; 
2012 net salary[B]: (A): $57,847; 
FERS pension: (B): $12,749; 
Social Security: (C): $16,928; 
Thrift Savings Plan (TSP) annuity: (D): $1,809; 
Total gross retirement income: (E = B + C +D): $31,487; 
Income replacement rate: (F = E/A): 54%; 
Income replacement rate (employee): (G): 17%; 
Income replacement rate (employer): (H = F - G): 37%. 

Grade/step[A]: 11/5; 
2012 net salary[B]: (A): $63,020; 
FERS pension: (B): $14,006; 
Social Security: (C): $18,015; 
Thrift Savings Plan (TSP) annuity: (D): $1,924; 
Total gross retirement income: (E = B + C +D): $33,946; 
Income replacement rate: (F = E/A): 54%; 
Income replacement rate (employee): (G): 17%; 
Income replacement rate (employer): (H = F - G): 37%. 

Grade/step[A]: 12/5; 
2012 net salary[B]: (A): $74,465; 
FERS pension: (B): $16,788; 
Social Security: (C): $19,316; 
Thrift Savings Plan (TSP) annuity: (D): $2,153; 
Total gross retirement income: (E = B + C +D): $38,258; 
Income replacement rate: (F = E/A): 51%; 
Income replacement rate (employee): (G): 15%; 
Income replacement rate (employer): (H = F - G): 36%. 

Grade/step[A]: 13/5; 
2012 net salary[B]: (A): $86,092; 
FERS pension: (B): $19,963; 
Social Security: (C): $20,767; 
Thrift Savings Plan (TSP) annuity: (D): $2,220; 
Total gross retirement income: (E = B + C +D): $42,950; 
Income replacement rate: (F = E/A): 50%; 
Income replacement rate (employee): (G): 14%; 
Income replacement rate (employer): (H = F - G): 36%. 

Grade/step[A]: 14/5; 
2012 net salary[B]: (A): $98,816; 
FERS pension: (B): $23,591; 
Social Security: (C): $22,141; 
Thrift Savings Plan (TSP) annuity: (D): $2,497; 
Total gross retirement income: (E = B + C +D): $48,229; 
Income replacement rate: (F = E/A): 49%; 
Income replacement rate (employee): (G): 13%; 
Income replacement rate (employer): (H = F - G): 35%. 

Grade/step[A]: 15/5; 
2012 net salary[B]: (A): $113,472; 
FERS pension: (B): $27,750; 
Social Security: (C): $22,323; 
Thrift Savings Plan (TSP) annuity: (D): $4,361; 
Total gross retirement income: (E = B + C +D): $54,433; 
Income replacement rate: (F = E/A): 48%; 
Income replacement rate (employee): (G): 13%; 
Income replacement rate (employer): (H = F - G): 35%. 

Grade/step[A]: 15/10; 
2012 net salary[B]: (A): $120,347; 
FERS pension: (B): $29,690; 
Social Security: (C): $22,323; 
Thrift Savings Plan (TSP) annuity: (D): $5,249; 
Total gross retirement income: (E = B + C +D): $57,262; 
Income replacement rate: (F = E/A): 48%; 
Income replacement rate (employee): (G): 12%; 
Income replacement rate (employer): (H = F - G): 35%. 

Source: GAO analysis of U.S. data. GAO-14-546. 

Notes: The income replacement rate is defined as total retirement 
income in the first year of retirement divided by net salary (take-
home pay after taxes) in the last year of work. Employees in this 
scenario contribute 9.4 percent of net pay toward retirement, which is 
equivalent to 7.3 to 8.3 percent of gross salary. In 2012, employees 
in this scenario contribute between 2.7 and 3.5 percent of gross 
salary to their TSP accounts. 

[A] This column presents U.S. government grade levels on the General 
Schedule scale from grade 9 to grade 15. We selected step levels for 
each grade, ranging from the lowest step for GS-9 to the highest step 
for GS-15, in order to represent the full range of salary levels from 
GS-9 to GS-15. For the other grade levels, we include the step level 
at the midpoint of each grade. 

[B] This column presents U.S. civil service net salary in New York, 
New York, to ensure comparability with take-home pay at UN 
headquarters. 

[End of table] 

Scenario 3--U.S. Federal Civilian Employees with 30 Years of Service 
Who Contribute the Average Amount of Gross Salary to the TSP: 

In scenario 3, we estimate income replacement rates for U.S. federal 
civilian employees who contribute the 2012 U.S. average contribution 
to the TSP in each year of service, which was 8.5 percent of gross 
salary for those FERS employees who made any elective contributions. 
We estimated this scenario for U.S. employees who retire at age 62. As 
shown in table 12, income replacement rates for employees who retire 
at age 62 range from 77 to 82 percent, with the portion of income 
replaced by the U.S. government ranging from 52 to 53 percent. 

Table 12: U.S. Civil Service Federal Employees Retirement Service 
(FERS) Employee Retirement Income and Income Replacement Rates in the 
First Year of Retirement for Employees Who Retire at Age 62 with 30 
Years of Federal Service and Contribute 8.5 Percent of Gross Salary to 
the Thrift Savings Plan (TSP) Annually: 

Grade/step[A]: 9/1; 
2012 net salary[B]: (A): $47,413; 
FERS pension: (B): $15,322; 
Social Security: (C): $14,384; 
TSP annuity: (D): $9,054; 
Total gross retirement income: (E = B + C +D): $38,760; 
Income replacement rate: (F = E/A): 82%; 
Income replacement rate (employee): (G): 29%; 
Income replacement rate (employer): (H = F - G): 53%. 

Grade/step[A]: 9/5; 
2012 net salary[B]: (A): $53,022; 
FERS pension: (B): $17,364; 
Social Security: (C): $15,750; 
TSP annuity: (D): $10,261; 
Total gross retirement income: (E = B + C +D): $43,376; 
Income replacement rate: (F = E/A): 82%; 
Income replacement rate (employee): (G): 29%; 
Income replacement rate (employer): (H = F - G): 53%. 

Grade/step[A]: 10/5; 
2012 net salary[B]: (A): $57,847; 
FERS pension: (B): $19,124; 
Social Security: (C): $16,928; 
TSP annuity: (D): $11,301; 
Total gross retirement income: (E = B + C +D): $47,353; 
Income replacement rate: (F = E/A): 82%; 
Income replacement rate (employee): (G): 29%; 
Income replacement rate (employer): (H = F - G): 53%. 

Grade/step[A]: 11/5; 
2012 net salary[B]: (A): $63,020; 
FERS pension: (B): $21,010; 
Social Security: (C): $18,015; 
TSP annuity: (D): $12,415; 
Total gross retirement income: (E = B + C +D): $51,440; 
Income replacement rate: (F = E/A): 82%; 
Income replacement rate (employee): (G): 29%; 
Income replacement rate (employer): (H = F - G): 53%. 

Grade/step[A]: 12/5; 
2012 net salary[B]: (A): $74,465; 
FERS pension: (B): $25,182; 
Social Security: (C): $19,316; 
TSP annuity: (D): $14,881; 
Total gross retirement income: (E = B + C +D): $59,380; 
Income replacement rate: (F = E/A): 80%; 
Income replacement rate (employee): (G): 27%; 
Income replacement rate (employer): (H = F - G): 52%. 

Grade/step[A]: 13/5; 
2012 net salary[B]: (A): $86,092; 
FERS pension: (B): $29,945; 
Social Security: (C): $20,767; 
TSP annuity: (D): $17,696; 
Total gross retirement income: (E = B + C +D): $68,408; 
Income replacement rate: (F = E/A): 79%; 
Income replacement rate (employee): (G): 27%; 
Income replacement rate (employer): (H = F - G): 52%. 

Grade/step[A]: 14/5; 
2012 net salary[B]: (A): $98,816; 
FERS pension: (B): $35,386; 
Social Security: (C): $22,141; 
TSP annuity: (D): $20,911; 
Total gross retirement income: (E = B + C +D): $78,438; 
Income replacement rate: (F = E/A): 79%; 
Income replacement rate (employee): (G): 27%; 
Income replacement rate (employer): (H = F - G): 53%. 

Grade/step[A]: 15/5; 
2012 net salary[B]: (A): $113,472; 
FERS pension: (B): $41,625; 
Social Security: (C): $22,323; 
TSP annuity: (D): $24,598; 
Total gross retirement income: (E = B + C +D): $88,545; 
Income replacement rate: (F = E/A): 78%; 
Income replacement rate (employee): (G): 26%; 
Income replacement rate (employer): (H = F - G): 52%. 

Grade/step[A]: 15/10; 
2012 net salary[B]: (A): $120,347; 
FERS pension: (B): $44,534; 
Social Security: (C): $22,323; 
TSP annuity: (D): $26,317; 
Total gross retirement income: (E = B + C +D): $93,174; 
Income replacement rate: (F = E/A): 77%; 
Income replacement rate (employee): (G): 25%; 
Income replacement rate (employer): (H = F - G): 52%. 

Source: GAO analysis of U.S. data. GAO-14-546. 

Notes: The income replacement rate is defined as total retirement 
income in the first year of retirement divided by net salary (take-
home pay after taxes) in the last year of work. Employees in this 
scenario contribute 8.5 percent of gross salary to their TSP accounts 
each year, in addition to 0.8 percent of salary toward their FERS 
pensions, and the Social Security tax (4.2 percent of gross salary up 
to the 2012 income threshold of $110,100). In 2012, employees in this 
scenario contribute between 12.3 and 13.5 percent of gross salary 
toward retirement. 

[A] This column presents U.S. government grade levels on the General 
Schedule scale from grade 9 to grade 15. We selected step levels for 
each grade, ranging from the lowest step for GS-9 to the highest step 
for GS-15, in order to represent the full range of salary levels from 
GS-9 to GS-15. For the other grade levels, we include the step level 
at the midpoint of each grade. 

[B] This column presents U.S. civil service net salary in New York to 
ensure comparability with take-home pay at UN headquarters. 

[End of table] 

Scenario 4--U.S. Federal Civilian Employees with 30 Years of Service 
Who Contribute 0 Percent of Gross Salary to the TSP: 

Under scenario 4, we estimate income replacement rates for U.S. 
federal civilian employees who did not defer any of their salary to 
the TSP in any years of service. TSP portfolios for these employees 
consist entirely of their agencies' automatic 1 percent contribution 
to the TSP each year. As shown in table 13, the income replacement 
rates for employees who retire at age 62 range from 57 to 64 percent, 
with the portion of income replaced by the employer ranging from 46 to 
47 percent. 

Table 13: U.S. Civil Service Federal Employees Retirement Service 
(FERS) Employee Retirement Income and Income Replacement Rates, for 
Employees Who Retire at Age 62 with 30 Years of Service and Contribute 
0 Percent of Gross Salary to the Thrift Savings Plan (TSP) Annually: 

Grade/step[A]: 9/1; 
2012 net salary[B]: (A): $47,413; 
FERS pension: (B): $15,322; 
Social Security: (C): $14,384; 
TSP annuity: (D): $671; 
Total gross retirement income: (E = B + C +D): $30,376; 
Income replacement rate: (F = E/A): 64%; 
Income replacement rate (employee): (G): 17%; 
Income replacement rate (employer): (H = F - G): 47%. 

Grade/step[A]: 9/5; 
2012 net salary[B]: (A): $53,022; 
FERS pension: (B): $17,364; 
Social Security: (C): $15,750; 
TSP annuity: (D): $760; 
Total gross retirement income: (E = B + C +D): $33,875; 
Income replacement rate: (F = E/A): 64%; 
Income replacement rate (employee): (G): 17%; 
Income replacement rate (employer): (H = F - G): 47%. 

Grade/step[A]: 10/5; 
2012 net salary[B]: (A): $57,847; 
FERS pension: (B): $19,124; 
Social Security: (C): $16,928; 
TSP annuity: (D): $837; 
Total gross retirement income: (E = B + C +D): $36,889; 
Income replacement rate: (F = E/A): 64%; 
Income replacement rate (employee): (G): 17%; 
Income replacement rate (employer): (H = F - G): 47%. 

Grade/step[A]: 11/5; 
2012 net salary[B]: (A): $63,020; 
FERS pension: (B): $21,010; 
Social Security: (C): $18,015; 
TSP annuity: (D): $920; 
Total gross retirement income: (E = B + C +D): $39,944; 
Income replacement rate: (F = E/A): 63%; 
Income replacement rate (employee): (G): 16%; 
Income replacement rate (employer): (H = F - G): 47%. 

Grade/step[A]: 12/5; 
2012 net salary[B]: (A): $74,465; 
FERS pension: (B): $25,182; 
Social Security: (C): $19,316; 
TSP annuity: (D): $1,102; 
Total gross retirement income: (E = B + C +D): $45,601; 
Income replacement rate: (F = E/A): 61%; 
Income replacement rate (employee): (G): 15%; 
Income replacement rate (employer): (H = F - G): 46%. 

Grade/step[A]: 13/5; 
2012 net salary[B]: (A): $86,092; 
FERS pension: (B): $29,945; 
Social Security: (C): $20,767; 
TSP annuity: (D): $1,311; 
Total gross retirement income: (E = B + C +D): $52,023; 
Income replacement rate: (F = E/A): 60%; 
Income replacement rate (employee): (G): 14%; 
Income replacement rate (employer): (H = F - G): 46%. 

Grade/step[A]: 14/5; 
2012 net salary[B]: (A): $98,816; 
FERS pension: (B): $35,386; 
Social Security: (C): $22,141; 
TSP annuity: (D): $1,549; 
Total gross retirement income: (E = B + C +D): $59,076; 
Income replacement rate: (F = E/A): 60%; 
Income replacement rate (employee): (G): 13%; 
Income replacement rate (employer): (H = F - G): 47%. 

Grade/step[A]: 15/5; 
2012 net salary[B]: (A): $113,472; 
FERS pension: (B): $41,625; 
Social Security: (C): $22,323; 
TSP annuity: (D): $1,822; 
Total gross retirement income: (E = B + C +D): $65,769; 
Income replacement rate: (F = E/A): 58%; 
Income replacement rate (employee): (G): 12%; 
Income replacement rate (employer): (H = F - G): 46%. 

Grade/step[A]: 15/10; 
2012 net salary[B]: (A): $120,347; 
FERS pension: (B): $44,534; 
Social Security: (C): $22,323; 
TSP annuity: (D): $1,949; 
Total gross retirement income: (E = B + C +D): $68,806; 
Income replacement rate: (F = E/A): 57%; 
Income replacement rate (employee): (G): 11%; 
Income replacement rate (employer): (H = F - G): 46%. 

Source: GAO analysis of U.S. data. GAO-14-546. 

Notes: The income replacement rate is defined as total retirement 
income in the first year of retirement divided by net salary (take-
home pay after taxes) in the last year of work. Employees in this 
scenario contribute 0 percent of gross salary to their TSP accounts. 
In 2012, employees in this scenario contribute between 3.8 and 5 
percent of gross salary toward retirement. 

[A] This column presents U.S. government grade levels on the General 
Schedule scale from grade 9 to grade 15. We selected step levels for 
each grade, ranging from the lowest step for GS-9 to the highest step 
for GS-15, in order to represent the full range of salary levels from 
GS-9 to GS-15. For the other grade levels, we include the step level 
at the midpoint of each grade. 

[B] This column presents U.S. civil service net salary in New York to 
ensure comparability with take-home pay at UN headquarters. 

[End of table] 

Scenario 5--UN Staff Who Are U.S. Citizens Employed in the United 
States with a 20-Year UN Work History: 

In our final scenario, we provide estimates of income replacement 
rates for UN staff members who are U.S. citizens employed in the 
United States. Like other UN staff members, U.S. citizens participate 
in the UN pension plan. In addition, they must also contribute to 
Social Security, and therefore are eligible for Social Security 
benefits. 

For the purposes of taxation, the U.S. Internal Revenue Service (IRS) 
treats UN staff who are U.S. citizens working in the United States as 
"self-employed" workers. According to IRS rules governing the taxation 
of such workers, UN staff who are U.S. citizens working in the United 
States must pay both the employer portion and the employee portion of 
Social Security taxes. However, the UN normally reimburses its U.S. 
citizen staff for one half of the Social Security tax. Therefore, UN 
staff who are U.S. citizens effectively pay the same rate of Social 
Security taxes as other salaried employees in the United States. 

Our estimates show that UN staff who are U.S. citizens have higher 
income replacement rates than other UN staff who retire with 20 years 
of service because they contribute to and receive Social Security 
benefits. As seen in table 14, the income replacement rate for UN 
employees who are U.S. citizens and retire at age 62 ranges from 56 to 
68 percent, and the portion of income replaced by the employer ranges 
from 38 to 45 percent. However, U.S. citizen employees of the UN who 
work in the United States have to contribute both to the UN pension 
plan and to Social Security. A UN official commented that UN staff who 
are U.S. citizens and who are working in the United States make up 
only a small percentage of total UN staff, and very few of these staff 
spend their entire career with the UN working in the United States. 
[Footnote 50] 

Table 14: Retirement Income and Income Replacement Rates in the First 
Year of Retirement for United Nations (UN) Staff Who Retire at Age 62 
and Who Are U.S. Citizens Employed in the United States with 20-Years 
of UN Service: 

Grade/step[A]: P1/1; 
2012 net remuneration[B]: (A): $65,272; 
UN pension: (B): $26,333; 
Social Security: (C): $17,914; 
Total gross retirement income: (D=B+C): $44,247; 
Income replacement rate: (E = D/A): 68%; 
Income replacement rate (employee): (F): 23%; 
Income replacement rate (employer): (G = E-F): 45%. 

Grade/step[A]: P1/5; 
2012 net remuneration[B]: (A): $73,575; 
UN pension: (B): $29,951; 
Social Security: (C): $18,755; 
Total gross retirement income: (D=B+C): $48,706; 
Income replacement rate: (E = D/A): 66%; 
Income replacement rate (employee): (F): 22%; 
Income replacement rate (employer): (G = E-F): 44%. 

Grade/step[A]: P2/6; 
2012 net remuneration[B]: (A): $93,254; 
UN pension: (B): $38,522; 
Social Security: (C): $20,756; 
Total gross retirement income: (D=B+C): $59,278; 
Income replacement rate: (E = D/A): 64%; 
Income replacement rate (employee): (F): 21%; 
Income replacement rate (employer): (G = E-F): 42%. 

Grade/step[A]: P3/8; 
2012 net remuneration[B]: (A): $116,358; 
UN pension: (B): $48,585; 
Social Security: (C): $22,322; 
Total gross retirement income: (D=B+C): $70,907; 
Income replacement rate: (E = D/A): 61%; 
Income replacement rate (employee): (F): 20%; 
Income replacement rate (employer): (G = E-F): 41%. 

Grade/step[A]: P4/8; 
2012 net remuneration[B]: (A): $138,197; 
UN pension: (B): $58,833; 
Social Security: (C): $22,323; 
Total gross retirement income: (D=B+C): $81,156; 
Income replacement rate: (E = D/A): 59%; 
Income replacement rate (employee): (F): 20%; 
Income replacement rate (employer): (G = E-F): 39%. 

Grade/step[A]: P5/7; 
2012 net remuneration[B]: (A): $160,050; 
UN pension: (B): $69,166; 
Social Security: (C): $22,323; 
Total gross retirement income: (D=B+C): $91,489; 
Income replacement rate: (E = D/A): 57%; 
Income replacement rate (employee): (F): 19%; 
Income replacement rate (employer): (G = E-F): 38%. 

Grade/step[A]: P5/13; 
2012 net remuneration[B]: (A): $176,274; 
UN pension: (B): $76,990; 
Social Security: (C): $22,323; 
Total gross retirement income: (D=B+C): $99,313; 
Income replacement rate: (E = D/A): 56%; 
Income replacement rate (employee): (F): 19%; 
Income replacement rate (employer): (G = E-F): 38%. 

Source: GAO analysis of UN data. GAO-14-546. 

[A] This column presents UN grade levels at the UN Professional (P1-
P5) grade levels. We selected step levels for each grade, ranging from 
the lowest step for P1 to the highest step for P5, in order to 
represent the full range of salary levels from P1 to P5. For the other 
grade levels, we include the step level at the midpoint of each grade. 

[B] This column presents UN net remuneration in New York City at the 
dependency rate of salary. Net remuneration is defined by the UN as 
net base salary plus post adjustment. This represents take-home pay 
for a worker with dependents, and is consistent with the UN's method 
for calculating pension amounts. 

[End of table] 

[End of section] 

Appendix III: Comparison of Allowances for United Nations Secretariat 
Staff and U.S. Civil Service Staff Overseas and Foreign Service 
employees: 

Allowances offered to eligible UN staff and U.S. Foreign Service 
employees and U.S. civil service employees: 

Serving in a dangerous duty station: 
United Nations (UN): Danger pay is a special allowance that has been 
established for internationally and locally recruited staff members 
who are required to work in a duty station where very dangerous 
conditions prevail, including those where staff face high risk of 
becoming collateral damage in a war or active armed conflict or where 
medical staff risk their lives when deployed to deal with a public 
health emergency. The Chairman of the International Civil Service 
Commission is responsible for authorizing the application of danger 
pay to a duty station based on the recommendations of the UN 
Department of Safety and Security or the World Health Organization. 
Danger pay is granted for up to 3 months at a time, subject to ongoing 
review. As of the publication of this report, the UN offered danger 
pay to staff in 15 duty stations. For internationally recruited staff, 
the allowance is $1,600 per month. For locally recruited staff, the 
allowance is based on the local salary scale; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government provides danger pay to all civilian 
employees serving in places where conditions of civil insurrection, 
civil war, terrorism, or wartime conditions that threaten physical 
harm or imminent danger to the health or well-being of an employee 
exist. Danger pay is additional compensation of up to 35 percent over 
basic compensation to staff, for service at places in foreign areas 
where dangerous conditions that could threaten the health or well 
being of an employee exist. As of the publication of this report, the 
U.S. government offered danger pay to employees in 29 locations. 

Allowances, based on duty station, for cost of living: 
United Nations (UN): The UN pays a post adjustment to staff to ensure 
equity in purchasing power of staff members across duty stations. The 
post adjustment is a part of the staff's salary and is not considered 
an allowance. The post adjustment is higher for staff with dependents; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government grants a post allowance to staff 
officially stationed at a post in a foreign area where the cost of 
living is substantially higher than in Washington, DC. The post 
allowance is designed to permit staff to spend the same portion of 
their salaries for their standard living expenses as they would if 
they were residing in Washington, D.C. The amount paid is a flat rate 
that varies by basic salary, size of family, and post. 

Travel for education, security and medical evacuation, rest and 
recuperation, home leave, and family visit: 
United Nations (UN): The UN pays travel expenses for staff when they 
are initially appointed; when they change their duty station; when 
they separate from service; when they travel on official business; 
when they travel for home leave; when they travel to visit family 
members, and for rest and recuperation. In special circumstances 
requiring evacuation of staff members and their families for medical 
or security reasons, the UN also covers certain travel and travel-
related costs. The UN pays travel expenses for staff dependents on the 
initial appointment; on separation from service, and on education 
grant travel and home leave. Staff also receive a daily allowance 
while on travel for official business. UN staff are also entitled to 
travel expenses for their child for one return journey from the 
educational institution to their duty station, if the educational 
institution is outside the country of the duty station. At some duty 
stations, the UN allows an additional round-trip journey in a non-home 
leave year; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government pays travel and related expenses for 
members of the Foreign Service and their families under a number of 
circumstances, including when they are proceeding to and returning 
from assigned posts of duty; for authorized or required home leave; 
for family members to accompany, precede, or follow a foreign service 
member to a place of temporary duty; for representation travel; 
medical travel; rest and recuperation travel; evacuation travel; or 
other travel as authorized.[A] In addition, the U.S. government pays 
the expenses for a child to travel to and from a secondary school or 
post-secondary school, once each way annually. The age limitation for 
secondary education travel is 20 (before the 21st birthday) and for 
post-secondary education the age limitation is 22 (before the 23rd 
birthday). The U.S. may also grant Foreign Service staff and their 
eligible family members rest and recuperation travel to the United 
States, its territories, or other locations abroad. 

Maintaining a family at a separate location from a duty station: 
United Nations (UN): The UN provides an Additional Hardship Allowance 
for staff serving in certain duty stations where they are involuntary 
separated from their families. The Additional Hardship Allowance is 
paid in addition to the normal hardship allowance. The amount of the 
allowance varies according to grade and dependency status, and ranged 
from $6,540 to $23,250 as of 2013. In addition, for a UN staff member 
located in a duty station that lacks appropriate schools and medical 
facilities to meet family members' needs, and who is obliged to pay 
rent in another city for their family, the staff member's rent at the 
duty station and the rent for the family in the capital city can be 
considered one combined rent for the purposes of determining the 
rental subsidy; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government offers a separate maintenance allowance 
to assist staff who are required to maintain family members at 
locations other than their overseas post of assignment either due to 
(a) dangerous, notably unhealthful, or excessively adverse living 
conditions at the post, (b) because of special needs or hardship 
involving the employee or family member, c) if the family needs to 
stay temporarily in commercial quarters, such as a hotel. 

Serving in a hardship duty station: 
United Nations (UN): The UN provides an annual hardship allowance to 
staff on assignment in duty stations where living and working 
conditions are difficult. In determining the hardship allowance, the 
UN considers a duty station's conditions of safety and security, 
health care, housing, climate, isolation, and conveniences of life. 
The hardship allowance varies depending on the duty station, salary 
level, and whether the staff member has dependents. Duty stations are 
categorized on a scale of difficulty from A to E, based on security 
conditions and quality of life at the duty station. Staff serving in 
more difficult duty stations receive higher allowance amounts. As of 
May 2013, the hardship allowance ranged from $4,360 to $23,250; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government provides a post hardship differential, 
which is additional compensation of 25, 30 or 35 percent of salary to 
staff for service at places in foreign areas where conditions of 
environment differ substantially from conditions of environment in the 
continental United States and warrant additional compensation as a 
recruitment and retention incentive. A hardship differential is 
established for locations where the living conditions are 
extraordinarily difficult, involve excessive physical hardship, or are 
notably unhealthy. A U.S. government agency may also grant a difficult-
to-staff incentive differential to staff assigned to a hardship post 
upon a determination that additional pay is warranted to recruit and 
retain staff at that post. The allowance is an additional 15 percent 
of salary. 

Relocation and Moving Expenses: 
United Nations (UN): UN staff are eligible for an assignment grant 
that is intended to provide staff with a reasonable cash amount at the 
beginning of the assignment for the costs incurred as a result of 
appointment or reassignment. The amount of the grant varies by duty 
station and whether the staff has dependents. For example, a staff 
member with two dependents assigned to headquarters for a period of 
two years might earn an assignment grant of $7200, to compensate for 
30 days at the beginning of the assignment. The UN also pays removal 
and shipment costs for staff. Staff may ship personal effects only, or 
household goods and personal effects in some cases. The UN has 
established weight limits for this allowance, which depend on the 
staff's number of dependents; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government grants a foreign transfer allowance to 
staff for extraordinary, necessary and reasonable expenses, incurred 
by staff transferring to any post of assignment in a foreign area, 
prior to departure. This allowance includes a miscellaneous expense 
portion, a wardrobe expense portion, a pre-departure subsistence 
expense portion, and a lease penalty expense portion. The U.S. 
government offers a home service transfer allowance for extraordinary, 
necessary and reasonable expenses, for staff prior to transferring 
back to a post in the United States. This allowance includes a 
miscellaneous expense portion, a wardrobe expense portion, a 
subsistence expense portion, and a lease penalty expense portion. 

Representation expenses: 
United Nations (UN): Some UN staff receive a small representation 
allowance, which permits them to extend official hospitality to 
individuals outside of the UN. For the purpose of official 
hospitality, heads of departments or offices may also authorize the 
reimbursement of reasonable expenditures incurred by staff who do not 
receive a representation allowance; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government provides representation allowances 
intended to cover allowable items of expenditure by staff whose 
official positions entail responsibility for establishing and 
maintaining relationships of value to the United States in foreign 
countries. Staff may submit vouchers to be reimbursed for allowable 
expenses or payments may be made on their behalf. 

Compensation for termination: 
United Nations (UN): The UN may pay a termination indemnity to a staff 
member whose appointment is terminated by the employing organization 
for any of the following reasons: abolition of post or reduction of 
staff, health, unsatisfactory service or agreed termination. In cases 
of unsatisfactory performance, the termination indemnity is at the 
discretion of the Secretary-General and up to half of what is 
otherwise payable; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government authorizes severance pay for full-time 
and part-time staff who are involuntarily separated from Federal 
service and who meet other conditions of eligibility. To be eligible 
for severance pay, staff must be serving under a qualifying 
appointment, have a regularly scheduled tour of duty, have completed 
at least 12 months of continuous service, and be removed from Federal 
service by involuntary separation for reasons other than inefficiency 
(i.e., unacceptable performance or conduct). 

Education Subsidy: 
United Nations (UN): UN staff serving outside their home country are 
eligible for an education grant to cover part of the cost of educating 
children in full-time attendance at an educational institution. The 
amount of the grant is equivalent to 75 percent of allowable costs, 
subject to a maximum that varies from country to country. Staff are 
eligible for the grant up to the fourth year of their child's 
postsecondary education, or age 25. For U.N. staff in the U.S., the 
maximum education grant in May 2013 was $43,589. The UN also covers up 
to 100 percent of boarding costs, up to a maximum amount, for children 
at the primary or secondary level if educational facilities are 
inadequate in the staff's duty station; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: The U.S. government provides an allowance to assist staff 
in meeting the extraordinary and necessary expenses in providing 
adequate elementary and secondary education for dependent children at 
an overseas post of assignment. The amount of the grant depends on 
whether the child is in a school at post, a school away from the post, 
or in home study or at a private institution. 

Housing Subsidy: 
United Nations (UN): UN staff are eligible for a rental subsidy 
intended to provide equity in accommodation expenses among UN staff in 
duty stations where rents vary considerably; and to alleviate 
hardships staff may face if their rent is higher than average for 
reasonable standard accommodations. For duty stations in Europe and 
North America, the UN determines a reasonable maximum rent level (or 
threshold) that is used to determine how much an staff should pay, 
taking into account their rent, their income, and whether they have 
dependents. Newly hired staff are eligible to receive a subsidy for 
the portion of their rent that exceeds the threshold up to a maximum 
of 40 percent of rent. They can receive the subsidy for up to seven 
years, and it declines over time. In years 1-4, the subsidy is 80 
percent, in year 5 the subsidy is 60 percent, in year 6 it is 40 
percent, and in year 7 it is 20 percent. For duty stations outside 
Europe and North America, the standard rental subsidy is 80 percent of 
the rent exceeding the threshold, up to a maximum of forty percent of 
rent; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: U.S. civilian staff are eligible for housing subsidies, 
called quarters allowances, that are designed to reimburse staff for 
substantially all costs of residing in either temporary or permanent 
living quarters. A quarters allowance is not granted when Government 
housing is provided. A temporary quarters subsistence allowance is 
granted to staff for the reasonable cost of temporary quarters, meals 
and laundry expenses incurred by staff and/or family member at the 
foreign post upon initial arrival or preceding final departure. A 
living quarters allowance is granted to staff for the annual cost of 
suitable, adequate, living quarters for the staff and his or her 
family. An extraordinary quarters allowance is granted to staff who 
must vacate permanent quarters due to renovations, or unhealthy or 
dangerous conditions. 

UN Allowances Not Offered to U.S. Employees: 

Support of dependents: 
United Nations (UN): The UN provides eligible staff members an annual 
children's allowance of $2,929 per child under age 18 (or under 21 if 
a full-time student), and this amount is doubled for staff with 
disabled children. The UN also pays employees with dependents at a 
higher salary rate than those without dependents. According to the UN, 
this is similar to the practice of member states that provide a tax 
advantage for having dependents. Many UN employees are not eligible 
for these tax advantages, as they might be if they were employed in 
their national civil service, because most UN employees are not 
required to pay income taxes on their UN earnings in their home 
countries. To qualify for the dependents salary rate, UN staff must 
have a primary dependent (i.e., one dependent spouse or a first 
dependent child, if there is no dependent spouse). For staff with no 
primary dependent, the UN also provides a secondary dependent's 
allowance for eligible staff members caring for a dependent parent or 
sibling; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: No comparable allowance. 

Incentive to change duty stations: 
United Nations (UN): To encourage movement from one duty station to 
another, the UN provides an annual mobility allowance to staff on an 
assignment of one year or more who have had 5 consecutive years of 
service in the UN system. The amount of this allowance varies by the 
staff's number of assignments, duty station, and whether the staff has 
dependents. As of August 2012, this allowance ranged from $2,020 to 
$16,900; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: No comparable allowance, though the U.S. government offers 
a difficult-to-staff incentive. See "Serving in a hardship duty 
station" above. 

Repatriation after service: 
United Nations (UN): UN provides, upon separation, a repatriation 
grant to staff members whom the organization is obligated to 
repatriate and who at the time of separation are residing, by virtue 
of their service with the United Nations, outside their home country. 
The UN determines the amount based on salary scale and varies 
according to family status and length of service outside the home 
country; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: No comparable allowance. 

U.S. Allowances Not Offered to UN Staff: 

Student Loan Repayment; 
United Nations (UN): No comparable allowance; 
U.S. Civil Service Staff Serving Overseas and Foreign Service 
Employees: Some U.S. government agencies have a program to repay 
certain types of Federally made, insured, or guaranteed student loans 
as an incentive to recruit or retain highly qualified personnel. 
Agencies may make payments to a loan holder of up to $10,000 in a 
calendar year, up to an aggregate maximum of $60,000 for any one 
staff. In return, staff must sign an agreement to remain in the 
service of the paying agency for at least 3 years. If the staff 
separates voluntarily or is separated involuntarily for misconduct, 
unacceptable performance, or a negative suitability determination 
under 5 CFR part 731 before fulfilling the service agreement, he or 
she must reimburse the paying agency for all student loan repayment 
benefits received. 

Source: GAO analysis of UN and Office of Personnel Management data. 
GAO-14-546. 

[A] The information for this allowance is relevant to Foreign Service 
Officers only. 

[End of table] 

[End of section] 

Appendix IV: Leave Benefits: 

As we previously reported, UN staff are eligible for more generous 
leave benefits than U.S. civil service employees.[Footnote 51] For 
example, UN staff on fixed-term contracts earn more annual leave than 
U.S. civil service employees. UN staff earn 30 days of annual leave 
per year, while U.S. civil service employees earn 26 days a year once 
they have 15 or more years of service. U.S. civil service employees 
with less than 3 years of service earn 13 days per year, and those 
with 3 but less than 15 years of service earn 20 days per year. In 
addition, UN staff can be eligible for more sick leave than U.S. civil 
service employees, depending on the length of service. UN Secretariat 
staff do not earn sick leave the way they earn annual leave. Those 
with a sick leave need, who have worked for the UN for less than 3 
years, are entitled to sick leave of up to 3 months on full salary and 
3 months of half salary. UN staff who have completed 3 or more years 
of service are entitled to up to 9 months of sick leave. In contrast, 
U.S. civil service employees earn 4 hours of sick leave per pay 
period, or 1 day per month and may carry over unlimited amounts of 
sick leave into subsequent years. In addition, UN staff are entitled 
to paid maternity and paternity leave, as well as eligible for paid 
leave if they adopt a child, which is not offered to U.S. civil 
service employees. U.S. civil service employees are entitled to take 
certain amounts of time away from work for these purposes, but must 
use either their paid leave or unpaid leave under the Family and 
Medical Leave Act to account for their absences. Both UN staff and 
U.S. civil service employees have 10 holidays per year, though the 
dates may vary for UN staff depending on their duty station. Table 15 
compares leave benefits for UN staff and U.S. civil service employees. 

Table 15: Comparison of Leave Benefits for United Nations (UN) 
Secretariat Staff and U.S. Civil Service Employees: 

Annual leave: 
UN staff: UN staff on fixed term contracts earn 2.5 working days per 
month (30 days per year), and may carry over up to 60 days per year; 
U.S. civil service employees: Full-time employees with less than 3 
years of service earn 4 hours annual leave per bi-weekly pay period 
(13 days per year). Those with 3 but less than 15 years of service 
earn 6 hours of annual leave per bi-weekly pay period and 10 hours of 
annual leave in the last pay period of the year (20 days per 
year).Those with 15 or more years of service earn 8 hours per bi-
weekly pay period (26 days per year). Senior Executive Service, Senior 
Level, Scientific or Professional employees and employees in 
equivalent pay systems earn 8 hours of leave per bi-weekly pay period, 
regardless of years of service. At its discretion, an agency may 
advance annual leave to an employee in an amount not to exceed the 
amount the employee would accrue within the year. Employees stationed 
in the United States may carry over 30 days of annual leave. Those 
stationed overseas may carry over 45 days, and Senior Executive 
Service employees may carry over 90 days. 

Sick leave: 
UN staff: UN staff members with less than 3 years of service are 
entitled to use up to 3 months of full salary and 3 months on half 
salary of certified sick leave. Staff members with more than 3 years 
of service are entitled to up to 9 months of full salary and 9 months 
of half salary of certified sick leave. Within the maximum entitlement 
referenced above, staff members are entitled to up to 7 days of 
uncertified sick leave, which can be used for purposes such as family 
emergencies. Since UN staff do not earn sick leave, sick leave does 
not accumulate; 
U.S. civil service employees: Full-time employees accrue 4 hours of 
sick leave for each bi-weekly pay period (13 days per year). There is 
no limitation on the amount of sick leave that can be accumulated or 
the amount an employee may use for his or her own personal medical 
needs. A full-time employee may use only up to 13 days of sick leave 
for general family care and bereavement purposes and up to 12 weeks of 
sick leave to care for a family member with a serious health condition 
each year. An employee is entitled to no more than a combined total of 
12 weeks of sick leave each year for all family care purposes. At its 
discretion, an agency may advance up to 13 or 30 days of sick leave 
(depending on the reason for which sick leave is advanced) to an 
employee, when required by the exigencies of the situation, for the 
same reasons it grants sick leave to an employee. 

Maternity leave: 
UN staff: Leave with full pay for a total period of 16 weeks (usually 
6 weeks prior to anticipated date of delivery and 10 weeks after 
birth.) Annual leave accrues during maternity leave if the staff 
member returns to work after a maximum of 6 months; 
U.S. civil service employees: A birth mother may use her sick leave 
for prenatal care, any period of incapacity due to her pregnancy, 
childbirth, or recovery from childbirth. The Family and Medical Leave 
Act (FMLA) of 1993 entitles the birth mother to use up to 12 weeks of 
unpaid leave for prenatal care, any period of incapacity due to her 
pregnancy, childbirth, or recovery from childbirth or to care for or 
bond with her newborn within the 12 months following the birth of the 
baby. The employee may substitute annual leave or sick leave, as 
appropriate, for any unpaid leave under the FMLA. Also, if the birth 
mother has exhausted her available paid leave, she can apply to 
receive donated leave under the Voluntary Leave Transfer or Voluntary 
Leave Bank Programs (see "Special leave" below), for her 
incapacitation because of childbirth and recovery from childbirth. 

Paternity leave: 
UN staff: A birth father is entitled to leave with full pay for up to 
4 weeks (up to 8 weeks when serving in a non-family duty station) 
within the 12 months following the child's birth; 
U.S. civil service employees: A birth father, and certain other family 
members, including same-sex domestic partners, may use sick leave to 
care for the birth mother for prenatal care and for any period of 
incapacity due to her pregnancy, childbirth, or recovery from 
childbirth. The FMLA entitles a husband to use up to 12 weeks of 
unpaid leave to care for his wife for prenatal care, and for any 
period of incapacity due to her pregnancy, childbirth, or recovery 
from childbirth. The act also entitles the birth father or anyone who 
will stand in loco parentis to the child, including same-sex domestic 
partners, to 12 weeks of unpaid FMLA leave to care for or bond with 
the newborn within the 12 months following the baby's birth. An 
employee entitled to FMLA leave for these purposes may substitute 
annual leave or sick leave, as appropriate, for any unpaid leave under 
FMLA. Also, if the birth father or certain other family members, have 
exhausted their available paid leave, they can apply to receive 
donated leave under the Voluntary Leave Transfer or Voluntary Leave 
Bank Programs (see "Special leave" below), to care for the birth 
mother during her incapacitation because of childbirth and recovery 
from childbirth. 

Adoption leave: 
UN staff: Special leave with full pay may be granted for the adoption 
of a child; 
U.S. civil service employees: The FMLA allows parents to use up to 12 
weeks of unpaid leave to adopt a child. Parents may also use accrued 
sick and annual leave for purposes related to the adoption of a child. 

Special leave: 
UN staff: Full, partial or no pay may be granted for advanced study or 
research in the interest of the organization; 
U.S. civil service employees: U.S. civil service employees have some 
additional categories of paid leave, including leave to serve as a 
juror or a witness, leave for bone marrow and organ donation, limited 
amounts of leave for certain types of military service, and leave 
sharing programs that allow employees to donate annual leave to 
colleagues who have certain emergency needs. 

Official holidays: 
UN staff: Ten holidays per year, the dates of which vary by duty 
station; 
U.S. civil service employees: Ten federal holidays per year. In 
addition, employees located in the Washington, D.C., area may receive 
a federal holiday for Inauguration Day, which occurs every 4 years. 

Source: GAO analysis of UN and Office of Personnel Management data. 
GAO-14-546. 

[End of table] 

[End of section] 

Appendix V: Comments from the Department of State: 

Note: GAO comments supplementing those in the report text appear at 
the end of this appendix: 

United States Department of State: 
Comptroller: 
P.O. Box 150008: 
Charleston, SC 29415-5008: 

June 11, 2014: 

Dr. Loren Yager: 
Managing Director: 
International Affairs and Trade: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548-0001: 

Dear Dr. Yager: 

We appreciate the opportunity to review your draft report, "United 
Nations: Key Compensation Elements Should Be Reviewed to Address Costs 
and Sustainability" GAO Job Code 320984. 

The enclosed Department of State comments are provided for incorporation
with this letter as an appendix to the final report. 

If you have any questions concerning this response, please contact
Stephanie McFadden, Program Analyst, Bureau of International 
Organization Affairs at (202) 647-6279. 

Sincerely, 

Signed by: 
Christopher H. Flaggs--Acting: 

cc: GAO - Thomas Melito; 
IO - H. Dean Pittman, Acting; 
State/OIG - Norman Brown. 

Enclosure: as stated. 

Department of State Comments on GAO Draft Report: 

United Nations: Key Compensation Elements Should Be Reviewed to Address
Costs and Sustainability (GAO-14-546, GAO Code 320984): 

Thank you for the opportunity to comment on your draft report entitled
United Nations: Key Compensation Elements Should Be Reviewed to Address
Costs and Sustainability. The Department of State notes that GAO was 
requested to review the structure of UN total compensation, including 
benefits and allowances, and determine how it compares to that of U.S. 
government employees. In fulfilling this mandate, GAO examined the 
similarities between UN and U.S. government benefits and compared 
their monetary values where data was available and examined UN efforts 
to address concerns about the sustainability of total compensation. 
The Department believes that the GAO report provides some useful and 
timely information, particularly given ongoing Department efforts to 
stem growth of staff compensation costs across the UN system. 

The Department accepts the GAO recommendation that the Department of
State should work with other member states to ensure that the costs of 
key elements of UN total compensation are reviewed to address rising 
staff costs and sustainability. At the instruction of member states, 
the International Civil Service Commission (ICSC) is conducting a 
comprehensive compensation review, which should include all monetary 
and non-monetary elements of the UN compensation package, the results 
of which will be delivered to the UN General Assembly in 2015. The GAO 
report helpfully reveals that several elements of compensation,
including pension benefits and after-service health benefits, are not 
under the purview of the ICSC and are not included in the 
comprehensive review. The Department will continue to work with other 
member states to ensure that the UN General Assembly receives the most 
comprehensive information available, including elements of 
compensation not under the purview of the ICSC. 

The Department of State recognizes the inherent challenges in conducting
such a complex comparative review and generally accepts and endorses 
the GAO's findings. That said, its findings are limited by one of the 
fundamental complexities of this task: the Noblemaire Principle. In 
the preceding GAO report, UN Compensation: United Nations Should 
ClarifY the Process and Assumptions Underlying Secretariat 
Professional Salaries, GAO noted that the UN sets salaries in 
accordance with the Noblemaire Principle. The Noblemaire Principle 
requires compensation for UN professional staff to be set in 
comparison to the highest compensated national civil service, and 
since 1945, the UN has considered this to be the u.s. federal civil 
service. 

[See comment 1] 

The Noblemaire Principle has several ambiguities, but two are 
particularly consequential in relation to comparability of 
compensation for UN professionals and u.s. federal civil service 
employees. The first ambiguity relates to whether international civil 
servants in the UN system should be compared to u.s. federal civil 
service employees working abroad or domestically, with the latter not 
entitled to the same wide range of benefits and allowances afforded to 
the former. The second ambiguity relates to how the scope of the 
Noblemaire Principle is defined. Past UN General Assembly resolutions 
required that only the salaries of the highest paid civil service be 
considered in comparing compensation. The Department has maintained 
that all components of compensation - salaries, benefits, and 
allowances - should be considered. While GAO was not mandated to
resolve these ambiguities in this report, we believe that highlighting 
this component of UN compensation provides additional insight into the 
complexities of comparing UN compensation to compensation of U.S. 
federal civil service employees as required by the Noblemaire 
Principle. 

We are grateful for the attention GAO has paid to the issue of UN staff
compensation costs, as it is directly related to one of the 
Department's top UN reform priorities, which is to limit budget growth 
at the United Nations. The Department has been actively engaging other 
member states and executive heads of organizations throughout the UN 
common system to stimulate more responsible and productive dialogue in 
UN General Assembly and to help alleviate the budgetary pressures 
faced by UN organizations due to the growth in staff compensation 
costs over the past ten years. The Department of State remains 
committed to working with other member states to ensure that decisions 
related to UN staff compensation are based on all available 
information related to salaries, benefits, allowances, as well as non-
monetary components of compensation. 

The following are GAO's comments on the State Department's letter 
dated June 11, 2014. 

GAO Comment: 

State commented that the ICSC review faces inherent challenges, 
including complexities associated with the Noblemaire Principle, which 
requires that compensation for UN professional staff be set in 
comparison to the highest compensated national service, which the UN 
has considered to be the U.S. federal civil service. State further 
commented on ambiguities with the Noblemaire Principle, including 
ambiguities over the comparison group and which elements of 
compensation should be included in the comparison. We agree that there 
are ambiguities associated with the Noblemaire Principle and therefore 
we did not use it as the basis for our comparison of UN and U.S. 
government benefits and allowances. As we discuss in the report, the 
UN General Assembly has directed that only salaries be used as part of 
the its margin calculation, rather than total compensation, which 
would include benefits and allowances in addition to salaries. It was 
beyond the scope of our review to comment on how the Noblemaire 
Principle should be applied, and our comparisons of UN and U.S. 
government benefits and allowances should not be interpreted as a 
statement or opinion on how Noblemaire comparisons should be conducted. 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Thomas Melito, (202) 512-9601, melitot@gao.gov: 

Staff Acknowledgments: 

In addition to the staff named above, Elizabeth Repko (Assistant 
Director), Debbie Chung, Leah DeWolf, Mark Dowling, Jeremy Latimer, 
Valérie Nowak, John O'Trakoun, Rhiannon Patterson, Steven Putansu, 
Jerry Sandau, David Schneider, Frank Todisco, and Ozzy Trevino made 
significant contributions to this report. 

[End of section] 

Footnotes: 

[1] GAO, UN Compensation: United Nations Should Clarify the Process 
and Assumptions Underlying Secretariat Professional Salaries, 
[hyperlink, http://www.gao.gov/products/GAO-13-526] (Washington, D.C.: 
May 29, 2013). 

[2] Although data from the U.S. government and UN payroll represent 
slightly different time periods, we interviewed UN and U.S. officials 
and determined that these differences were not likely to significantly 
affect our results. 

[3] United Nations, Composition of the Secretariat: Staff 
Demographics, Report of the Secretary General, A/68/356 (August 2013). 

[4] As of the current UN biennium, the United States is the only 
country that uses the tax equalization fund. 

[5] [hyperlink, http://www.gao.gov/products/GAO-13-526], 23-31 and 51-
57. 

[6] The UN common system includes the UN Secretariat, its affiliated 
programs, 13 specialized agencies, and 1 related entity. 

[7] In a 2014 resolution (A/RES/68/253), the General Assembly 
requested that the ICSC, as part of its ongoing compensation review, 
ensure the comparability of the UN total compensation package, 
including all monetary and nonmonetary elements, under the Noblemaire 
Principle. This principle states that UN compensation should be set 
high enough to attract civil service employees from all member states, 
including those with the highest-compensated government employees. 

[8] OPM reported that as of September 30, 2011, approximately 89 
percent of U.S. federal employees were covered under FERS. 

[9] CSRS employees may also contribute a portion of pay to the TSP, 
however, they do not receive employer matching contributions. 

[10] Figure 1 focuses specifically on allowances provided by either 
the UN or the U.S. government, and not on other forms of compensation 
that each entity may provide. As noted in the figure, in some cases, 
while the UN and the U.S government provide forms of compensation or 
assistance for a related purpose, the other may provide this 
assistance under a different mechanism than an allowance. 

[11] Because approximately 89 percent of current U.S. federal civilian 
employees are covered under FERS, and this percentage will continue to 
grow in the future, we focused our analysis on FERS. 

[12] When analyzing income replacement rates for UN employees and U.S. 
civil service employees under FERS, we made several simplifying 
assumptions. We assumed that employees (1) retired at the end of 
December 2012, and (2) started collecting retirement income in January 
2013. Additionally, we assumed wages grew at the same rate in the UN 
and the U.S. government. We also assumed that both UN and U.S. 
government staff were married at retirement, and that U.S. employees 
selected a FERS pension with a 50 percent benefit for their surviving 
spouse, and converted their TSP balance into a similar 50 percent 
survivor annuity at retirement. UN employees receive a 50 percent 
survivor annuity payable to surviving spouses automatically, with no 
reduction in pension benefits required. For the analysis of TSP 
annuities, we assumed that U.S. government employees invested in the 
TSP's Government Securities Investment Fund (G fund), and that this 
fund earned its historical rates of return. See app. II for additional 
details about the assumptions used in our calculations. 

[13] In both of these scenarios, we assumed that UN staff and U.S. 
civil service employees covered by FERS retire at age 62. However, 
U.S. government employees who retire at age 62 receive a Social 
Security benefit that is 25 percent lower than for employees who 
retire at age 66 with equivalent earnings histories. 

[14] To provide a contribution rate for U.S. civil service employees 
covered by FERS that was equivalent to the UN contribution rate, we 
assumed that U.S. employees contribute 9.4 percent of net salary to 
their retirement plans. We chose 9.4 percent because it is the mean 
pension contribution rate across UN professional staff pay grades. A 
contribution by U.S. employees of 9.4 percent of net salary 
corresponds to 7.3 to 8.3 percent of gross salary, allocated across 
contributions to the FERS pension, Social Security, and the TSP. 
Therefore, U.S. government employees' TSP contributions range from 2.7 
to 3.5 percent of 2012 gross pay in this scenario. See app. II for 
additional details on our analysis. 

[15] We included this scenario because, according to UN officials, the 
UN tends to hire midcareer staff with prior work experience, who are 
therefore less likely to accumulate 30 years of service at the UN. 

[16] In 2012, the average contribution rate for U.S. civil service 
employees who made elective contributions to the TSP was 8.5 percent. 
When also including contributions to an employee's FERS pension and 
Social Security, employees in this scenario contribute between 12.3 
and 13.5 percent of gross salary to retirement. U.S. civil service 
employees who made no elective contributions to the TSP contributed 
between 3.8 percent and 5.0 percent of gross salary to retirement in 
2012, including their contributions to their FERS pension--0.8 percent 
of salary--and their contributions to Social Security, which in 2012 
was 4.2 percent of salary up to the Social Security income threshold. 
U.S. civil service employees contributed 4.2 percent of their salary 
to Social Security--up to the Social Security maximum taxable income 
level--in 2012, because of a temporary payroll tax reduction, but this 
contribution rate returned to 6.2 percent in 2013. 

[17] Salary growth rates and the market performance of the TSP's G 
fund, the default fund for employees' TSP investments, reflected a 
period of high growth in the 1980s and 1990s, with salary growth rates 
exceeding 5 percent per year and G fund returns at or exceeding 9 
percent per year throughout most of the 1980s, followed by a period of 
slower growth. It is also significant that the period of high salary 
growth occurred early in the working lives of the workers in our 
scenarios, building up their portfolios and allowing interest to 
compound on a larger base than would have occurred if the period of 
high growth came later in their careers. For example, workers facing 
lower salary increases at the beginning of their careers may never 
obtain the TSP balances that they would have done had they started 
their careers in a high-growth period. 

[18] The average subsidy for participants without dependents was 
approximately $3,600, while the average subsidy for participants with 
dependents was approximately $7,800. 

[19] OPM's data include nonprofessional staff as well as professional 
staff. We did not present data on average health insurance costs for 
U.S. civil service employees at a specific location because OPM does 
not disaggregate these data by location. In addition, we did not 
conduct a detailed comparison of the coverage of UN and U.S. civil 
service health insurance plans. 

[20] According to an OPM official, the 80 percent participation rate 
among non-Postal employees reflects primary policy holders only. It 
does not include employees who may be otherwise covered under a 
federal health care plan, such as through a spouse. 

[21] The average cost to the agency for self-only plans in 2012 was 
approximately $4,500, while the average cost to the agency for self-
and-family plans was approximately $10,300. 

[22] While the UN Secretariat does not currently require its staff to 
move between duty stations, including moving between headquarters and 
the field, the UN General Assembly adopted a resolution in April 2014 
approving a managed mobility framework that is scheduled to begin 
implementation in 2016. This framework will add more specific 
requirements on staff moves, including imposing a 7-year time limit 
for staff serving in headquarters posts, and requiring at least one 
geographic move for staff to be eligible for positions at the P-5 
grade level. 

[23] Federal agencies may repay certain types of insured, or 
guaranteed, student loans, up to a maximum of $10,000 for an employee 
in a calendar year and not more than $60,000 for any one employee. In 
return, employees must sign a service agreement to remain with the 
agency for at least 3 years. 

[24] [hyperlink, http://www.gao.gov/products/GAO-13-526]. 

[25] Staff-related expenditures includes salaries, benefits (including 
contributions to pensions and health insurance), certain allowances 
(including dependency, hardship, and mobility allowances), and other 
costs. 

[26] [hyperlink, http://www.gao.gov/products/GAO-13-526]. In 2012, the 
General Assembly took action to alleviate these concerns by freezing 
the implementation of the New York post adjustment for 6 months. 

[27] In addition to assisting the ICSC in data collection, in 2013, 
the CEB began a baseline costs study of the UN compensation package. 
According to ICSC and CEB officials, this study will be used to 
validate the cost estimates performed as part of the ICSC total 
compensation review, and will be reported to the General Assembly. 

[28] Although data from the U.S. government and UN payroll represent 
slightly different time periods, we interviewed UN and U.S. officials 
and determined that these differences were not likely to significantly 
affect our results. 

[29] The income replacement rates in this report measure the value of 
retirement income at the time of an employee's retirement, which may 
not fully reflect differences in benefit indexation. For example, the 
Social Security benefit is fully indexed to inflation using the 
Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-
W), while the FERS defined benefit is partially indexed to inflation 
(with a formula based on CPI-W). The TSP allows participants to select 
an annuity that is partially indexed, or one with level payments. In 
the scenarios presented in this report, we assume the TSP participants 
have selected an annuity with benefit increases that are partially 
indexed to inflation. The UN retirement benefit includes pension 
adjustments that reflect both changes in the U.S. Consumer Price Index 
and changes in the exchange rate between the United States and the 
retiree's country of residence. 

[30] CSRS covers U.S. government employees who were hired before 1984 
and did not switch to FERS. 

[31] FERS employees are eligible for a nonreduced FERS pension after 
20 years of work at age 60 or older, or 5 years of work at age 62 or 
older. In 2013, FERS employees could retire with nonreduced Social 
Security benefits at age 66; FERS employees who retired at age 62 in 
2013 receive a Social Security benefit that is 25 percent lower than a 
66-year-old with an identical earnings history would receive. UN staff 
are fully vested in their pension after 5 years of work once they have 
reached the normal retirement age, which was 60 for staff who started 
employment prior to 1990, 62 for staff who started or reentered 
employment on January 1,1990, or later, and 65 for staff who started 
or reentered employment on January 1, 2014, or later. 

[32] The default option for FERS employees who are married is a 
spousal survivor benefit in which the spouse receives 50 percent of 
the FERS retiree's pension if the FERS retiree dies before his or her 
spouse. Selecting this benefit results in a reduction in the FERS 
pension (relative to an unmarried recipient) of 10 percent in most 
cases. FERS employees may select a 25 percent spousal benefit, which 
results in a reduction in the FERS pension of 5 percent (relative to 
an unmarried recipient) in most cases, or they may select no spousal 
benefit. However, FERS employees who are married require their 
spouse's written permission to select any option other than the 
default option. UN employees receive a 50 percent survivor annuity 
payable to surviving spouses automatically, with no reduction in 
pension benefits required. 

[33] The G fund stands for the Government Securities Investment Fund. 
This is the default fund into which an employee's TSP investments are 
put unless an employee actively selects an alternative fund. The G 
fund's investment objective is to produce a rate of return that is 
higher than inflation while avoiding exposure to credit (default) risk 
and market price fluctuations. The G fund purchases Treasury 
securities that are guaranteed by the U.S. government. 

[34] Salary growth rates and the market performance of the TSP's G 
fund reflected a period of high growth in the 1980s and 1990s, with 
salary growth rates exceeding 5 percent per year and G fund returns at 
or exceeding 9 percent per year throughout most of the 1980s, followed 
by a period of slower growth. It is also significant that the period 
of high salary growth occurred early in the working lives of the 
employees in our scenarios, building up their portfolios and allowing 
interest to compound on a larger base than would have occurred if the 
period of high growth came later in their careers. 

[35] For the years 1983 to 1987, we used the rate of return equal to 
the annual interest rate on Social Security special issues, which very 
closely track the annual interest rate on the TSP G fund. 

[36] A TSP life annuity is an insurance product that provides 
guaranteed monthly payments for as long as the retiree, or his or her 
designated survivor, is alive. 

[37] We assume that U.S. employees are married and filing jointly, 
with no children, and with a spouse with zero taxable income. 

[38] Because UN pensions are subject to taxation in the country where 
the staff member receives the pension benefit, they are established in 
gross terms to account for the amount of taxes UN retirees will have 
to pay on their pension benefits. "Pensionable remuneration" is a term 
used by the UN to describe the "grossed-up" salary scale on which 
pension contributions and subsequent gross pensions are based. Thus 
pensionable remuneration is higher than net remuneration for UN staff. 

[39] Because of the tax code, even though all U.S. civil service 
workers in a given scenario are contributing 9.4 percent of net salary 
to retirement, their contribution rate as a percentage of gross salary 
varies across salary levels. 

[40] One limitation of the residual approach for generating TSP 
contribution rates is that we are not recalculating the relationship 
between net salary and gross salary for every level of salary in each 
year of an employee's 20-or 30-year salary history. In practice, the 
effective tax rate for an individual at any given level of 2012 salary 
would have changed over the past 20 or 30 years, for two reasons. 
First, even if the federal and New York tax rates did not change, the 
individual would have fallen into different tax brackets in some of 
the years when his or her salary was lower. Second, even had the 
individual experienced no salary growth over the previous 20 or 30 
years, the federal and New York state tax rates would have changed 
over this period, resulting in different effective tax rates in 
different years. 

[41] Since 1990, in most years employees have contributed 6.2 percent 
of salary to Social Security, up to the Social Security maximum 
taxable income level, which was $110,100 in 2012. In 2012, workers 
contributed 4.2 percent of salary to Social Security, because of 
temporary tax provisions in 2011 and 2012. The Social Security 
employee tax rate returned to 6.2 percent in 2013. Our model 
incorporates these variations in Social Security tax rates. 

[42] Federal agencies contribute an automatic 1 percent of gross 
salary to the TSP for all FERS employees. In addition, agencies match 
100 percent of employee contributions up to 3 percent of gross salary, 
and match 50 percent of employee contributions up to 5 percent of 
gross salary. Thus the maximum employer contribution to the TSP in any 
year is 5 percent (1 percent automatic plus up to 4 percent matching 
contribution.) 

[43] We do not apply a constant rate of return, but instead assign the 
rate of return earned by the G fund in each year from 1988 to 2012. 

[44] The FRTIB administers the TSP. 

[45] TSP participation rates and contribution rates have varied over 
time. The average employee contribution rate among TSP participants 
who made any elective contributions was 8.5 percent in 2012. In 
November 2012, among federal civilian employees who were enrolled in 
FERS, 86 percent of those who were eligible to participate in the TSP 
were making payroll deductions. 

[46] OPM estimates the cost of the FERS basic annuity at an amount 
equal to 12.7 percent of pay. For FERS employees first hired before 
2013, the federal government contributes 11.9 percent of pay and 
employees contribute 0.8 percent of pay. For FERS employees hired in 
2013 or later, the federal government pays 9.6 percent of pay. 
Employees first hired in 2013 pay the remaining 3.1 percent and 
employees hired after pay 4.4 percent. 

[47] We assumed that all employees had a 35-year Social Security work 
history because Social Security benefits are based on a person's 
highest 35 years of earnings. 

[48] The OASDI program provides benefits for retired workers, their 
families, and the survivors of deceased workers through the Old-Age 
and Survivors Insurance Program, and provides benefits to disabled 
workers and their families through the Disability Insurance program. 
Since 1990, the OASDI tax rate has been set at 6.2 percent for 
employers and employees. An exception is the period 2011 and 2012, 
when the OASDI tax rate for employees was temporarily reduced to 4.2 
percent. 

[49] For U.S. federal civilian employees in the FERS retirement plan, 
the income base for the Social Security tax is total pay, up to the 
maximum taxable amount. For U.S. citizen employees of the UN, the 
income base for the Social Security tax is the gross base salary plus 
the post adjustment, plus any salary allowances. The gross base salary 
is defined as the net base salary, at the dependent or single rate, 
plus the staff assessment. 

[50] According to a UN official, approximately 1,000 UN professional 
staff who are U.S. citizens are working in the United States. UN staff 
who are U.S. citizens and spend a portion of their career in another 
country are generally subject to the Social Security windfall 
elimination provision, which reduces the Social Security benefit 
formula for these staff. 

[51] [hyperlink, http://www.gao.gov/products/GAO-13-526]. 

[End of section] 

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