Merchants in the Temple (31 page)

Authors: Gianluigi Nuzzi

BOOK: Merchants in the Temple

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7. Holes in the Pension Fund

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â“If you look at the contribution of active employees (current average value of contributionsâpresently active),” Messemer underlines, “it will bring in 494 million euros: this is about 288 million less than what is needed to cover the estimated liability of 782 million euros for active employees.
Â Â Â Â “It is presumed that this discrepancy is financed both by the net assets and by future employees and that it will be covered, for the most part, by a mathematical reserve of about 180 million euros in the profits and losses account. To put it simply, the contributions of future employees should amount to about 575 million euros, while liabilities for the same group of persons is estimated at only 395 million euros.
Â Â Â Â “To be more concise: contributions from future employees will finance about 180 million euros of the pension [liability] of current employees. If you look at the need to cut personnel costs, thereby reducing the financial base of future contributions to the pension fund, this would seem to be an unrealistic assumptionÂ â¦
Â Â Â Â “The most important analysis that must be done urgently is an analysis of the correspondence between assets and liabilities. We are unable to say whether earnings from current and future assets (from a prospect based on the rate of risk/profit) are stable enough to guarantee the profits needed to cover the liabilities. The current interest rate for the calculation is about 4.7 percent. I should mention that the current interest rate on German government bonds (10 years) is 1.3 percent.
Â Â Â Â “The IRS, the Swap interest rate (20 years) is about 2 percent, also indicates that we are seeing a dramatic drop in interest rates, within which a projected rate of about 5 percent is truly ambitious. Making things more complicated is the fact that one-third of the assets are real estate. What type of asset are we referring to? In what does it consist? Are there also investments that could, in the future, modify the budget structure?”

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âThe auditor had been particularly harsh five months earlier, on June 21, 2012, as documented in the minutes of the meeting of the international auditors' board: “Mr. Messemer hopes that, in the space of a few years, we can have a holistic view of the economic and financial activity of the Vatican, avoiding unpleasant surprisesÂ â¦ This is why it is important for the Pension Fund to have exact risk assessments and to undertake an accurate actuarial calculation. To this end, Mr. Messemer underlined several important needs:

1.
Change the pension system for new employees (i.e., per contribution);

2.
Understand that the Pension Fund is part of a scenario in which interest rates vary from 2â3%;

3.
Verify the exact correspondence between assets and liabilities. There are models that could be used as reference;

4.
Always assess the counterpart's risk. The top insurance companies never neglect this aspect. If an insurance policy is drawn up with a bank, first check whether the bank is solvent.

5.
Try to respect promises made to employees. This regards both the Pension Fund and the Health Insurance Fund.

6.
Address the media's skepticism in calm cool tones, trying not to sound too worried about what is happening.”

The other auditors share Messemer's concerns: “Mr. Prato returned to the subject of the Pension Fund and the two systems, of payments and contributions, that should exist after the introduction of contributions for new employees. Considering, however, the rather low turnover rate of Vatican personnel, it would be better to schedule a set date for the full transition to a system of contributions, for all employees, to prevent any possible disorder due to the coexistence of the two systems. Mr. Messemer claims that the separation of the two systems is the most immediate solution. It is problematic to transition to the new system if the old one is still widely misunderstood. Another source of concern is tied to the flows from one system to the other to allow the new pensions to pay for the old ones.”

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âThe document continues by underlining the following:

1.
All the personnel offices of all the administrative bodies that report to the Apostolic See, in any way and regardless of the de facto or legal autonomy they have so far enjoyed, will be unified in a single administrative structure that will perform all the functions in this area. Some of these functions could be delegated, in part or in whole, for a fixed term.

â¢ This structure will be called “Personnel Office of the Apostolic See” and it will report to the Prefecture of the Economic Affairs of the Holy See.

â¢ It will be headed by an appointed Director of Human Resources who will direct and coordinate all personnel who, at present, handle assignments in this field at the single administrative bodies;

â¢ The structure will be divided into two sections: one for all full-time permanent employees and another for other types of collaborators of any type working for administrative bodies of the Holy See, including unpaid collaborators.

â¢ All the existing regulations at the single dicasteries will remain valid, provided they are in compliance with regulations at the higher level and, of course, with the universal principles of equity and justice.

8. Attack on the Reform

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âOn several occasionsâfor example, at the Basilica of Our Lady of Tears in Siracusa on the day after the announcement of his replacement by ParolinâBertone responded to the many “accusations” to which he had been subjected: “Of course there have been many problems, especially in the past two years, and many accusations have been thrown at me byÂ â¦ a cabal of crows and snakesÂ â¦ But this should not obscure what I consider a positive final balance.” “I have had my flaws,” he said, but “I have always given my all” and no one can say that “I did not try to serve the Church.” “On the one hand it would seem that the Secretary of State decides and controls everything, but that is not the case. There are events that got out of hand because these problems were âsealed' within the control of certain persons who refused to liaise with the Secretariat of State.” (ANSA, September 1, 2013.)

9. The War, Act I: Blocked Budgets and Bureaucratic Assaults

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