Merchants in the Temple (18 page)

In August 2013 the troubled issue of the pension fund was taken up as one of the official subjects of inquiry of COSEA. This was all done with the utmost secrecy, to avoid disturbing the peaceful sleep of the precious hardworking community that every day labors away at the Vatican and knows nothing of the pension system, which is so severe that it could compromise the future of many employees.

In the end, Messemer's proposal that a task force be formed did not fall on deaf ears, and action to that effect was quickly taken. The mission was assigned to a giant in the field of management consultancy: Oliver Wyman, a multinational company headquartered in New York with offices in more than fifty countries. Wyman was delegated to conduct an actuarial study to estimate the financial health of the pension fund and assess whether the paychecks withholdings were sufficient to guarantee a safe future for everyone. COSEA also asked Wyman to “develop a proposal to cover the deficit,” as the internal documents indicate, and to restore the health of the fund, assuring a serene old age to all the Vatican employees, from the cardinals to the Swiss guards.

Here, too—as was often the case on the various critical fronts opened by the teams deployed by Francis—well-informed cardinals, bishops, and monsignors were divided into two factions. The optimists, loyal to continuity with the past, proposed the sale of some real estate to balance the budget. And they spread the word that the actual deficit amounted to “only” 40 million euros. This is the number that had been circulating ever since the last audit of the pension fund, in 2011, by a Roman expert, who estimated the deficit at precisely this amount. For them there was no reason to panic, and the situation was under control.

The realists, instead, described the actual situation. They were the loyalists of Francis, including the Spanish Cardinal Santos Abril y Castelló and the Frenchman Jean-Louis Tauran. They knew that the size of the deficit was much greater than the unofficial figures being circulated, and that all the data showed the Vatican social security system on the edge of collapse. The picture they painted was hardly reassuring. The cardinals closest to the Pope proposed another set of urgent and, above all, serious inspections. They were all rightly convinced, as the other financial questions had made crystal clear, that viable countermeasures could only be identified and enacted through solid data.

Francis's collaborators were shrewd enough not to contradict the optimistic reports circulating within the Vatican walls, which downplayed the size of the deficit, saying it only amounted to a few tens of millions. Their strategy was aimed at reassuring the people and preventing the spread of panic or alarm. On the issue of pensions, a very delicate hand was being played: it was essential that the pensions be safeguarded to prevent unpredictable reactions by the employees of the Holy See, which might spark a domino effect with repercussions in the media, and provoke a chain reaction of rampant destabilizing events such as strikes and protests.

In late September Wyman's team was able to offer a preliminary assessment on the basis of data collected from various Vatican dicasteries. A top-secret document was drafted and sent in a sealed envelope on October 11 to Zahra, the Chair of the COSEA Commission, and to Messemer, who had been assigned to follow this specific project. The next day was a relatively peaceful Sunday. The COSEA commissioners met early in the morning for the third time. After a quick coffee and welcoming remarks, Messemer and Zahra did not conceal their desire to share all the information they had received. Wyman's report gave a sharp photograph of the situation that shocked the experts assembled at Casa Santa Marta. Their profound distress emerges clearly in a few lines of the meeting summary:

The consultancy company that was hired, Oliver Wyman, presented already on October 11 a preliminary report on the data it had acquired on about forty Vatican offices. Now it will focus primarily on the pension fund, which at first glance shows a heavy exposure to risk that is extremely troubling.

In fact, the first indications report a deficit that was far greater than what had been imagined in the spring, comparing the available data with the reports prepared in past years. The unofficial figure that had been rumored in the corridors of the holy palaces shot up to incredible levels: the deficit had increased to half a billion. But even this projection would prove to be too optimistic.

“The Vatican Risks Extinction” According to the Head of the Prefecture, Cardinal Versaldi

Francis's goal was to return the Holy See to the dictates of the Gospel in every sector, from finance to management and administration. Health insurance and pensions also had to be rethought, according to these criteria. The reform of the pension system should thus not be studied in isolation but rather in connection to a new model relationship between the worker and the Holy See. The functions and role of the Labor Office had to be reviewed, correcting and rationalizing three key points: human resources, pensions, and health insurance. This is made clear in a COSEA memorandum of late October 2013, which proposes the creation of a new strategic office to manage everything having to do with workers. The document appears to be the draft of a speech written in the first person and bearing the signature of the Pope.

The title is revealing:
Pontificum cura
.

The concern of the Pontiffs for all the collaborators has always been a unique characteristic of the government of the Apostolic See. In recent times many measures have been taken to render their service more serene and fruitful. In 1988, through the Apostolic Constitution
Pastor Bonus
(art. 36), the Labor Office of the Apostolic See was established … Since 1993 the pension fund has been operative, unifying, for all Vatican employees, the administrative center for the treatment of retirement and the allocation of the pension check.

Over the years the health insurance fund has been kept updated to provide a good level of services, allowing health care that, while it can always be improved if adequate resources exist, can stand comparison in timeliness and drug coverage with the care afforded citizens of many more economically developed countries.

In recent times … a commission has been established at the Secretariat of State to regulate, standardize and make more transparent procedures for the hiring of new lay personnel. Finally, mention should be made of the not infrequent increases in the base salary and special mention should be given to the existing system of automatic pay raises. This system, adopted in the past by various countries, has been deactivated almost everywhere as a result of the economic crisis under way. By the same token, also in state organizations in our vicinity, profound changes have been made to the criteria for calculating the pension check.

The Providence of the Father has always assured the Holy Church the necessary means to perform its duties: spiritual means and material means. This fills us with serenity, but it should also commit everyone to use these means in accordance with the letter and the spirit of the Gospel. In particular, the use of material means, which through the charity of the faithful throughout the world arrive at this Apostolic See, must be directed toward the primary purpose for which they are given. They must therefore not be diverted from their immediate goal, wasted, or used in a way that is inappropriate.

All the gifts received must be accounted for in accordance with what the Gospel indicates to us and urges us to assess. All the more so in the midst of a profound economic crisis like the present, which creates so much distress and poses so many material and spiritual problems for the people involved. I wish to contribute to the serenity of all those who, to any degree, collaborate in the service of the Bishop of Rome for the Universal Church.

Therefore, for the sake of achieving correct use of the material assets and while awaiting the contribution that the Commission of Eight Cardinals will make to the achievement of the broader reform of the Roman Curia, I felt it was advisable to begin gradually to take measures in this direction, so as to assure also for the future the economic resources that enable, for all employees, job stability, a fair salary, adequate health care and an appropriate economic allotment that will allow them to live with dignity after their working life is over.

These are important words because they anticipate the de facto reform of the Curia on the key issue of employee relations. Francis's challenge was to redefine the balance between temporal power and religious power and to translate it into the architecture of a new state.

In particular, the investigation highlighted that there were too many workers and too many personnel offices. According to the latest data available to the commissioners there were actually 21 personnel offices with 35 staff members employed throughout the territory of the Holy See. Each one of them administered its own small share of the 4,699 total of employees.

This situation applied not only to APSA and the Governorate, whose human resources offices have a staff, respectively, of 7 and 14 employees. There were also similar structures at Propaganda Fide (2 units), Vatican Radio (3 units), the IOR, the Printing Shop, and
Osservatore Romano
, and so on, all the way to the St. Peter's Chapter (2), the Fabbrica of St. Peter's (2), the Vicar's Office (2), and even the library, with 2 units, while the cutting of paychecks is handled by APSA.

The guidelines provided in
Pontificum cura
thus set the goal of creating a single personnel office:

Among the many changes that should be made to achieve proper use of economic resources, having listened to various collaborators, I have decided to proceed with the unification of all the resources destined for the management of the activities relative to the personnel of all the administrative bodies that, to any extent, report to this Apostolic See. Therefore … until the new decision is made the regulations indicated below shall be observed, regarding in particular the functioning of the personnel offices of the bodies of the Holy See.
6

The new Personnel Office will handle in particular the following matters … It will be a special task to draft and propose suggestions in order to achieve regulations that are more in compliance with the principles of equity and justice. In particular the teachings of the Second Vatican Council will be kept in mind and fully enacted.

In this episode, too, unfortunately, the appeals to be more careful about hiring and assigning jobs went unheeded. The Curia was not sensitive to the Pope's warnings. His every instruction would be ignored: “We have to change our way of thinking”—Versaldi had thundered at the closed-door meeting with the auditors on December 19, 2012—“by trying to look beyond our own limited reality … the Vatican can be inspired by the pursuit of common values, which are proclaimed by the Gospel. In any case, rejecting a reduction of expenses would signify risking the extinction of the whole structure.”
7
But this appeal also fell on deaf ears. The offices proliferated, duplicating one another's work and increasing expenses in the process. New employees were hired according to criteria that was not always endorsed by the Pope. But he knew nothing of it. The situation was out of control.

An 800 Million Euro Deficit in the Pension Fund

In the meantime, the investigation into the pension system continued. In the next three months, the expert analysts went to the root of the problem—and they were scathing in their reports about what they found. By cross-referencing information, they discovered “a significant deficit in the financing of almost 700–800 million, which was identified in the pension fund.” The fund was quickly approaching collapse: the promise of a pension tied up 1.2 to 1.3 billion euros against an endowment not much higher than 450 million, with a deficit of 700–800 million.
8

This was a structural question that in a few years' time risked jeopardizing the whole pension system for employees who had already retired or were making plans to do so. The risk would only grow because of the incompetence of the persons assigned to administer the fund. The report emphasized, “the lack of knowledge in the fields of insurance and asset management on the part of the fund's oversight bodies.”
9

This was the unvarnished conclusion made by COSEA in the documents it prepared for the February 17 and 18 meetings with the Council of Cardinals of the Economy, which were recently approved by Francis (which will be discussed later). In other words, the pension fund was caught in a bind: on the one hand, there was the rock of the deep deficit, on the other, the hard place of the professional incompetence of the persons called on to manage the accounts.

These assessments seemed to be confirmed by the management of the fund's assets, consisting of real estate and securities with their own significant risks: “The asset management of the fund is not aligned with the debts of the fund and there are major investments into risky positions [such as] Italian government bonds.”
10

There were also some questions about the real estate portfolio, since it was invested entirely in the municipality of Rome and not distributed among various realities, to prevent overexposure to the market fluctuations of a single city. In reality, in a country, pension funds are not structured around reserves and real estate investments, but count on the contributions of employees and new hires, which steadily finance the pensions of persons who go into retirement. The Vatican is a unique case, however, since the mortality rate is so low and births, for obvious reasons, are so few.

These negative evaluations were not offset by the positive data that Cardinal Versaldi, as the President of the Prefecture, found in the 2013 budget and 2014 estimated data received on December 19, 2013, directly from Cardinal Calcagno:

Most Reverend Eminence,

 … The YTD budget shows a possible financial surplus of 27.7 million euros, the 2014 estimated budget projects it at 28 million. The results predicted for the 2013 and 2014 fiscal years are thus high enough to foresee pension fund assets at the equivalent of 479.1 million as of December 31, 2014. I am grateful for this opportunity to confirm the assurances of my highest esteem for Your Most Reverend Eminence.