Article V

"Safeguarding the trust of fund beneficiaries is paramount. Conflicts of interest, bribes, gifts or favors which subordinate IMRF Trustees or staff to private gains are unacceptable."

One can never catalogue all the conduits by which trustees or staff may be induced to manage participant’s assets in ways that benefit the trustee, staff member or a third party rather than the participants. The variations on this theme are endless. However, defining how trustees and staff should act in such situations requires no novel interpretation. Rather, it requires recognition of the fact that trustees and staff cannot act in accordance with the morals of the market place but must instead meet the higher standards of loyalty, integrity and prudence.

Under the duty of loyalty, trustees and staff are required to act in the best interest of another. Fullness of disclosure, honesty of intentions, the payment of an adequate price, the lack of damages and in no cases ethical excuses. Honest but imprudent trustees and staff can dissipate the assets of a fund at the same speed as dishonest trustees and staff.

The relation between trustees or staff and participants is particularly intimate. The participant is obliged to place great confidence in the trustee and staff. The trustee and staff have a high degree of control over the affairs of the participant. The relationship should be treated as one requiring the highest of moral and ethical commitment.

Rules and Interpretations

Rule 5.01 Trustees and staff must safeguard assets for the current and future generations of participants.

The trustees and staff have an obligation to manage IMRF funds so as to enable IMRF to meet its obligations not only to retirees, but also to those scheduled to retire in the future, (members whose pension and annuity rights will be earned over the years of active service).

To exhaust assets of an actuarially underfunded pension system on a single class of participants violates a fiduciary obligation.

Rule 5.02 Safeguarding Assets.

Trustees and staff are charged with statutory and common law duties to exercise fiduciary responsibilities over assets of the fund.

Trustees and staff should only distribute assets from IMRF for the benefit of the participants.

Rule 5.03 Conflict of Interest.

As fiduciaries, the trustees and staff must discharge all their duties solely in the interest of the participants and beneficiaries for the exclusive purpose of (1) providing benefits to participants and their beneficiaries; and (2) defraying reasonable expenses of administering IMRF. Trustees and staff must act honestly and with undivided loyalty to the trust and must serve the interest of all beneficiaries excluding self interest.

Trustees and staff must not deal with the IMRF assets for their individual benefit.