IMRF Continues to Boost Local Economies During Recession

-- Pension fund generates $1.4 billion of economic activity in Illinois --

Download the Economic Impact Study (pdf file, 3.4 mb)

Read about the Pension Ripple Effect

OAK BROOK, Ill. — April 6, 2009 — As the national economy continues to sag, the Illinois Municipal Retirement Fund (IMRF) is making a profound and positive impact on economies across the state. According to a new study, 2008 benefit payments from IMRF produced nearly $1.4 billion in economic activity and created more than 10,000 jobs in the state of Illinois. This report joined a growing body of evidence that suggests that defined-benefit pensions are critical economic generators.

IMRF administers retirement, disability and death benefits on behalf of approximately 3,000 local units of government. It serves 182,000 working public sector employees and 89,000 retirees. Eighty-five percent of IMRF beneficiaries live in Illinois and pump their dollars back into each of the state’s 102 counties.

The report looked at the $829 million in benefits that were paid to Illinois residents in 2008, and then analyzed the ripple effect to the economy as residents spent those benefit payments on goods and services throughout the state. It found that 2008 IMRF benefit payments resulted in $1.382 billion in economic activity in Illinois. Economic activity calculates the initial value of the benefits and adds the value of the transactions that occurred as a result. IMRF's resulting economic activity surpasses the value of all the coal mined in Illinois each year.

At a time when unemployment is on the rise, the report shows that IMRF benefits also result in job creation. It is estimated that 2008 IMRF benefit payments created 10,522 jobs in Illinois — more than the Illinois workforce of either McDonalds or Allstate Insurance Company, two of the state's largest employers.

These figures suggest that defined benefit plans like IMRF are a consistent, stabilizing force, even in uncertain economic times. Retirees relying on defined contribution accounts must adjust their spending with the ups and downs of the market. Those with a guaranteed pension such as IMRF, however, can maintain spending on basic needs through a downturn.

In addition to the economic impact IMRF retirees have on their local economies, public pensions like IMRF also play a critical role on a national scale. Public pensions hold more than $2 trillion in assets, equal to nearly 16 percent of the nation’s entire GDP. When they invest, defined benefit pensions stimulate the economy, providing long-term, patient investment capital.

“Throughout this economic crisis our retirees have been able to depend on a modest, guaranteed benefit from IMRF,” said Louis Kosiba, IMRF executive director. “This not only helps household budgeting, but also supports economies across the state by ensuring that retirees continue to spend at local businesses. In these tough economic times, we’re pleased that IMRF is able to make a positive impact.”

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About IMRF

The IMRF was created by the Illinois General Assembly. Since 1941, IMRF has partnered with local units of government to provide death, disability and retirement benefits for working and retired public employees. Today, IMRF has more than 182,000 active members working for nearly 3,000 different units of government, including school districts, counties, cities and villages, parks and libraries. It has more than 89,000 retirees receiving an average monthly benefit of $877. IMRF consistently works toward reaching full funding over the long term, ensuring that it remains financially sound. A full funding goal guarantees public workers a secure and modest retirement income at the lowest long-term cost to taxpayers

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