IMRF Benefits Offer Boost to Local Economies

-- Pension fund generates $1.5 billion of economic activity in Illinois --

Download the Economic Impact Study (pdf 2.75 mb)

Read about the Pension Ripple Effect

OAK BROOK, Ill. — April 16, 2010 — As unemployment numbers continue to rise and business owners anxiously watch balance sheets, a new study found that the Illinois Municipal Retirement Fund (IMRF) made a profound and positive impact on local economies across Illinois last year.

According to a new study, 2009 benefit payments from IMRF produced nearly $1.5 billion in economic output and created more than 11,000 jobs in the state of Illinois. This report joined a 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 181,000 working public sector employees and 92,000 retirees.

Eighty-five percent of IMRF beneficiaries live in Illinois and pump their dollars back into their communities. The report looked at the $896 million in benefits that were paid to Illinois residents in 2009, and analyzed the ripple effect to the economy as residents spent those benefit payments on goods and services throughout the state. It found that 2009 IMRF benefit payments resulted in $1.495 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.

At a time when unemployment is the highest it has been in decades, the report also found that 2009 IMRF benefits created an estimated 11,379 jobs. That is more than the Illinois workforce of either McDonalds or Allstate Insurance Company, two of the state's largest employers.

“Defined benefit plans like IMRF serve a vital stimulative role, especially in a down economy,” said Louis Kosiba, IMRF executive director.

"Our retirees can depend on a consistent, modest benefit check every month. As a result of this income security, they pump those dollars back into local businesses. Those with defined contribution plans, on the other hand, may be forced to curtail spending during a market downturn, amplifying the pain felt by local businesses"

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. At the end of 2008, public pension plans held nearly $2 trillion in assets, equal to more than 20 percent of the nation’s entire GDP. Because defined benefit retirement systems invest for the long-term, they provide the market with a critical source of investment capital for businesses, technology and medical advancements.

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 181,000 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 92,000 retirees. An average member retiring in 2009 had 20 years of service and received a monthly benefit of $1,248.

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.

###

Need more information? Contact us.

Printer friendly