Actuarial Valuation Report and Annual Gain/Loss Analysis finds IMRF well run and well funded
Actuaries Brian Murphy, Mark Buis and Francois Pieterse from Gabriel, Roeder, Smith & Co. presented IMRF's Annual Actuarial Valuation as of December 31, 2011, and IMRF's Annual Gain/Loss Analysis.
The purpose of the Annual Valuation is to report employer contribution rates for 2013, measure IMRF's actuarial position and funding progress (ratio of assets to liabilities), and explain changes in IMRF's funding position.
The purpose of the Gain/Loss Analysis is to identify any changes in IMRF's unfunded liabilities because of deviations from assumptions for each area of risk, e.g., membership, investment return, and inflation.
The GRS team said that by 2018, half of the IMRF membership will be new members. While in the past every employer had the same Normal Cost rate, with the addition of Tier 2, each employer now has an individual Normal Cost rate, since this rate is directly affected by how many Tier 2 members each employer has.
The 2011 Valuation results were affected by:
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A 2011 Experience Study
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Poor investment return in 2011
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A second tier of benefits
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Continued phase-in of 2008 market value loss
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Changes in actuarial assumptions
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Early Retirement Incentive (ERI) liabilities
In summary:
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Contribution rates increased due to revisions in actuarial assumptions, primarily due to longer expected lifetimes.
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Investment markets continue to be volatile—unfavorable investment performance in 2011 also increased contribution rates.
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IMRF is still well funded (83% funding on an actuarial basis, 80% funding on a market basis) considering recent historic market volatility; national average is about 75% funding.
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Board approves Trustee election procedures
Later this year, IMRF employers will elect one executive trustee for a five-year term of office and one employee trustee for a two-year term of office.
The Board approved the election schedule, general memo, fact sheet, nominating petition form, biographical information form, and list of election judges and clerks.
As IMRF has done in the past, employers will receive a general memorandum via the Employer Digest email newsletter about the elections at the end of June. The memo will include a link to the documents.
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Board Legislative Agenda passed both chambers
General Counsel Kathy O’Brien said that House Bill 4622 passed the second chamber on May 15, 2012. The bill contains the Board’s 2012 Legislative Agenda and makes two changes.
The first change removes an incorrect word in Section 7-220 of the Illinois Pension Code. The second change removes obsolete Social Security procedures, including clarifying that taxes levied for IMRF purposes can only be used for IMRF employer contributions.
The bill will be sent to the governor to be signed.
The group also briefly discussed the “pension reform” bill that was expected to be introduced the week following the Board meeting. IMRF is not expected to be included in this legislation.
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Trustees revise Disability and non-Disability Appeals procedures
The Board approved a recommendation to revise the appeal procedures for both Disability and non-Disability claims. The revised procedures are available at www.imrf.org.
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Board approves upcoming self-evaluation
The Board briefly discussed the self-evaluation it will perform at the June 2012 Board meeting.
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Next Board meeting
The next monthly Board meeting will be held Friday, June 22, in Oak Brook, IL.
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