Employer contribution rates are determined by IMRF’s consulting actuary on an annual basis and for each employer separately. IMRF will continue to use the Annual Required Contribution (ARC) calculation embedded in GASB Statement No. 27 to determine employer contribution rates through 2014. Note: Beginning in 2015, in accordance with GASB 68, this calculation will be disclosed as Actuarially Determined Contribution (ADC), which is determined by the actuary. The ARC is not necessarily the same as ADC, as required by GASB 27.
Each employer pays for the pension costs of its own members only. Employer rates differ because the composition and actuarial experience of member groups vary.
The essential difference between municipality and instrumentality rates is the amortization period for the unfunded past service liabilities. The amortization period for taxing bodies is for a 19-year closed period in 2024, reducing to 15 years and then becoming a 15-year open period, and for non-taxing bodies the amortization period is a 10-year open period.
Because the annual costs of participation are expressed as a percentage of payroll, assuming similar annual total dollar costs, an employer with a small payroll base will have a higher rate than an employer with a larger payroll base.
Employer contributions for supplemental retirement, death, and disability benefits are placed in separate reserves for all IMRF employers.
Employer contributions for IMRF pensions are placed in the individual employer’s reserve account. This reserve is not earmarked for any specific member. It is used to pay the employer share of pension costs only when a pension is granted to one of its own members.
Once retired, members lose their employer identity and participate as part of the whole fund. Any actuarial experience variations, such as living longer or dying earlier, do not affect employer costs on an individual basis. However, employers continue to bear investment risk related to their retired members.