7.20 D. Amortization of Overfunded Liability

Amortization for employers who are 120% or more overfunded on a market basis is handled differently. Overfunding occurs when the total assets exceed the actuarial obligation. The funding ratio of an employer can be found on the GASB Statement Number 50 disclosure furnished annually by IMRF.

The primary goal of IMRF is to produce stable employer rates. However an employer who is 120% or more overfunded on a market basis will be given the option of selecting a minimum contribution amount as long as the employer remains over 120% funded on a market basis.  Selecting the minimum contribution option will increase rate volatility.  Some overfunded employers with limited ability to increase tax levies may want to continue with the normal amortization period since it provides more stable rates. Once overfunded amounts are used up, employer rates will increase to the (at a minimum) normal cost rate, death, disability, and supplemental rate plus amortization of any unfunded amounts.

Employers who are over 120% funded on a market basis  may use the overfunding to reduce or satisfy its early retirement incentive liability.

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