Both normal retirement contributions and the amortization of the <overfunded> unfunded liability pay the employer’s portion of retirement benefits. However, they are calculated separately.
The normal retirement contribution, also referred to as the normal cost, is the percent of payroll necessary to fund this year’s portion of the expected total cost of future benefits for the average IMRF member. While most IMRF employers have the same normal cost for their Tier 1 and Tier 2 members, the blended rate is based on the employer’s mix of Tier 1 and Tier 2 members. Therefore, the blended normal cost rate differs among employers. For 2024 the average normal cost is 4.96% for regular employers, 9.61% for SLEP employers, and 12.81% for ECO employers.
Employers with more than 400 active members were offered an individual rating option for their normal cost. This option allowed a select group of employers to have an individual calculation of their normal cost based on their employees' demographics which may reduce their normal cost rate. (Eligible employers who opted to have individual rating of normal cost paid the incremental actuarial fees required for the calculation.)
Except for several large employers who have opted to have their normal cost calculated on an individual basis, the normal cost is calculated for IMRF as a whole.