7.23 Financing the Cost of IMRF Early Retirement Incentive (ERI)

Once an employer A unit of government that joins IMRF. adopts the IMRF Early Retirement Incentive (ERI) and a member An employee who works in a position not excluded from IMRF coverage and whose position meets the annual hourly standard for IMRF coverage. For the purposes of an Authorized Agent submitting a petition or casting a ballot in an executive trustee election, an active member also includes an employee receiving an IMRF pension and working in position that does not qualify for IMRF participation or one that provides the employee the option of participating in IMRF, e.g., elected office. retires under it, a separate ERI reserve account is established. The employer does not receive a bill for the employer’s ERI costs. The ERI obligation is factored into the employer’s contribution rate.

Annually, the employer’s ERI Reserve Account and amortization period One of the pieces of information an actuary uses to calculate an IMRF employer contribution rate. Generally, each IMRF employer (unit of government) has an unfunded liability due to "prior service" of employees when the employer joined IMRF and due to benefit increases. (Prior service refers to the years and months an employee worked for a unit of government before that unit joined IMRF-assuming the position the employee held qualified for IMRF). The unfunded liability is the estimated cost of retirement benefits earned to date that have not been funded. That is to say, the employer has no assets with IMRF to pay those benefits. A portion of the unfunded liability must be paid each year; the portion is determined by the employer's structure. For most employers, the unfunded liability is amortized over a 25-year period in 2007. Participating instrumentalities (employers without taxing authority) amortize their unfunded liabilities over a five-year period. will be sent to IMRF’s actuary A statistician who estimates future funding needs based on rates of mortality, disability, turnover, ages at retirement, rate of investment income, and salary trends.. The actuary will calculate the employer’s ERI rate based upon that information. Employer rates are on a two-year lag: 2023 information (members who retired under ERI) sent to the actuary in 2024 is used to calculate 2025 rates.

Learn more about financing the cost of IMRF ERI from the topics below:

1. Amortization Period

2. Impact on Employer ERI Rate If Member Has Concurrent IMRF Employers

3. Impact on Employer ERI Rate If Member Has Multiple IMRF Employers

4. Subsequent ERI Offerings