7.23 A. Amortization Period

An 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. of 10 years is assumed. If an employer A unit of government that joins IMRF. would like an amortization period less than 10 years, it must submit a resolution specifying a shorter amortization period. (See Section 6, view Exhibit 6LL, IMRF Suggested Form Resolution, “Resolution to Adopt Amortization Period for IMRF Early Retirement Incentive.”)

To use IMRF’s suggested form of resolution, send a secure message to request a “Resolution to Adopt Amortization Period for IMRF Early Retirement Incentive” form. If unable to send a secure message, contact IMRF through the employer-only phone number at 1-800-728-7971.

Please note: due to the method IMRF uses to calculate employer contribution rates, only whole year (one through 10) amortization periods are allowed. The amortization period the employer chooses is decreased each year to calculate the employer’s ERI rate.

Employers may also choose to pay off the incremental ERI liability by making a lump sum payment. The lump sum payment should be submitted to IMRF using First Data Government Solutions Electronic Funds Transfer Pay-by-Phone or Pay Online system.

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