Staff reports on progress related to 2014-2016 Strategic Plan
IMRF Deputy Executive Director Dan Duquette and Performance Excellence Manager Kathy Goerdt updated the IMRF Board of Trustees on progress related to the 2014-2016 Strategic Plan.
The IMRF Strategic Plan has five Key Result Areas (KRA’s): Financial Health and Sustainability, Investment Returns, Customer Satisfaction and Operational Excellence, Workforce Engagement, and Modernization. The Plan has Strategic Objectives related to each KRA, and each Objective is supported by a series of Action Plans. The Strategic Plan supports IMRF’s Vision to "provide the highest quality retirement services to our members, their beneficiaries and employers." IMRF strives to achieve a top 10% ranking for most of its Strategic Objectives.
Highlights of progress made during 2014 include:
- Decreasing the average employer contribution rate. The average rate is projected to fall to 10.78% in 2016 (Financial Health and Sustainability KRA).
- Outperforming the Total Portfolio Benchmark Return over the last 3-, 5-, and 10-year periods. (Investment Returns KRA)
- Providing outstanding customer service, as validated by our membership and two external benchmarking surveys, at a median cost (Customer Satisfaction and Operational Excellence KRA).
- Earning top decile results on an independent, externally administered employee engagement survey (Workforce Engagement KRA).
- Completing IMRF’s Website Replacement Project on schedule and within budget (Modernization).
Board approves GASB 68-related budget adjustments
The Board approved two significant amendments to IMRF’s 2015 Budget as a result of the requirements of Governmental Accounting Standards Board (GASB) Statement No. 68.
The budget amendments include:
- $675,000 to engage the firm KPMG to produce audit opinions on the Schedule of Changes in Fiduciary Net Position by Employer for all employers who require one. IMRF employers who will comply with the requirements of GASB 68 will need such an opinion.
- $100,000 to engage the firm KPMG to produce a SOC 1 Type 2 Report verifying the reliability of IMRF’s internal controls over financial reporting. IMRF employers who will comply with the requirements of GASB 68 will need to supply the SOC 1 Type 2 Report to firms auditing their financial statements.
The ultimate cost to produce the audit opinions depends on the number of employers who require one. IMRF recently surveyed its employers on their requirements. IMRF staff is in the process of verifying that each employer who requested an audit opinion actually needs one. The cost to produce these audit opinions is a significant, but one-time, expense.
Producing an annual SOC 1 Type 2 Report will be an ongoing, annual expense.
Employers credited portion of 2014 investment return
Chief Financial Officer Mark Nannini reported that in 2014 IMRF earned about $2.38 billion on investments. After covering administrative and investment expenses, and crediting 7.5% interest to the member and annuitant reserves as required by law, on average IMRF credited employers 5.12% on their beginning of the year reserve balances.
Board sets 2016 death, disability rates
The Board approved death and disability benefit rates for 2016.
The 2016 average death benefit rate will decrease from 0.18% to 0.15% of employer payroll. The 2016 disability benefit rate will increase from 0.11% to 0.14% of employer payroll. IMRF’s goal is to maintain a balance in the death benefit and disability benefit reserves equal to one year’s total payments.
Staff projects 2015 "13th Payment"
Each July, eligible retirees and surviving spouses receive a Supplemental Benefit Payment, also known as the "13th Payment." Chief Financial Officer Mark Nannini estimated that the 2015 13th Payment will be 34% of a retiree’s June benefit payment. This is a decrease from 36% in 2014. The 13th Payment is funded by an annual employer contribution equal to 0.62% of payroll. The 13th payment amount is decreasing annually because the number of retirees continues to outpace the growth in employer payroll.
Payments to exceed contributions in 2015
Chief Financial Officer Mark Nannini reported to the Board that benefit payments are projected to exceed contributions by $576.6 in 2015. Payments exceeded contributions by $391.8 million in 2014. The gap is largely due to an increase in retirements as the baby boom generation reaches retirement eligibility. IMRF will fund the shortfall via investment returns. Average employer contribution rates are not anticipated to increase as a result.
Board sets 2015 committees
The Board set the following committees for 2015:
Audit Committee
- Gwen Henry, Chair
- Sue Stanish, Vice Chair
- Tom Kuehne
Benefit Review Committee
- John Piechocinski, Chair
- Tom Kuehne, Vice Chair
- Natalie Copper
- David Miller
- Sue Stanish
- Sharon U. Thompson
Executive Committee
- John Piechocinski, Chair
- Tom Kuehne, Vice Chair
- Natalie Copper
- Gwen Henry
- Jeff Stulir
Investment Committee
- Tom Kuehne, Chair
- Jeff Stulir, Vice Chair
- Natalie Copper
- Gwen Henry
- David Miller
- John Piechocinski
- Sue Stanish
- Sharon U. Thompson
Legislative Committee
- Sharon U. Thompson, Chair
- Natalie Copper, Vice Chair
- Gwen Henry
- David Miller
- John Piechocinski
New IMRF employers
The Board approved the participation of the following new employers:
- Cass County Housing Authority
- Goose Creek District Library
- Northwest Special Education Cooperative
Next Board meeting
The next regularly scheduled Board meeting will be held May 29 at IMRF’s Oak Brook headquarters.