Board Meeting Highlights

Meeting room
February 27, 2015

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:

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:

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

Benefit Review Committee

Executive Committee

Investment Committee

Legislative Committee

New IMRF employers

The Board approved the participation of the following new employers:

Next Board meeting

The next regularly scheduled Board meeting will be held May 29 at IMRF’s Oak Brook headquarters.