IMRF Announces Decreasing Employer Contribution Rates for 2015
Executive Director to travel state to discuss impact of investment returns and Tier 2 on individual employer plans
"IMRF is well-funded and highly sustainable. Our overall investment strategy and goal to be 100 percent funded will sustain our long-term financial performance as we strive to provide the lowest cost to taxpayers"
- Louis Kosiba, IMRF Executive Director
OAK BROOK, Ill. – April 7, 2015 – Strong investment returns and lower costs associated with the Tier 2 benefit structure continue to reduce IMRF contribution rates for the average unit of government participating in The Illinois Municipal Retirement Fund (IMRF). The average employer contribution rate for the IMRF Regular Plan will fall from 12.58 percent of payroll in 2014 to 11.72 percent of payroll in 2015. That will cut IMRF costs for many of the 2,976 cities, counties, and other forms of government that participate in Illinois’ best-funded statewide retirement system.
"That means savings for our employers and the taxpayers who support them," said IMRF Executive Director Louis W. Kosiba, who will travel across the state later this month to discuss contribution rates with employers in select communities. “And that’s good news for everyone.”
More than 60 percent of the plan's nearly $35 billion in assets come from investment returns. From 1982 until 2014, the plan's total investment return exceeded 10 percent, which decreased the cost of the pension plan to employers. IMRF's estimated 2014 investment return was 6.01 percent.
In addition, the Tier 2 benefit structure for IMRF's new hires – which began in 2011 – is decreasing employer contribution rates, and will continue to do so in years to come. The cost of providing a Tier 2 pension is 40 percent less than a Tier 1 pension. Today, more than 42,000 of IMRF’s 137,000 active members are Tier 2.
As of Dec. 31, 2014, IMRF is about 93 percent funded on a market basis, which makes it the best-funded statewide retirement system in Illinois. IMRF was almost 100 percent funded prior to the recession, and is working to regain its fully funded status. "IMRF is well-funded and highly sustainable. Our overall investment strategy and goal to be 100 percent funded will sustain our long-term financial performance as we strive to provide the lowest cost to taxpayers," Kosiba said. "We'll continue to collect required contributions from our employers and members, invest them prudently, and pay modest benefits to our retirees."
About IMRF
The Illinois Municipal Retirement Fund (IMRF) was created by the Illinois General Assembly. Since 1941, IMRF has partnered with local units of government to provide retirement, disability and death benefits for public employees. With a funded status of about 93 percent and nearly $35 billion in assets, IMRF is well-funded and sustainable. Today, IMRF has more than 420,000 members and serves nearly 3,000 different units of government, including towns and villages, libraries and park districts, and counties and school districts (non-teaching personnel). The average member who retired in 2014 had 20 years of service and received an annual benefit of about $20,805.
