Employee Trustee Piechocinski to Retire; Board to Fill Upcoming Vacancy for Remainder of 2016
At the May 20 Board Meeting, Employee Trustee John Piechocinski announced that he will be retiring on June 30, 2016, and stepping down from his position on the IMRF Board of Trustees as a result.
Piechocinski, an employee of the Plainfield Community Consolidated School District, has been an Employee Trustee since January 2011. He has held the positions of Board Secretary (2013), Board Vice President (2014), and Board President (2015). During the meeting, IMRF's Board of Trustees approved a Resolution of Appreciation of Piechocinski's service to IMRF.
Piechocinski told the Board that he truly enjoyed his time serving as an IMRF Trustee, and regretted having to step down from the position.
“I will miss working with the Board and the staff at IMRF,” Piechocinski said. “I enjoyed my time representing all the members at IMRF.”
At Piechocinski’s recommendation, the Board appointed Alex Wallace to fill the upcoming vacancy.
Wallace, an employee of Oswego Community Unit School District 308, will fill the position effective July 1, 2016. His term will run through the end of 2016. Members will elect a candidate to fill the remainder of Piechocinski’s term, which will run from January 1, 2017, through December 31, 2020.
“I’ve worked with Alex, and I believe he will be a great addition to the Board,” Piechocinski said. “He has the same leadership style that I have."
Board Approves Plans and Procedures for 2016 Elections
The Board approved plans and procedures for executing two Trustee elections later this year.
IMRF employers will elect one Executive Trustee for a five-year term beginning January 1, 2017. The position will open when Executive Trustee David Miller’s current term expires at the end of 2016. IMRF active members will elect one Employee Trustee for a four-year term beginning January 1, 2017. The position will open due to John Piechocinski’s pending retirement.
IMRF’s website will be updated with the detailed election information on June 30.
Annual Actuarial Valuation Released
Actuaries Gabriel, Roeder, Smith (GRS) and Co. presented IMRF's Actuarial Valuation for 2015 to the IMRF Board of Trustees.
The valuation details IMRF's financial position and highlights changes to the demographics of the IMRF membership during the prior calendar year. The valuation also makes recommendations that the Board uses to set employer contribution rates for future years.
According to the valuation:
- The average employer Regular Plan contribution rate will decrease from 11.73% of payroll in 2016 to 11.34% of in 2017.
- The rate of return of IMRF investments was approximately 0.5% during 2015.
- The market value of IMRF's assets was approximately $34.5 billion as of 12/31/15.
- IMRF was approximately 87.3% funded on a market basis as of 12/31/15.
Demographic highlights from the valuation include:
| Number of All IMRF Members | As of 12/31/15 | As of 12/31/14 |
|---|---|---|
| Tier 1 Active | 125,829 | 134,273 |
| Tier 2 Active | 48,269 | 39,695 |
| Retirees | 118,038 | 112,762 |
| Inactive | 121,664 | 118,440 |
| Total | 413,800 | 405,170 |
| Number of IMRF Active Members | As of 12/31/15 | As of 12/31/14 |
|---|---|---|
| Regular Plan | 169,647 | 169,495 |
| SLEP Plan | 4,212 | 4,227 |
| ECO Plan | 239 | 246 |
| Total | 174,098 | 173,968 |
Board Discusses Assumed Rate of Return
The Board heard a discussion on IMRF’s long-term assumed rate of investment return.
IMRF’s assumed rate of return of 7.5% has been in place since 1991. The figure, which is set by the IMRF Board of Trustees, is important because it effects how IMRF calculates its long-term liabilities. This calculation, in turn, effects IMRF’s funded status and employer contribution rates. If IMRF’s assumed rate of return were lower, IMRF’s liabilities would increase, its funded status would decrease, and employer contribution rates would increase.
Brian Murphy, an actuary with GRS, told the Board that its 7.5% assumption is reasonable in the long-term and within the mainstream of public pensions nationally. Many plans have higher assumptions and are considering lowering them to IMRF’s assumed rate of return.
On the other hand, Murphy said that meeting the assumed rate of investment return requires IMRF to take on a greater level of investment risk than in years past. While greater risk offers the promise of greater return, it also increases levels of investment volatility from year-to-year. As annual payments to IMRF retirees increase over time, Murphy said that it’s prudent for the Board to examine “portfolio risk and return trade-offs carefully.”
Executive Director Louis W. Kosiba said that staff would work with GRS to conduct a deeper analysis of IMRF’s funding policy and investment return assumption, with the goal of presenting further information to the Board at subsequent meetings during 2016.
New Employers Join IMRF
The Board approved the participation of the following new employers:
- Northlake Fire Protection District
- Rides Mass Transit District
Next Board Meeting
The next regular meeting of the IMRF Board of Trustees will be Friday, July 22, at 9 a.m. at IMRF’s Oak Brook headquarters.