Board Meeting Highlights

Board Room
February 28, 2017

IMRF Board requires recertification of elected officials' eligibility every two years

The IMRF Board of Trustees unanimously voted to begin requiring every two years recertification of IMRF eligibility for all elected positions.

The resolution requires all governing bodies of units of government with elected positions participating in IMRF to pass new resolutions every two years re-affirming that the positions meet the IMRF hourly standard (either 600 or 1,000 hours per year). The first resolution must be filed with IMRF by September 1, 2017. If IMRF does not receive such a resolution by the fall deadline, the unit of government’s elected officials will no longer be allowed to participate in IMRF.

The new rule mirrors the requirements of Public Act 99-900, which went into effect in August 2016. That law requires County Boards with members participating in IMRF to recertify every two years that the position of County Board member meets IMRF’s hourly standard.

IMRF General Counsel Kathy O’Brien said that many of the elected official certifications on file with IMRF date back to the 1980s. As governing body membership changes regularly, the new requirement is an opportunity for elected officials to discuss IMRF participation requirements. The new requirement will also streamline IMRF’s employer-audit process. IMRF auditors currently request additional documentation from units of government when elected officials participate in IMRF. If a unit of government recertifies bi-annually that its elected official positions meet IMRF eligibility requirements, IMRF auditors will rely on that certification without requiring additional documentation.

IMRF employers should look for additional guidance on complying with this new requirement in a forthcoming Special Memorandum from IMRF.

Staff provides final update on 2014-2016 Strategic Plan; Reviews Action Plans for 2017-2019

IMRF achieved the objectives outlined in its 2014-2016 Strategic Plan, staff reported.

IMRF executed 22 Action Plans in 2014; 22 Action Plans in 2015; and 18 Action Plans in 2016 aligned with the five Key Result Areas (KRAs) of the 2014-2016 Strategic Plan.

Key successes within each KRA included:

Financial Health and Sustainability KRA

Investment Returns KRA

Customer Satisfaction and Operational Excellence KRA

Workforce Engagement KRA

Modernization KRA

Staff also provided an overview of the 2017-2019 Strategic Plan. The new plan is the culmination of work throughout 2016 with numerous stakeholders. The process began by gathering input from external stakeholders, IMRF staff, and the Board of Trustees using a Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis; analyzing those results; and developing corresponding Key Result Areas, Strategic Objectives, and Action Plans. The new plan includes four Key Result areas and Strategic Objectives, with 14 supporting Action Plans for 2017. 

Employer accounts to be credited due to 2016 returns

Chief Financial Officer Mark Nannini reported that employer reserve accounts will be credited about $461.9 million in 2017, due to 2016’s strong investment return. Last year, IMRF earned about $2.7 billion on its investments, a net, unaudited return of about 7.71% on the portfolio. That figure exceeded IMRF’s long-term assumed rate of return of 7.5%. After crediting 7.5% of the return to the member and annuitant reserves as required by law, employer reserve accounts receive the remainder of the return. This reflects the nature of a defined benefit pension plan, in which employers bear both the risk and reward of investments. Since 1982, when IMRF gained authority to invest broadly in the markets, the IMRF portfolio has returned approximately 10%.

2018 death and disability rates to decrease

The Board approved death and disability benefit rates for 2018.

The 2018 average death benefit rate will decrease from 0.15% to 0.12% of employer payroll. The rate varies by employer according to the age of its workforce. The funds are used to pay death benefits for active members who die prior to retirement.

The 2018 disability benefit rate will decrease from 0.12% to 0.07% of employer payroll. The rate is the same for all employers. The funds are used to pay temporary disability benefits.

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 2017 "13th Payment"

Each July, eligible retirees and surviving spouses receive a Supplemental Benefit Payment, also known as the “13th Payment.” IMRF staff estimated that the 2017 13th Payment will be 30% of a retiree’s June benefit payment. This is a decrease from 32% in 2016. 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 projected to exceed contributions in 2017

IMRF staff reported to the Board that benefit payments are projected to exceed contributions by $852 million in 2017. The gap is to be expected for a mature defined benefit pension plan like IMRF as more members reach retirement age. Over time, IMRF will fund any gap between payments and contributions through investment returns.

Board hears update on endorsed insurance

IMRF provides pension, disability, and death benefit coverage for participants, but is not authorized by law to provide health insurance. In recognition of the insurance needs of IMRF’s retirees, the Board annually endorses a variety of insurance programs with discounted group rates.

IMRF staff reported that 2017 enrollment across the 18 endorsed benefit plans was more than 26,058. This includes a suite of coverage options including health, dental, vision, prescription drug, long-term care, and supplemental life insurance.

The program is administered by insurance consultant Doyle Rowe, LTD.

Retirees should visit later this year for information on 2018 offerings. This information is also always available in the Winter Edition of the Fundamentals newsletter for retirees.

2017 Board Committees established

The Board set the following committees for 2017:

Audit Committee

Benefit Review Committee

Investment Committee

Legislative Committee

New units of government join IMRF

The Board approved the participation of the following new employers:

Next Board meeting

The next regular meeting of the IMRF Board of Trustees will be Friday, March 31, at 9 a.m. at IMRF’s Oak Brook office.