Rate Meetings, Returns, & Retirement

April 12, 2017

OAK BROOK, Ill. -- After flat investment returns in 2015, the market delivered markedly higher numbers last year, decreasing the average employer contribution rate for the Illinois Municipal Retirement Fund (IMRF) – from 11.34 percent of payroll in 2017 to 11.24 percent of payroll in 2018.

“With an almost eight percent return on investments, 2016 was a solid year for IMRF’s financial performance,” said IMRF Executive Director Louis W. Kosiba. “It exceeded the plan’s 7.5 percent assumed rate of return, which is good news for our neighbors across the state of Illinois.”

2017 Rate Meetings

In addition, the second-largest and best-funded statewide public pension plan paid $1.6 billion to retirees in Illinois in 2016, resulting in $2.34 billion in local economic activity, while supporting the creation of 16,843 jobs, according to the U.S. Bureau of Economic Analysis.

“Retirement doesn’t mean the end of spending at a certain age and for most of our retirees, it doesn’t mean relocation beyond the state line. In direct contrast to recent reports of residents leaving the Land of Lincoln, 86 percent of our retirees choose Illinois as a permanent home. Then, as they purchase goods and services, they contribute to the state’s economic cycle,” Kosiba said.

Impressive investment returns for 2016 grow funded status

IMRF’s investment portfolio realized an impressive gain of 7.71 percent, net of fees, during 2016. That generated $2.58 billion in investment income, growing the total value of the portfolio to $36.4 billion as of December 31, 2016, the close of IMRF’s fiscal year.

The 2016 investment return increased IMRF’s funded status on a market basis from 87.4 percent on December 31, 2015, to 89.3 percent on December 31, 2016.

From a $5,000 investment in 1941 to $36.4 billion in assets in 2017, IMRF is the 47th largest retirement plan in the United States, according to Pensions & Investments magazine. Since 1982, when IMRF received the authority to invest outside of bonds and government securities, IMRF’s annualized total fund return has been 9.38 percent. About 62 percent of the plan's assets come from investment returns, resulting in lower contribution rates from government and taxpayers in communities across Illinois.

Kosiba to host series of “Rate Meetings”

Kosiba will travel Illinois hosting a series of meetings with local units of government between April 24 and May 3. At the meetings, Kosiba will discuss the financial performance of IMRF’s investment portfolio, and estimate IMRF’s future impact on the rates employers will pay to the pension system.

This will be Kosiba’s last Rate Meeting series, as he has announced his retirement effective December 31, 2017. Kosiba has served as Executive Director of IMRF since 2001. He first joined the pension fund in 1988. The IMRF Board of Trustees will conduct a nationwide search for IMRF’s next Executive Director. The Board hopes to announce Kosiba’s successor later this year.