Board Meeting Highlights

Board Room
December 20, 2017

Board certifies Executive Trustee election results

The IMRF Board of Trustees certified the results of the 2017 Executive Trustee election which saw Tom Kuehne re-elected for a second term.

Kuehne, Finance Director/Treasurer for the Village of Arlington Heights, will serve a five-year term of office through December 31, 2022.

Kuehne, who first joined the Board in 2013, said that he was looking forward to continuing to work with the other Trustees and staff.

Board appoints 2018 officers

The Board appointed the following officers for 2018:

Learn more here about your IMRF Board of Trustees.

Board maintains 7.5% investment return assumption

After a thorough discussion, the IMRF Board of Trustees decided to maintain the current 7.5% investment return assumption, after considering lowering it to 7.25%.

This assumption is critical when calculating employer contribution rates. Lowering the assumption would have placed upward pressure on employer contribution rates starting in 2019. In maintaining the current rate, the Trustees considered IMRF’s recent asset-liability modeling study, which found IMRF has a 50% probability of achieving the expected rate of return over a 30-year investment horizon. Since 1982, when IMRF received the authority to invest broadly in the market, the investment portfolio has averaged an annual return of 9.38%, resulting in a funding level above 90%.

At the November meeting, the Board adjusted a number of demographic and economic assumptions. These adjustments are anticipated to place downward pressure on employer contribution rates in the coming years. The average employer contribution rate for the Regular Plan is 11.24% of payroll in 2017. Once the new assumptions go into effect in 2019, the average employer contribution rate for the Regular plan projects to fall to 9.83% of payroll. Individual employer rates may vary widely from those averages. Preliminary 2019 rates will be announced in April, 2018.

Board passes resolution on cash paid in lieu of health insurance

The Board adopted a resolution that gives employers the option of deciding whether cash paid in lieu of health insurance is reportable earnings to IMRF.

IMRF’s Board has the legal authority to determine what forms of compensation are pensionable earnings. The value of employer-provided health insurance, for example, is not considered IMRF pensionable earnings. Some employers, however, provide cash as an alternative to employer-paid health insurance. IMRF staff asked for clarification from the Board as to whether these cash payments should be considered IMRF earnings for pension calculation purposes. After considering practices at other public retirement funds, the Board decided to give individual employers the option of deciding themselves whether or not these payments should be considered pensionable earnings. IMRF staff will provide additional guidance on the topic for employers in 2018.

Annual report on minority/emerging manager usage approved

The Board approved a report documenting IMRF’s utilization of minority and emerging investment-management firms and brokers.

IMRF has an aspirational goal of awarding a minimum of 20% of contracts to minority or emerging firms. Since 2012, assets under management by minority firms have increased from $5.2 to $7.3 billion.

Board honors retiring Kosiba, O’Brien

The Trustees passed resolutions of appreciation honoring retiring Executive Director Louis W. Kosiba and General Counsel Kathy O’Brien.

Kosiba first joined IMRF in 1988 and became Executive Director in 2001. IMRF’s fiduciary net position grew from $16.1 billion at the start of his tenure as Executive Director, to more than $40 billion today.

O’Brien first joined IMRF in 1986 and became General Counsel in 2001. During her 31 years at IMRF, she executed more than 350 resolutions on behalf of the Board of Trustees, and created IMRF’s legal interpretations process to help staff communicate IMRF’s application of the Illinois Pension Code with members and employers.

Board approves consultants for 2018

The Trustees approved consultants to the Board for 2018. They include:

New units of government join IMRF

The Board approved the participation of the following new employers:    

Board sets 2018 meeting dates

The Trustees set the following dates for 2018 Board meetings:

Next Board meeting

The next regular meeting of the IMRF Board of Trustees will be February 23 at 9 a.m. at IMRF’s Oak Brook headquarters.