Staff provides update on 2017-2019 Strategic Plan
Deputy Executive Director Dan Duquette and Performance Excellence Manager Kathy Goerdt presented an update on activities and metrics supporting the 2017-2019 IMRF Strategic Plan. Staff completed a number of tactics outlined in 16 Action Plans.
Each Action Plan is aligned with one of the four Key Result Areas (KRAs). Key successes within each KRA included:
Financial Health KRA
- IMRF’s aggregate funding level reached approximately 97% on a market basis
Customer Engagement KRA
- "Voice of the Customer" survey results were in the top decile
Workforce Engagement KRA
- Employee engagement survey results were in the top decile
Operational Excellence KRA
- Illinois Performance Excellence (ILPEx) awarded IMRF the Gold Award for "Achievement of Excellence"
Employer accounts to be credited due to 2017 returns
Chief Financial Officer Mark Nannini reported that employer reserve accounts will be credited about $3.76 billion in 2017 due to 2017’s strong investment return. Last year, IMRF earned about $5.8 billion on its investments, a net, unaudited return of about 15.73% 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 received 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 10%.
Board approves 2019 death and disability rates
The Board approved death and disability benefit rates for 2019.
The 2019 average death benefit rate will decrease from 0.12% to 0.09% 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 2019 disability benefit rate will increase from 0.07% to 0.08% 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 2018 "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 2018 13th Payment will be 28% of a retiree’s June benefit payment. This is a decrease from 30% in 2017.
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 2018
Chief Financial Officer Mark Nannini reported to the Board that benefit payments are projected to exceed contributions by about $1 billion in 2017. The gap – which is to be expected for a mature defined benefit pension plan like IMRF – is largely due to an increase in retirements as the Baby Boom generation reaches retirement eligibility. Over time, IMRF will fund any gap between payments and contributions through investment returns.
2018 Board Committees established
The Board set the following committees for 2018:
Audit Committee
- Sue Stanish, Chair
- Alex Wallace, Jr., Vice Chair
- Gwen Henry
Benefit Review Committee
- David Miller, Chair
- Sharon Thompson, Vice Chair
- Alex Wallace, Jr.
- Tom Kuehne
- Natalie Copper
Investment Committee
- Tom Kuehne, Chair
- Gwen Henry, Vice Chair
- Natalie Copper
- Dave Miller
- Sue Stanish
- Sharon U. Thompson
- Alex Wallace, Jr.
- Trudy Williams
Legislative Committee
- Sharon U. Thompson, Chair
- Trudy Williams, Vice Chair
- Natalie Copper
- Tom Kuehne
- David Miller
- Sue Stanish
- Alex Wallace, Jr.
- Gwen Henry
Board passes resolutions
The Board passed the following resolutions:
- Board Resolution 2018-02-10(b): Clarifies exemption eligibility related to the prohibition against reporting vehicle allowances as IMRF earnings.
- Board Resolution 2018-02-10(a)-1 and 2018-02-10(a)-2: Removes the five-year renewal requirement for all representative payee designations (individuals and institutions).
- Board Resolution 2018-02-10(c): Amended IMRF’s diversity procurement policy to change the word “female” to “woman” in keeping with state law changes.
New units of government join IMRF
The Board approved the participation of the following new employers:
- Central Illinois Regional Dispatch Center
- West Central Consolidated Communications
Next Board meeting
The next regular meeting of the IMRF Board of Trustees will be May 18 at 9 a.m. at IMRF’s Oak Brook headquarters.