Board Meeting Highlights

Board Room
March 9, 2018

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

Customer Engagement KRA

Workforce Engagement KRA

Operational Excellence KRA

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        

Benefit Review Committee

Investment Committee

Legislative Committee

Board passes resolutions

The Board passed the following resolutions:

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 May 18 at 9 a.m. at IMRF’s Oak Brook headquarters.