The IMRF Board of Trustees opposes House Bill 4078, which would force IMRF to adopt a long-term funding goal of only 80%. In addition to the IMRF Board, the Illinois Municipal League (IML), the statewide organization of Illinois municipalities, opposes HB 4078.
The IMRF Board’s current funding goal is 100%. A funding goal of 100% means the Board aspires for IMRF to have on hand all the money it needs to pay current and future benefits. This funding goal is important because it is used to set employer contribution rates. After taking into account employee contributions and anticipated investment earnings, IMRF employer rates are set at a level to pay what IMRF anticipates is needed to cover all currently projected liabilities. A 100% funding goal is universally acknowledged to be the best practice within the public pension industry and is the Government Finance Officers Association top recommendation for sustainable funding practices for defined benefit pensions. Lowering this funding goal to 80% would mean that IMRF employer rates would not be set to cover the full cost of current and future benefits, but only 80% of that cost. As a result, the full anticipated cost of current and future IMRF benefits would never be met and the cost would be passed onto future generations of taxpayers. We have already seen the toll that this type of practice has taken on the financial health of other Illinois pension funds.
Although it is currently unclear whether this unnecessary legislation will gain traction with the General Assembly, IMRF has already communicated the Board’s opposition to lawmakers. IMRF will continue to monitor the status of the bill, and update its membership and employers on any developments including whether any action will be necessary on your part.