General Memo 585


2008 Employer Retirement Reserve Statements

February 24, 2009

Your 2008 Employer Retirement Reserve Statements are available. These Statements may include:

Function of the Retirement Reserve Account

The retirement reserve is used to fund retirement benefits for a unit of government’s active IMRF members when they retire. It is also one factor used to calculate the IMRF employer contribution rate.

This “Reserve Statement of Account” reflects the accumulation of employer assets from the beginning of a unit’s participation to December 31 of the reserve statement year. The remaining balance is the amount available to fund future retirement benefits for active employees. The Reserve Statement shows:

The statement reflects calendar year 2008 transactions; it does not reflect a cumulative listing of all the above transactions that impact an employer’s retirement reserve account.

The actuarial value of assets shown on the Governmental Accounting Standards Board (GASB) Statement 27 (50) Footnote Disclosure, Schedule of Funding Progress, includes the December 31 ending balance of employer assets, plus member contributions and interest, plus an actuarial market value adjustment.

Explanation of entries

Pages 4 and 5 of this memo provides an Addendum that explains the entries that could appear on your Reserve Statement(s).


Interest credited or charged on opening balance

When IMRF earns its investment assumption, we credit interest if the opening balance is positive and charge interest if it is negative. If IMRF earns its investment assumption, the current rate of interest, as established by the IMRF Board of Trustees, is 7.5 percent per annum.

Employer Retirement Contributions

This entry is the amount of employer contributions for retirement benefits. The contributions credited are based on your unit of government’s retirement rate (a part of the total employer contribution rate) and its reported wages. Disability, death, and supplemental benefit (“13th payment”) contributions are credited to pooled reserves from which these benefits are paid and are not reflected in the Employer Retirement Reserve Account.

Residual Investment Income or Loss

This entry is the amount of investment income available to be credited to employers after interest is allocated to member, annuitant and employer reserves. If in a year, there is insufficient investment income to cover interest to be credited to member and annuitant reserves, a residual investment loss occurs. There will be an entry to allocate this loss among employers.


Member and Survivor Annuities

This is the employer cost for the pension. First we calculate the total cost of a lifetime member and survivor benefit based on the amount of the annuity, the member’s and survivor’s ages, the current interest rate assumption, etc. This amount is then reduced by the member’s contributions plus interest. The remainder is the amount charged to the unit of government’s Employer Retirement Reserve Account.

Due to our quick payout system, it is possible for a member to appear more than once and possibly in two different years (due to an additional payroll being posted, an adjustment to service, or an adjustment for ERI). A common inquiry from units of government occurs when an unknown member is listed in this section. The most common situations are that the member is an employee who:

  • Terminated in the past and began working for some other unit of government that participates in IMRF or for a reciprocal retirement system and proportionate charges for his or her pension are made to the unit of government’s Employer Retirement Reserve Account for services rendered to that unit, or
  • Participated in IMRF through a dissolved unit of government and that unit’s pension obligation was partially or fully transferred to your unit of government.


If you have any questions, please call IMRF Employer Account Associate Analyst Corey Lockwood at 630-706-4226, or you can call an IMRF Member Services Representative at 1-800-ASK-IMRF (1-800-275-4673) 7:30 a.m. to 5:30 p.m., Monday through Friday.