General Memo 623


2011 Employer Retirement Reserve Statements

February 15, 2012

Executive Summary

Your 2011 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 component of an employer’s actuarial assets which, along with the accrued actuarial liability, helps to determine the employer’s over- or underfunding balance. The over- or underfunding balance is used when calculating the employer’s contribution rate.

This “Reserve Statement of Account” reflects the accumulation of employer assets available to fund future retirement benefits for active employees.

The Reserve Statement shows:

The statement reflects calendar year 2011 transactions; it does not reflect a cumulative listing of all the above transactions that impacted an employer’s retirement reserve account.

The actuarial value of assets shown on the Governmental Accounting Standards Board (GASB) Statement (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

You can view an Addendum that explains the entries that could appear on your Reserve Statement(s).

Explanation of Special Journal Entries

Below is an explanation of entries that may or may not appear on your unit of government’s reserve statements.

Miscellaneous ER Adjustment
Adjustment to correct an account.

Correction of ER Contributions
Adjustment received from the employer for prior year earnings.

Charge/Credit Emplr Reclassifi
(Charge/Credit Employer Reclassification)
Adjustment received from a unit of government or member to reclassify wages or contributions (from/to Regular, SLEP, ECO).

Credit ER for Ret Reserve Cont
(Credit Employer for Retirement Reserve Contributions)
Additional payments to reduce a unit of government’s unfunded obligation.

Trans ER Reserv - Annex/Consol
(Transfer Employer Reserve – Annexation or Consolidation)
Transfer of a dissolved unit of government’s retirement reserve balance to respective successor unit(s) of government.

Charge Employer ERI Liability
Adjustment to charge the responsible unit of government for employer’s Early Retirement Incentive costs.

Reversal of ERI Liability
Adjustment to correct reserve (Regular, SLEP, ECO) for employer’s Early Retirement Incentive cost.

Charge/Credit MISC MBR ADJ
Adjustment to correct member accounts.

Residual Investment Income or Loss
Each year IMRF distributes 7.5 percent interest to the opening balance of the member and annuitant asset accounts.

Residual investment income is the amount left from IMRF’s total earnings after these distributions, payment of administrative and investment expenses, and the distribution of employer interest are made.

Residual loss is the amount necessary to charge employer reserves if there is insufficient investment income to provide interest on member and annuitant reserves and cover administrative and investment expenses.

The distribution is based on a unit of government’s (employer’s) opening employer reserve balance and the present value of benefits of the unit’s annuitants (individuals receiving an IMRF pension). The actuary calculates the present value of benefits based on the monthly benefit of each annuitant, current age, and other factors.

The calculation of the residual investment income is as follows:

Example for illustrative purposes only
The sum of
The sum of
Opening balance of an employer’s Retirement Reserve Account plus the present value of benefits of that employer’s annuitants
Divided by ÷
The sum of
Total opening balance of all employers’ Retirement Reserve Accounts plus total present value of benefits of annuitants of all employers
Equals the =
Ratio of that employer’s assets to the total assets of all employers. .05%
The total residual investment income to be distributed multiplied by this ratio is the amount of residual investment income that will be distributed to that employer. $50,000,000
x .05%

In 2011, $1.4 billion was charged to all employers as residual investment loss.


If you have any questions, please call IMRF Employer Account Associate Analyst Corey Lockwood at 630-706-4226, 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, or send IMRF a Secure Electronic Message.