IMRF strives to be 100 percent funded and has generally been successful in staying close to that formally adopted strategic goal. The plan uses the entry age normal (EAN) approach for funding and reporting purposes and assumes an annual return of 7.5 percent on investments. It did not adjust that assumption during the stock market’s growth period between 1995 and 1999, when double-digit returns on investments were the norm.
The IMRF Board sets the annual contribution rate based on current actuarial assumptions with the 100 percent funded goal in mind. The average annual required contribution rate for participating local governments in 2011 was 12.4 percent up from 9.27 percent before the 2008 investment losses. The IMRF Board gave participating local employers the option of phasing in rate increases in 2010 and 2011 to moderate the impact on local budgets.
Employees contribute 4.5 percent of regular wages. The member employee contribution is set by state statute.
The IMRF Board also has authority to enforce collection of the annual required contribution each year from all participating units of government—including the ability to sue participating governments for failure to pay or asking the state to withhold other funding to that government until its ARC is paid.
