Saline board hears from head of IMRF

Making a discussion of the Illinois Municipal Retirement Fund interesting is like making a silk purse out of a sow's ear.

The executive director of the fund, Louis Kosiba, came to Harrisburg Thursday and did just that. He made it interesting.

Using a printed presentation as an outline for his oral explanation, Kosiba at Thursday's Saline County Board special meeting explained the current pension system that applies to county and municipal employees other than police and fire personnel. These first responders each have their own systems tailored to the needs of their personnel.

IMRF covers all the other county and municipal employees who qualify.

It is the second largest public pension system in Illinois and it is the best funded system statewide.

It was created in 1939 by the Illinois General Assembly in response to the Great Depression. Social Security was not available to public employees. Governed by Article 7 of the Illinois Pension Code it is neither funded nor managed by the state.

The IMRF provides benefits to local government employees.

These benefits are: retirement, disability and death benefits.

It serves 2,969 units of local government: Cities, counties, non-teaching school personnel - excluding Cook County and Chicago - and not local police and fire personnel.

There are 174,188 actively participating members, 107,247 benefit recipients and 118,450 inactive members.

The money comes from employees, employers and returns on the fund's investments.

The investment returns made up 60 percent of the fund's income in 1982 to 2013.

The employers contributed 27 percent and the employees 13 percent.

The employees on the regular plan contributed 4.5 percent of their incomes, sheriff's law enforcement personnel 7.5 percent and elected county officials 7.5 percent.

The employers contribute varying amounts. Contributions for the regular plan are 12.6 percent; Sheriff's Law Enforcement Personnel or SLEP 17.81 percent and ECO or Elected County Officials 163.5 percent.

The contributions vary from year to year based on employee demographics, value of pension assets and value of pension liabilities. The employers pay retirement benefits for their employees only.

The investments are managed prudently by the IMRF chief investment officer, one investment consultant firm and more than 80 professional investment firms. The administrative costs are 35 percent of those charged by a 401K. The investments are highly diversified: Stocks, bonds, alternatives, real estate.

The return for 2013 investments was 20.26 percent. for 1982-2013 the return was 10.38 percent.

"Size of a retirement plan is not always a guarantee of solvency," Kosiba said. "Unlike Social Security, our retirement plans are prefunded. With Social Security it is pay as you go."

Saline Board member Danny Gibbs asked a number of questions about the ECO plan.

The ECO plan was based on a Cook County retirement program. The General Assembly wanted it abolished which it was in 2011, Kosiba said.

Here in Saline County it was done away with in 2004 because the county officials projected it would be too expensive for the county into the future.

In response to a question by board member Bruce Tolley, Kosiba said that qualifying members of IMRF had to work 600 hours in a given calendar year. Later in the discussion Kosiba pointed out that elected officials are prohibited from counting time spent campaigning or planning and working on their campaigns. Their 600 hours have to be in service to the county.

"In the case of an employer who cannot pay the contribution we (IMRF) have the legal power to garnish monies received from the state and monies received from real estate tax," Kosiba said.

Earlier he had pointed out that IMRF is not a state agency. It is neither funded nor managed by the state.