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R-1895 - 12/08/2020 - IMRF - Resolutions ITEM 9.A.1 BOARD OF TRUSTEES MEETING UPPER LEVEL CONFERENCE ROOM Vill \C--F 01 OAK B R , K - , BUTLER GOVERNMENT CENTER rA41 1200 OAK BROOK ROAD OAK BROOK, ILLINOIS 630-368-5000 AGENDA ITEM Regular Board of Tnistees Meeting of September 8, 2020 SUBJECT: IlvIRF-Early Retirement Incentive Program FROM: Riccardo Ginex, Village Manager Jason Paprocki, Finance Director Kathy Vonachen,HR Director/Deptity Clerk BUDGET SOURCE/BUDGET IMPACT: See Attached Meuio RECOMMENDED MOTION: A Motion to Approve Resolution R-2020-ERI-I.MRF-R-1895 Adopting an Early Retirement Incentive Program with the Illinois Municipal Retirement Fund for the Village of Oak Brook. Background: At the August Board meeting,we were asked to gather fiulher information regarding starting the program at different times during the rest of the year, number of employees who could participate and costs of the Early Retirement Incentive Program. The Early Retirement Incentive allows for early retirement by offering an employee to purchase between one mouth and five years of age and service credit for the propose of determining retirement benefits. To be eligible for retirement under an ERI, an euiployee must be 50 years of age and have 20 years of service credit by the date of thein retirement. The IIvIRF retirement plan is a defined benefit plan, and as such, provides a specific monthly retirement benefit/payuuent based on an employee's years of service,and his/her age. Both time of service and age are used to calculate the monthly benefit aurount. The ERI therefore allows for the enhancement of both the years of service and age categories. Based on the requested studies, 25 Village of Oak Brook employees are eligible to participate in an ERI offering with window openings in October, November, and December of 2020 and 26 Village employees eligible with a January 1, 2021 through January 1, 2022 window date. �G If we move additional months out,we will see increases as follows in the liability payment: Start Date No.Eligible Employees 5 Year Cost to Employer Payment Increase 10/1/2020 25 $4,756,678 11/1/2020 25 $4,753,489 ($3,189) 12/1/2020 25 $4,756,678 $9,418 1/1/2021 26 $5,077,196 $320,518 As stated in the attached memo of July 14th of the employees who are eligible to take part in the program,only 11 have expressed serious interest in possibly participating in the ERI program.The preliminary IMRF ERI Study calculates an ERI cost created by program at$3,934,059. This becomes a$4,678,638 unfunded liability amortized over a five(5)year payback period for the years 2023-2027. These estimates assume all 25 eligible employees will utilize the program and purchase the maximum service credit allowed. At this time,we believe only 11 employees will participate in the program,which would create an estimated$1,667,699 ERI cost,or approximately$1,995,228 amortized over five years. The amortized cost for the interested 11 employees was not provided by IMRF,this is an estimate by Village staff. As noted earlier,these numbers may change significantly depending on the number of employees that actually participate and the number of service years they ultimately buy. The July 14'h memo detailed a potential savings if four positions were eliminated and the other seven positions were re-hired at lower salaries.By eliminating the four(4)positions noted above,the Village should be able to realize enough savings to pay for the amortized ERI cost of all 11 interested positions. Recommendation: The Board passes the resolution and adopts the program as presented. Page 2 THE VILLAGE OF OAK BROOK COOK AND DUPAGE COUNTIES, ILLINOIS RESOLUTION NUMBER 2020-ERI-IMRF-R-1895 A Resolution Adopting an Early Retirement Incentive Program with the Illinois Municipal Retirement Fund for the Village of Oak Brook GOPAL G. LALMALANI, Village President CHARLOTTE K. PRUSS, Village Clerk JOHN BAAR PHILIP CUEVAS MICHAEL MANZO MOIN SAIYED EDWARD TIESENGA ASIF YUSUF Village Board Published in pamphlet form by authority of the President and the Board of Trustees of the Village of Oak Brook on this the 8th day of September, 2020 RESOLUTION 2020-ERI-IMRF- R-1895 EARLY RETIREMENT INCENTIVE PROGRAM Page 2 of 2 RESOLUTION 2020-ERI-IMRF-R-1895 A RESOLUTION ADOPTING AN EARLY RETIREMENT INCENTIVE PROGRAM WITH THE ILLINOIS MUNICIPAL RETIREMENT FUND FOR THE VILLAGE OF OAK BROOK,ILLINOIS FAILED THIS 8th day of September,2020 Gopal G.Lalmalani Village President FAILED THIS 8th day of September,2020 Ayes: Trustees Bear,Cuevas,Tiesenga Nays: Trustees Manzo,Saiyed,Yusuf,President Lalmalani Absent: None ATTEST* G .o �o Charlotte K.Pruss C�UgTY SUGGESTED FORM OF RESOLUTION TO PLEASE ENTER ® ADOPT EARLY RETIREMENT INCENTIVE EmployerIMRF I.D.Number IMRF Form 6.77 Rev. 04/2015 04572 See next page for additional ERI information. RESOLUTION Number r WHEREAS.Section 7-141.1 of the Illinois Pension Code provides that a participating employer may elect to adopt an early retirement incentive program offered by the Illinois Municipal Retirement Fund by adopting a resolution or ordinance;and WHEREAS,the goal of adopting an early retirement program is to realize a substantial savings in personnel costs by offering early retirement Incentives to employees who have accumulated many years of service credit;and WHEREAS,IMRF has prepared an actuarial estimate of the cost of an early retirement incentive program for Wage of oak amok and the additional liability created by the early retirement incentive EMPLOYER NAME is estimated to be$3.936.059 :and the 5-year amortization cost is estimated to be$ 4 678,658 WHEREAS,the village Board has reviewed the cost estimate and determined that the adoption of an early A D.UUUNUIL, retirement Incentive is in the best interests of the village of oak Brook ;therefore be it PL YERNAME RESOLVED by the village Board of wage a Oak Brook that: couNcl. EMPLOYER NANit (1)The valageaoreinok does hereby adopt the Illinois Municipal Retirement Fund EMPLOYER NAME early retirement incentive program as provided in Section 7.141.1 of the Illinois Pension Code.The early retirement incentive program shall take effect Oaomr r,mm DATE (2)In order to help achieve a true cost savings,an employee who retires under the early retirement incentive program shall lose those incentives if he or she later accepts employment with any IMRF employer In any position.(Exception:employee can hold an elected position if he/she chooses to not participate in IMRF and the pension is not based on any service earned in that position during any term of office.) (3)In order to utilize an early retirement incentive as a budgeting tool,the Vane aoall amok EMPLOYER NAME will use its best efforts either to limit the number of retiring employees replaced or to limit the salaries paid to the replacement employees. (4)The effective date of each employee's retirement under this early retirement incentive program shall be set by vI Iage01 Oak Brook and shall be no earlier than the effective date of the program and no later than one year after rMP=MXPE, that effective date;except that the employee may require that the retirement date set by the employer be no later than the June 30 next occurring after the effective date of the program and no earlier than the date upon which the employee qualifies for retirement. (5)To be eligible for the early retirement incentive under this Section,the employee must have attained age 50 and have at least 20 years of creditable service by his or her retirement date:and (6)As of the date of the adoption of this Resolution,theyilege Board is( X ) is not( )aware of the BOARD,COUNCIL,ETC pending dissolution of village of Oak Brook EMPLOYER NAME (Note:Failure to disclose a potential dissolution shall void this Resolution.If the Board,Council,etc.is aware of the pending dissolution of the IMRF employer,then the successor unit(s)of local government must approve the adoption of the early retirement incentive in order for this Resolution to be effective.ff there is no successor,submit your resolution for approval from the IMRF Board of Trustees.) (7)The Clerk shall promptly file a certified copy of this resolution(ordinance)with the CLERK OR SECRETARY Board of Trustees of the Illinois Municipal Retirement Fund. CERTIFICATION 1, Charlotte Pruss the_ peak of the NAME CLERIC OR SECRETARY village or oak Brook of the County of Cook a DuPage ,State of Illinois,do hereby EMPLOYER NAME COUNTY certify that I am the keeper of the books and records of the wlage of oak Brook and that the foregoing is a true and EMPLOYER NAME correct copy of a resolution 11120-ERI-NRF-R-1395 duly adopted by the village Board at a meeting RESOLUTION BOARD.COUNCIL,ETC. duly convened and held on the eN day of seplerrber ,2020 . If applicable.I further certify that this Resolution has been submitted to the successor unit(s)of local government and that said unit(s)of local government has/have adopted a resolution approving the adoption of the early retirement incentive for Village or Oak Brook EMPLOYERNAME A copy of the approval resolution is attached hereto. SEAL CLERK OR SECRETARY OF TI1E BOARD IMRF 2211 York Road Suite 500 Oak Brook,IL 60523-2337 Employer Services Representatives 1-800.728-7971 Fax:(630)706-4289 IMRF Form 6.77(Rev.042015) www.imrforg Actuarial Analysis of The Potential Effect of IMRF's Early Retirement Incentive Progam For 04572-VILLAGE OF OAK BROOK (Regular Members) 1 year Window Beginning 10/1/2020 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results and Input Variables Window Period: 10/01/2020 Through 10/01/2021 EMPLOYEES AFFECTED BY WINDOW 1. Presently eligible to retire with full or reduced benefits a. Number 18 b. Annual Payroll $1,573,872 2. Number newly eligible to retire a. Number 7 b. Annual Payroll $626,967 INPUT VARIABLES 3. Employees presently eligible to retire,who a.Would have retired without this window 0 b. Are induced to retire during this window" 18 4. Employees newly eligible to retire who are induced to retire during window period" 7 5.Total number assumed to retire during window period:(3a)+(3b)+(4) 25 6.Total across-the-board pay increase since 12/31/2019 0.00% ' Persons covered by Elected County Official benefit provisions with this employer were not included in this study. "Inducement to retire is consistent with the assumptions for the Reserve Transfer Program. 8/28/2020 2:13 PM 04572 2 v1.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results Window Period: 10/01/2020 Through 10/01/2021 IMRF COSTS 1. Unpaid ERI Liabiltity Exists? No (See Note Below) 2.Additional Liability Created by 3,999,679 Window 3.Schedule of Increase in Employer Contribution to IMRF based on indicated amortization of liability increase Amortization Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years First Year 904,943 770,670 674,958 603,345 547,797 503,496 Second Year 927,567 789,937 691,832 618,428 561,492 516,083 Third Year 950,756 809,686 709,127 633,889 575,530 528,985 Fourth Year 974,525 829,928 726,856 649,736 589,918 542,210 Fifth Year 998,888 850,676 745,027 665,980 604,666 555,765 Sixth Year 871,943 763,653 682,629 619,782 569,659 Seventh Year 782,744 699,695 635,277 583,901 Eighth Year 717,187 651,159 598,498 Ninth Year 667,438 613,461 Tenth Year 628,797 Total Estimate Cost 4,756,678 4,922,840 5,094,196 5,270,888 5,453,059 5,640,854 First Year NOTE: An employer cannot adopt an ERI program until the cost of a previous ERI program is paid in full.A resolution adopting ERI with an effective date prior to the pay-of date is void.Call 1800 ASK IMRF and ask to speak with Dionne Green, Employer Account Analyst,to request a written confirmation of the current balance. 8/28/2020 2:13 PM 04572 3 vl.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Window Period: 10/01/2020 Through 10/01/2021 Individual Member Results New Lump Total ERI Name ID No. Salary Sum Wages Service Cost XXXXX9430 68,226.00 15,721.49 26.50 169,602.48 XXXXX1142 131,735.00 5,066.73 30.17 357,581.11 - XXXXX7991 124,249.00 30,169.00 30.67 332,620.64 - XXXXX8769 145,616.00 35,237.23 21.75 220,894.53 - XXXXX0462 187,460.00 10,268.29 27.50 254,498.37 - XXXXX5231 74,801.00 6,935.00 30.75 208,691.20 - XXXXX9458 98,654.00 25,948.46 36.25 179,825.09 XXXXX5192 31,512.00 0.00 24.33 42,798.90 - XXXXX1455 71,534.00 11,921.59 27.00 100,721.70 XXXXX5843 92,623.00 10,415.24 38.67 88,352.92 - XXXXX6730 98,654.00 24,098.70 39.67 52,958.48 - XXXXX7511 71,231.00 17,594.45 21.17 142,081.34 - XXXXX1184 70,112.00 7,334.82 24.83 141,842.94 - XXXXX1945 85,221.00 20,912.66 28.92 136,095.81 - XXXXX0871 70,112.00 18,753.34 27.25 60,197.93 - XXXXX1323 73,197.00 4,284.67 25.00 152,358.06 - XXXXX4178 81,849.00 20,896.56 27.08 206,331.15 XXXXX1061 74,801.00 19,598.98 35.17 161,178.56 - XXXXX6894 71,245.00 6,817.00 20.33 95,804.98 - XXXXX3225 14,828.00 0.00 25.08 29,908.36 - XXXXX4975 81,849.00 16,432.72 34.33 181,879.80 - XXXXX9049 121,813.00 4,685.12 24.17 196,470.61 - XXXXX5730 77,298.00 19,033.50 28.25 194,024.63 XXXXX6392 99,427.00 14,334.58 20.17 174,891.30 - XXXXX3522 82,792.00 20,336.59 21.83 118,068.45 Total 2,200,839.00 366,796.72 3,999,679.35 8/28/2020 2:13 PM 04572 4 v1.0.6997.26680 s13 Actuarial Analysis of The Potential Effect of IMRF's Early Retirement Incentive Progam For 04572-VILLAGE OF OAK BROOK (Regular Members) 1 Year Window Beginning 11/1/2020 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results and Input Variables Window Period: 11/01/2020 Through 11/01/2021 EMPLOYEES AFFECTED BY WINDOW" 1. Presently eligible to retire with full or reduced benefits a. Number 18 b. Annual Payroll 51,573,872 2. Number newly eligible to retire a. Number 7 b. Annual Payroll 5626,967 INPUT VARIABLES 3. Employees presently eligible to retire,who a.Would have retired without this window 0 b. Are induced to retire during this window'" 18 4. Employees newly eligible to retire who are induced to retire during window period" 7 5.Total number assumed to retire during window period:(3a)+(3b)+(4) 25 6.Total across-the-board pay increase since 12/31/2019 0.00% ' Persons covered by Elected County Official benefit provisions with this employer were not included in this study. •"Inducement to retire is consistent with the assumptions for the Reserve Transfer Program. 8/28/2020 2:11 PM 04572 2 v1.0.6997.26680 sl3 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results Window Period: 11/01/2020 Through 11/01/2021 IMRF COSTS 1. Unpaid ERI Liabiltity Exists? No (See Note Below) 2.Additional Liability Created by 3,996,998 Window 3.Schedule of Increase in Employer Contribution to IMRF based on indicated amortization of liability increase Amortization Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years First Year 904,336 770,154 674,505 602,940 547,430 503,158 Second Year 926,945 789,408 691,368 618,014 561,116 515,737 Third Year 950,118 809,143 708,652 633,464 575,144 528,631 Fourth Year 973,871 829,371 726,368 649,301 589,522 541,846 Fifth Year 998,218 850,106 744,528 665,533 604,260 555,392 Sixth Year 871,358 763,141 682,171 619,367 569,277 Seventh Year 782,219 699,226 634,851 583,509 Eighth Year 716,706 650,722 598,097 Ninth Year 666,990 613,049 Tenth Year 628,376 Total Estimate Cost 4,753,489 4,919,539 5,090,781 5,267,355 5,449,403 5,637,073 First Year NOTE: An employer cannot adopt an ERI program until the cost of a previous ERI program is paid in full.A resolution adopting ERI with an effective date prior to the pay-of date is void. Call 1800 ASK IMRF and ask to speak with Dionne Green, Employer Account Analyst,to request a written confirmation of the current balance. 8/28/2020 2:11 PM 04572 3 v1.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Window Period: 11/01/2020 Through 11/01/2021 Individual Member Results New Lump Total ERI Name ID No. Salary Sum Wages Service cost XXXXX9430 68,226.00 15,721.49 26.58 169,602.48 XXXXX1142 131,735.00 5,066.73 30.25 357,581.11 - XXXXX7991 124,249.00 30,169.00 30.75 332,620.64 - XXXXX8769 145,616.00 35,237.23 21.83 220,894.53 - XXXXX0462 187,460.00 10,268.29 27.58 254,498.37 XXXXX5231 74,801.00 6,935.00 30.83 208,691.20 - XXXXX9458 98,654.00 25,948.46 36.33 179,825.09 XXXXX5192 31,512.00 0.00 24.42 42,798.90 - XXXXX1455 71,534.00 11,921.59 27.08 100,721.70 XXXXX5843 92,623.00 10,415.24 38.75 88,352.92 - XXXXX6730 98,654.00 24,098.70 39.75 52,958.48 - XXXXX7511 71,231.00 17,594.45 21.25 142,081.34 - XXXXX1184 70,112.00 7,334.82 24.92 141,827.41 - XXXXX1945 85,221.00 20,912.66 29.00 141,144.93 - XXXXX0871 70,112.00 18,753.34 27.33 60,197.93 - XXXXX1323 73,197.00 4,284.67 25.08 152,358.06 - XXXXX4178 81,849.00 20,896.56 27.17 206,331.15 XXXXX1061 74,801.00 19,598.98 35.25 161,178.56 - XXXXX6894 71,245.00 6,817.00 20.42 95,804.98 - XXXXX3225 14,828.00 0.00 25.17 29,908.36 - XXXXX4975 81,849.00 16,432.72 34.42 181,879.80 - XXXXX9049 121,813.00 4,685.12 24.25 196,470.61 - XXXXX5730 77,298.00 19,033.50 28.33 194,024.63 XXXXX6392 99,427.00 14,334.58 20.25 167,176.35 XXXXX3522 82,792.00 20,336.59 21.92 118,068.45 0ta� 2,200,839.00 366,796.72 3,996,997.99 8/28/2020 2:11 PM 04572 4 v1.0.6997.26680 s13 Actuarial Analysis of The Potential Effect of IMRF's Early Retirement Incentive Progam For 04572-VILLAGE OF OAK BROOK (Regular Members) 1 Year Window Beginning 12/1/2020 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results and Input Variables Window Period: 12/01/2020 Through 12/01/2021 EMPLOYEES AFFECTED BY WINDOW 1. Presently eligible to retire with full or reduced benefits a. Number 19 b. Annual Payroll $1,648,673 2. Number newly eligible to retire a. Number 6 b. Annual Payroll $552,166 INPUT VARIABLES 3. Employees presently eligible to retire,who a.Would have retired without this window 0 b. Are induced to retire during this window•' 19 4. Employees newly eligible to retire who are induced to retire during window period'• 6 5.Total number assumed to retireduringwindow period:(3a)+(3b)+(4) 25 6.Total across-the-board pay increase since 12/31/2019 0.00% ' Persons covered by Elected County Official benefit provisions with this employer were not included in this study. "Inducement to retire is consistent with the assumptions for the Reserve Transfer Program. 8/28/2020 2:10 PM 04572 2 v1.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results Window Period: 12/01/2020 Through 12/01/2021 IMRF COSTS 1. Unpaid ERI Liabiltity Exists? No (See Note Below) 2.Additional Liability Created by 4,004,918 Window 3.Schedule of Increase in Employer Contribution to IMRF based on indicated amortization of liability increase Amortization Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years First Year 906,128 771,680 675,842 604,135 548,515 504,155 Second Year 928,781 790,972 692,738 619,238 562,228 516,759 Third Year 952,001 810,746 710,056 634,719 576,283 529,678 Fourth Year 975,801 831,015 727,808 650,587 590,690 542,920 Fifth Year 1,000,196 851,790 746,003 666,852 605,458 556,493 Sixth Year 873,085 764,653 683,523 620,594 570,405 Seventh Year 783,769 700,611 636,109 584,665 Eighth Year 718,126 652,012 599,282 Ninth Year 668,312 614,264 Tenth Year 629,621 Total Estimate Cost 4,762,907 4,929,287 5,100,868 5,277,791 5,460,200 5,648,242 First Year NOTE: An employer cannot adopt an ERI program until the cost of a previous ERI program is paid in full.A resolution adopting ERI with an effective date prior to the pay-of date is void.Call 1800 ASK IMRF and ask to speak with Dionne Green, Employer Account Analyst,to request a written confirmation of the current balance. 8/28/2020 2:10 PM 04572 3 vl.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Window Period: 12/01/2020 Through 12/01/2021 Individual Member Results New Lump Total ERI Name ID No. Salary Sum Wages Service Cost XXXXX9430 68,226.00 15,721.49 26.67 169,602.48 XXXXX1142 131,735.00 5,066.73 30.33 357,581.11 _ XXXXX7991 124,249.00 30,169.00 30.83 332,620.64 - XXXXX8769 145,616.00 35,237.23 21.92 220,894.53 - XXXXX0462 187,460.00 10,268.29 27.67 254,498.37 - XXXXX5231 74,801.00 6,935.00 30.92 208,691.20 - XXXXX9458 98,654.00 25,948.46 36.42 179,825.09 XXXXX5192 31,512.00 0.00 24.50 42,798.90 - XXXXX1455 71,534.00 11,921.59 27.17 100,721.70 XXXXX5843 92,623.00 10,415.24 38.83 88,352.92 - XXXXX6730 98,654.00 24,098.70 39.83 52,958.48 - XXXXX7511 71,231.00 17,594.45 21.33 142,041.34 - XXXXX1184 70,112.00 7,334.82 25.00 146,459.92 - XXXXX1945 85,221.00 20,912.66 29.08 141,144.93 - XXXXX0871 70,112.00 18,753.34 27.42 60,197.93 - XXXXX1323 73,197.00 4,284.67 25.17 152,358.06 - XXXXX4178 81,849.00 20,896.56 27.25 206,331.15 XXXXX1061 74,801.00 19,598.98 35.33 161,178.56 - XXXXX6894 71,245.00 6,817.00 20.50 95,804.98 - XXXXX3225 14,828.00 0.00 25.25 29,908.36 - XXXXX4975 81,849.00 16,432.72 34.50 181,879.80 - XXXXX9049 121,813.00 4,685.12 24.33 196,470.61 - XXXXX5730 77,298.00 19,033.50 28.42 194,024.63 XXXXX6392 99,427.00 14,334.58 20.33 167,176.35 - XXXXX3522 82,792.00 20,336.59 22.00 121,395.47 Total 2,200,839.00 366,796.72 4,004,917.52 8/28/2020 2:10 PM 04572 4 v1.0.6997.26680 s13 Actuarial Analysis of The Potential Effect of IMRF's Early Retirement Incentive Progam For 04572-VILLAGE OF OAK BROOK (Regular Members) 1 Year Window Beginning 1/1/2021 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results and Input Variables Window Period: 01/01/2021 Through 01/01/2022 EMPLOYEES AFFECTED BY WINDOW 1.Presently eligible to retire with full or reduced benefits a. Number 19 b.Annual Payroll 51,648,673 2. Number newly eligible to retire a. Number 7 b.Annual Payroll 5635,364 INPUT VARIABLES 3. Employees presently eligible to retire,who a.Would have retired without this window 0 b. Are induced to retire during this window"' 19 4. Employees newly eligible to retire who are induced to retire during window period" 7 5.Total number assumed to retire during window period:(3a)+(3b)+(4) 26 6.Total across-the-board pay increase since 12/31/2019 0.00% • Persons covered by Elected County Official benefit provisions with this employer were not included in this study. "Inducement to retire is consistent with the assumptions for the Reserve Transfer Program. 8/28/2020 1:59 PM 04572 2 vl.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results Window Period: 01/01/2021 Through 01/01/2022 IMRF COSTS 1. Unpaid ERI Liabiltity Exists? No (See Note Below) 2.Additional Liability Created by 4,269,188 Window 3.Schedule of Increase in Employer Contribution to IMRF based on indicated amortization of liability increase Amortization Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years First Year 965,921 822,600 720,438 644,000 584,709 537,423 Second Year 990,069 843,165 738,449 660,100 599,327 550,858 Third Year 1,014,820 864,244 756,910 676,602 614,310 564,630 Fourth Year 1,040,191 885,850 775,833 693,517 629,668 578,745 Fifth Year 1,066,196 907,997 795,229 710,855 645,410 593,214 Sixth Year 930,697 815,110 728,626 661,545 608,044 Seventh Year 835,487 746,842 678,084 623,245 Eighth Year 765,513 695,036 638,827 Ninth Year 712,412 654,797 Tenth Year 671,167 Total Estimate Cost 5,077,196 5,254,554 5,437,457 5,626,055 5,820,500 6,020,950 First Year NOTE: An employer cannot adopt an ERI program until the cost of a previous ERI program is paid in full.A resolution adopting ERI with an effective date prior to the pay-of date is void.Call 1800 ASK IMRF and ask to speak with Dionne Green, Employer Account Analyst,to request a written confirmation of the current balance. 8/28/2020 1:59 PM 04572 3 v1.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Window Period: 01/01/2021 Through 01/01/2022 Individual Member Results New Lump Total ERI Name ID No. Salary Sum Wages Service Cost XXXXX9430 68,226.00 15,721.49 26.75 187,367.90 XXXXX1142 131,735.00 5,066.73 30.42 374,884.71 - XXXXX7991 124,249.00 30,169.00 30.92 323,335.23 - XXXXX8769 145,616.00 35,237.23 22.00 225,117.46 - XXXXX0462 187,460.00 10,268.29 27.75 262,435.05 - XXXXX5231 74,801.00 6,935.00 31.00 207,342.91 - XXXXX9458 98,654.00 25,948.46 36.50 185,947.58 XXXXX5192 31,512.00 0.00 24.58 43,001.76 - XXXXX1455 71,534.00 11,921.59 27.25 102,818.00 XXXXX5843 92,623.00 10,415.24 38.92 91,158.05 - XXXXX6730 98,654.00 24,098.70 39.92 57,347.29 - XXXXX7511 71,231.00 17,594.45 21.42 139,565.04 - XXXXX1184 70,112.00 7,334.82 25.08 143,106.71 - XXXXX1945 85,221.00 20,912.66 29.17 137,491.64 - XXXXX0871 70,112.00 18,753.34 27.50 59,548.56 - XXXXX1323 73,197.00 4,284.67 25.25 148,613.29 - XXXXX4178 81,849.00 20,896.56 27.33 227,044.96 XXXXX0249 83,198.00 0.00 26.67 156,442.98 XXXXX1061 74,801.00 19,598.98 35.42 150,956.41 - XXXXX6894 71,245.00 6,817.00 20.58 112,010.06 - XXXXX3225 14,828.00 0.00 25.33 29,281.54 - XXXXX4975 81,849.00 16,432.72 34.58 180,507.45 - XXXXX9049 121,813.00 4,685.12 24.42 227,487.49 - XXXXX5730 77,298.00 19,033.50 28.50 206,070.50 - XXXXX6392 99,427.00 14,334.58 20.42 167,384.57 XXXXX3522 82,792.00 20,336.59 22.08 122,921.36 Tota1 2,284,037.00 366,796.72 4,269,188.50 8/28/2020 1:59 PM 04572 4 v1.0.6997.26680 s13 BOARD OF TRUSTEES MEETING VILLAGE OF SAMUEL E. DEAN BOARD ROOM OAK BR , K BUTLER GOVERNMENT CENTER 1200 OAK BROOK ROAD OAK BROOK, ILLINOIS 630-368-5000 AGENDA ITEM Regular Board of Trustees Meeting of July 14, 2020 SUBJECT: IMRF Early Retirement Incentive Program for the Village of Oak Brook FROM: Riccardo Ginex, Village Manager Jason Paprocki, Finance Director Kathy Vonachen, HR Director/Deputy Clerk BUDGET SOURCE/BUDGET IMPACT: N/A—Discussion Item RECOMMENDED MOTION: N/A—Discussion Item Background/History: The Illinois Municipal Retirement Fund (IMRF) covers all full-time and part-time personnel working more than 1,000 hours a year who are not categorized as sworn police and fire personnel. In 1996, IMRF developed an early retirement plan known as the Early Retirement Incentive or ERI. For an understanding of how the program will or will not save in personnel costs, we must look at several factors. The Early Retirement Incentive allows for early retirement by offering an employee to purchase between one month and five years of age and service credit for the purpose of determining retirement benefits. To be eligible for retirement under an ERI, an employee must be 50 years of age and have 20 years of service credit by the date of their retirement. The IMRF retirement plan is a defined benefit plan, and as such,provides a specific monthly retirement benefit/payment based on an employee's years of service, and his/her age. Both time of service and age are used to calculate the monthly benefit amount. The ERI therefore allows for the enhancement of both the years of service and age categories. BOT AGENDA Page 1 Cost Assessment Past studies by IMRF show that most employers who reduce salary expenses of employees retiring under ERI by 30%can expect to offset increased pension costs. The 30%reduction can be accomplished through any combination of not re-staffing positions or by paying lower salaries to replacements. In 2019,the Village spent$565,146 for IMRF pension payments based on an employer rate of 10.18%of eligible payroll. In 2020, the Village has budgeted $695,900 in IMRF pension payments based on an employer rate of 12.42%of eligible payroll. Based on the eligibility requirements for the ERI, we have 24 Village employees that could participate in the plan. Staff solicited interest with each eligible member. Of the 24 employees who are eligible to take part in the program, only 11 have expressed serious interest in possibly participating in the ERI program. When the Village asked IMRF to re-calculate the potential ERI cost scenario on the 11 interested employees, IMRF stated it could not provide anything other than the full ERI Cost Study containing all 24 eligible employees. If and when the Village files the resolution adopting the IMRF ERI program,the Village would submit that with a copy of the ERI Cost Study they provided. This would be the cost the Village is agreeing to. Employees that stated they have no interest in the program could change their mind and participate. They could apply no later than 30 days prior to the last day of work and no sooner than 60 days ahead of the end of the ERI window to take advantage of the program regardless of what they had previously stated. In addition, employees that have expressed interest in the program could choose not to participate. For these reasons, IMRF will not provide limited participant ERI Cost Studies. The full ERI Cost Study assumes that all 24 eligible employees will purchase the full five years (or the most allowed) of service credit. This may not actually be the case and could lower the Village ERI cost. The final cost of the program for the employer is calculated after the window closes and if less employees choose to retire under the ERI program, then the cost to the Village would be reduced. This number assumes that the eligibility window for the plan (the window is defined as a one- year period, within which participants must be determined to be eligible by having 20 years of service and by being 50 years of age)will be September 1, 2020 through September 1, 2021. To determine the cost of this program, the key calculation is that of the increased pension liability created by the ERI program. This information has been provided in the attached Actuarial Analysis provided by IMRF. IMRF Analysis The IMRF analysis provides estimated amortized annual costs over five to ten years. The Village has the choice of how many years to repay the ERI liability. IMRF will charge the Village interest at 7.25%the following year the Village has an outstanding ERI balance at the beginning of the year. Therefore,the longer the Village repays the ERI liability, the more it will ultimately pay. BOT AGENDA Page 2 The Village will not begin to incur costs until the second calendar year following retirement; therefore, if an employee retires in 2021 under ERI, the cost is reflected in the Village's 2023 IMRF rate. If we are able to hold open a position currently,we could also start pre-funding this program. IMRF ERI Costs The preliminary IMRF ERI Study calculates an ERI cost created by program at $3,934,059. This becomes a$4,678,638 unfunded liability amortized over a five (5)year payback period for the years 2023-2027. These estimates assume all 24 eligible employees will utilize the program and purchase the maximum service credit allowed. At this time, we believe only 11 employees will participate in the program, which would create an estimated $1,667,699 ERI cost, or approximately $1,995,228 amortized over five years. The amortized cost for the interested 11 employees was not provided by IMRF, this is an estimate by Village staff. As noted earlier, these numbers may change significantly depending on the number of employees that actually participate and the number of service years they ultimately buy. Potential Savings If the ERI program is approved, we anticipate we could see a long-term savings in the following terms: • If the sale of our water system outside of Village Boundaries is approved,we can reorganize Public Works and eliminate two(2)positions in Public Works for a salary savings of approximately $178,000 in 2021. • We can reduce one(1)part-time position in the Community Development area as that employee would be promoted to fill a vacant full-time position which will utilize the ERI for a salary savings of approximately $55,000 in 2021. • We can reduce one(1)full-time position in Golf which will utilize the ERI and fill that position with a part-time employee to assist with payroll and administrative functions for a salary savings of approximately$52,000 in 2021. • Any rehires would result in a 2-month salary and benefits savings to advertise, interview,and hire. • Any rehires would be brought in near the starting salary. The schedule below outlines the potential savings from eliminating the four(4)positions noted above. This assumes all positions work until the end of the ERI window in, therefore a 25% salary savings is estimated in 2021. Beginning in 2022, salary and FICA savings are estimated to increase 3.0%each year as those positions would receive an estimated merit increase. In addition, the current health insurance savings of these positions are projected to increase 5%per year. BOT AGENDA Page 3 Estimated Salary,FICA, Amortized Insurance (Savings)/ Year ERI Repayment Year ERI Elimination Cost 2021 $ - $ (88,118) $ (88,118) 2022 - (363,960) (363,960) 2023 Year 1 379,586 (375,838) 3,748 2024 Year 2 389,076 (388,120) 956 2025 Year 3 398,802 (400,821) (2,019) 2026 Year 4 408,772 (413,956) (5,184) 2027 Year 5 418,992 (427,540) (8,548) $ 1,995,228 $ (2,458,353) $ (463,125) Please note there could be additional savings for the other seven (7)positions that will be rehired at lower starting salaries. Since staffing plans, starting salaries, and health insurance elections are unknown for the remaining 7 positons, they have been excluded for the time being. By eliminating the four(4)positions noted above, the Village should be able to realize enough savings to pay for the amortized ERI cost of all 11 interested positions. Please keep in mind that this program is voluntary and any employee included in this analysis could decide not to participate and continue to work. Also, an employee that was previously not interested and excluded from this analysis could decide to participate. Projections could change due to this. While it is possible that any of these positons would retire within this seven-year period regardless of the ERI program, the ERI could allow the Village to reorganize and realize personnel costs much sooner. Representatives from IMRF will be in attendance to give a brief overview of the ERI program and answer any questions. Recommendation: We recommend a thorough discussion on the ERI Program. If there is approval for adoption of the program a resolution will be presented at the August 11th Board meeting. BOT AGENDA Page 4 2211 York Road, Suite 500 Oak Brook, IL 60523-2337 1-800-728-7971 www.imrf.org Introduction The accompanying report illustrates the potential effects of the IMRF Early Retirement Incentive(ERI)Program on your unit of government.The enclosed report is an estimate which illustrates the additional liability(cost)created if your employer offers the ERI program.This cost may be partially offset if the ERI results in payroll and fringe benefit savings.Your employer is in the best position to determine whether or not the ERI will generate any overall savings.Participation in the ERI by any unit of government is voluntary and at the discretion of the governing body. The effect of the ERI on any particular unit of government depends on the: • Number of eligible members • Number of members electing to retire under the ERI • Employer's re-staffing plans • Salary and fringe benefit costs for replacement employees. Because of differing demographics and other local conditions,not all employers will be able to save money under the ERI program. Data used to produce the report The attached report was based upon December 31,2018,data(our most current).The data was adjusted to the extent possible for employees who have already retired or who have service with Illinois reciprocal public pension systems.Independent actuaries Gabriel,Roeder,Smith and Company created the software for this report.Your unit of government provided input variables that were selected for this report.If the input variables do not reflect actual practice if/when your employer adopts the program,the results may vary considerably. Timing of costs Increased retirement costs due to ERI are reflected in future IMRF employer contribution rates.If your employer adopts the ERI program,the cost of the ERI will be based on actual experience and will be reflected in the second calendar year's rate.For example,if your employer adopts an ERI program and one of your employees retires under it in 2019,the cost for ERI will be first reflected in your 2021 employer rate. We will charge your employer 7.25%interest the following year that your employer has an outstanding ERI balance at the beginning of the year. This report reflects estimated employer costs of the ERI. Summary of Provisions Eligible Members" To be eligible to retire under ERI,a member must be at least age 50 years old and have 20 or more years of IMRF service credit by their date of retirement.The 20 years of service can include service credit earned with another IMRF employer and/or reciprocal service credit.These ERI requirements apply to regular IMRF members,Sheriffs Law Enforcement Personnel(SLEP)members,and Elected County Officials(ECO). Eligible members include IMRF members who were actively participating in IMRF on the effective date of their employer's ERI program.A member is considered active if he or she is on layoff status with right of re-employment,on IMRF Benefit Protection Leave of Absence,or receiving IMRF disability benefits for less than two years. Members participating in the Elected County Official plan are not included in the study. Retirement Incentives Eligible members may purchase up to five years of IMRF service credit.The member's age at retirement will be increased by the amount of service credit purchased.For example,if a 50-year-old member purchases five years(or 60 months)of service credit,his or her age will be increased to age 55 for the purposes of determining IMRF retirement benefits Note:A regular IMRF member receives the maximum pension after earning 40 years of service credit.Therefore.regular members with less than 35 years of service credit should purchase all five years of ERI service. 'Eligible Members,for this document,refers to IMRF Tier 1 Members.Retirement age and service requirements,as related to ERI,are different for IMRF Tier 2 Members.Please contact an IMRF Member Services Representative at IMRF's employer number, 1-800-728-7971,for Tier 2 IMRF ERI provisions. ` 2211 York Road, Suite 500 Oak Brook, IL 60523-2337 1-800-728-7971 www.imrf.org t Member Cost For each year of service credit the member purchases,he or she will pay 4.5%(7.5%for SLEP,7.5%for ECO)of the member's highest 12 consecutive months of salary within the final rate of earnings period. For more information on member cost,please refer to the member ERI booklet that can be downloaded at www.imrforg. Retirement Dates The ERI legislation provides flexibility for employers by allowing the governing body to determine when a member retires(terminates employment). Employers are to give a member at least 30 days'notice of his or her designated termination date.The member may waive the 30-day notice. A member may terminate up to one year from the effective date of the employer's ERI program.However,a member must file his or her"Notice of Intent to Retire under ERI"(IMRF Form 5.21)with the retirement application(IMRF Form 5.20). Example: Board meeting adopting program.....December 15,2019 Member files Notice of Intent by retirement date* Effective date of ERI program...........December 31,2019 Last eligible termination date:December 31,2020# *Best practice:Encourage the member to file a"Notice of Intent to Retire Under Employer's IMRF Early Retirement Incentive"(IMRF Form 5.21) as soon as your employer adopts the ERI and the member decides to retire under it. #If a member requests to retire on or before June 30,so he or she can receive the following year's Supplemental Benefit Payment,your employer is required by law to allow the member to do so. Cost estimate Your IMRF field representative must prepare a cost estimate,and you must share that cost estimate with your employer's governing body before it adopts ERI. Also,the cost estimate must be based on the same time period as the ERI being considered by your governing body.If your employer does not know when it will offer the ERI,your IMRF Field Representative can prepare multiple cost estimates,each using a different time period. The ERI resolution has been revised to acknowledge the cost estimate requirement.The cost estimate and IMRF Form 6.77,"Suggested Form of Resolution to Adopt Early Retirement Incentive,"must be submitted to IMRF. For more information,please refer to the member and employer ERI booklets that can be downloaded at www imrforg.Your IMRF field representative is also available to meet with your employees to discuss the ERI program.Please contact your field representative to arrange a meeting. Future ERI programs An employer cannot adopt an ERI programs until the cost of the previous ERI is paid in full.A resolution adopting ERI with an effective date prior to the pay-off date is void.Call 1-800-728-7971,IMRF's employer number,to request a written confirmation of the current balance. Limitations on Frequency As of December 31,2013,employers may not adopt an Early Retirement Incentive(ERI)more frequently than once every five years after the close of a prior ERI.An ERI resolution adopting a program earlier than five years after the close of a prior ERI shall not be given effect by IMRF. Actuarial Analysis of The Potential Effect of IMRF's Early Retirement Incentive Progam For 04572-VILLAGE OF OAK BROOK (Regular Members) 1 year Window Beginning 9/1/2020 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 -VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results and Input Variables Window Period: 09/01/2020 Through 09/01/2021 EMPLOYEES AFFECTED BY WINDOW 1. Presently eligible to retire with full or reduced benefits a. Number 17 b. Annual Payroll $1,503,760 2. Number newly eligible to retire a. Number 7 b. Annual Payroll $626,967 INPUT VARIABLES 3. Employees presently eligible to retire,who a. Would have retired without this window 0 b. Are induced to retire during this window" 17 4. Employees newly eligible to retire who are induced to retire during window period" 7 5. Total number assumed to retire during window period: (3a)+(3b)+(4) 24 6.Total across-the-board pay increase since 12/31/2019 0.00% • Persons covered by Elected County official benefit provisions with this employer were not included in this study. "Inducement to retire is consistent with the assumptions for the Reserve Transfer Program. 5/1/2020 7:32 AM 04572 2 v1.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Summary of Valuation Results Window Period: 09/01/2020 Through 09/01/2021 IMRF COSTS 1. Unpaid ERI Liabiltity Exists? No (See Note Below) 2. Additional Liability Created by 3,934,059 Window 3.Schedule of Increase in Employer Contribution to IMRF based on indicated amortization of liability increase Amortization Years 5 Years 6 Years 7 Years 8 Years 9 Years 10 Years First Year 890,096 758,027 663,884 593,446 538,810 495,235 Second Year 912,349 776,977 680,481 608,282 552,280 507,616 Third Year 935,157 796,402 697,493 623,489 566,087 520,306 Fourth Year 958,536 816,312 714,931 639,076 580,239 533,314 Fifth Year 982,500 836,719 732,804 655,053 594,745 546,647 Sixth Year 857,637 751,124 671,430 609,614 560,313 Seventh Year 769,902 688,215 624,854 574,321 Eighth Year 705,421 640,476 588,679 Ninth Year 656,488 603,396 Tenth Year 618,481 Total Estimate Cost 4,678,638 4,842,074 5,010,619 5,184,412 5,363,594 5,548,309 First Year NOTE: An employer cannot adopt an ERI program until the cost of a previous ERI program is paid in full.A resolution adopting ERI with an effective date prior to the pay-of date is void. Call 1800 ASK IMRF and ask to speak with Dionne Green, Employer Account Analyst,to request a written confirmation of the current balance. 5/1/2020 7:32 AM 04572 3 v1.0.6997.26680 s13 IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 04572 - VILLAGE OF OAK BROOK (Regular Members) Window Period: 09/01/2020 Through 09/01/2021 Individual Member Results New lump Total ERI Position salary Sum Wages Service Cost ASSISTANT GOLF PROFESSIONAL 68,226.00 15,721.49 26.42 169,602.48 DEVELOPMENT SERVICES DIRECTOR 131,735.00 5,066.73 30.08 357,581.11 GOLF SUPERINTENDENT 124,249.00 30,169.00 30.58 332,620.64 IT DIRECTOR 145,616.00 35,237.23 21.67 220,894.53 VILLAGE MANAGER 187,460.00 10,268.29 27.42 254,498.37 MAINTENANCE WORKER II 74,801.00 6,935.00 30.67 208,691.20 STREETS SUPERVISOR 98,654.00 25,948.46 36.17 179,825.09 HR ASSISTANT 31,512.00 0.00 24.25 42,798.90 ADMINISTRATIVE COORDINATOR 71,534.00 11,921.59 26.92 102,388.52 HEAD MECHANIC 92,623.00 10,415.24 38.58 88,352.92 WATER SUPERVISOR 98,654.00 24,098.70 39.58 52,958.48 SENIOR ACCOUNTING ASSISTANT 71,231.00 17,594.45 21.08 142,081.34 SENIOR ADMINISTRATIVE ASSISTANT 70,112.00 7,334.82 24.75 141,858.41 PLANNING TECHNICIAN 85,221.00 20,912.66 28.83 137,035.85 BUILDING INSPECTOR 73,197.00 4,284.67 24.92 147,497.01 WATER OPERATOR IN CHARGE 81,849.00 20,896.56 27.00 206,331.15 MAINTENANCE WORKER II 74,801.00 19,598.98 35.08 161,178.56 SENIOR PURCHASING ASSISTANT 71,245.00 6,817.47 20.25 95,805.00 GOLF CAFE WORKER 14,828.00 0.00 25.00 29,908.36 WATER OPERATOR IN CHARGE 81,849.00 16,432.72 34.25 181,879.80 PUBLIC WORKS SUPERINTENDENT 121,813.00 4,685.12 24.08 196,470.61 GOLF MECHANIC 77,298.00 19,033.50 28.17 190,841.33 HR DIRECTOR/DEPUTY CLERK 99,427.00 14,334.58 20.08 174,891.30 ACCOUNTANT 82,792.00 20,336.59 21.75 118,068.45 Total 2,130,727.00 348,043.85 3,934,059.41 5/1/2020 7:32 AM 04572 4 v1.0.6997.26680 s13 IMRF arly Retiore I ■ Incentive EMPLOYER INFORMATION Illinois Municipal Retirement Fund 2211 York Road Oak Brook, IL 60523-2337 Employer Services: 1-800-728-7971 Member Services: 1-800-ASK-IMRF (1-800-275-4673) Revised 0412015 www.imrf.org Inside Front Cover IMRF Early Retirement Incentive Features of the IMRF Early Retirement Incentive........................................................................1 Incentive for members to retire early ...........................................................................................2 Adoptingthe ERI ..........................................................................................................................2 Cost Estimate Requirement .........................................................................................................3 Dissolving Units of Government...................................................................................................4 IMRF Form 6.77, "Suggested Form of Resolution to Adopt IMRF ERI" ..............................5 Informing members of the ERI .....................................................................................................7 Determining member termination dates.......................................................................................8 Resolution to Adopt Amortization Period......................................................................................9 IMRF Form 6.78, "Suggested Form of Resolution to Adopt Amortization Period...............10 Limitations on Frequency of Subsequent ERI offerings.............................................................11 Employercost for the ERI..........................................................................................................11 If a member has Concurrentemployers........................................................................................................12 Multipleemployers..............................................................................................................12 Paying member costs for the ERI Lump sum payments for sick, vacation, personal time......................................................13 If employer pays member cost (contributions)...........................................................................14 ERI invoice for member cost......................................................................................................14 Health insurance continuation....................................................................................................14 IMRF form 6.85, "Suggested Form of Resolution for Employer Pick-Up (Payment) of Contributions for Member's Contributions Required for Purchase of Additional Service under the IMRF ERI"................................................................ 15 Steps to Adopt and Retire Under ERI........................................................................................ 16 Revised 04/2015 i This page intentionally left blank. EMPLOYER 'MRF Early Retirement Incentive Features of the IMRF Early Retirement Incentive • The IMRF Early Retirement Incentive(ERI)is a permanent part of the IMRF benefit program. • It is a tool eligible IMRF employers can use,if and when they need it,to save fringe benefits and payroll costs by providing an incentive for long-term members to retire. Employers are encouraged to either: (i) replace no more than 80%of members electing to retire under the program,or (ii) reduce replacement staff salaries to no more than 80%of current salary levels. • Eligible members can purchase between one month and five years of age and service credit for the purpose of determining retirement benefits. • The legislation provides flexibility for employers by allowing the employer to determine the timing of member terminations.Members may terminate up to a year from the effective date of the employer's ERI program.However,if a member requests to retire before July 1st so he or she will be eligible to receive the following year's Supplemental Benefit Payment("13th payment"),the employer must allow the member to do so. • The employer cost of adopting the ERI can be paid for over a period of no more than 10 years. (Details regarding employer costs can be found on page 11.) • Before an employer can adopt ERI,it must have a cost estimate completed by IMRF. • Employers may not adopt an Early Retirement Incentive(ERI)more frequently than once every five years after the close of a prior ERI. • If an employer adopts the program,the ERI applies to all IMRF members,including elected officials participating in IMRF. Please Note Federal law requires an employer who is seriously considering of- fering early retirement benefits to inform certain employees who ask about such benefits.A unit of government which intends to keep its investigation into IMRF's ERI confidential may want to con- sult with an attorney about this issue. IMRF Early Retirement Incentive EMPLOYER Incentive for members to retire early TIER 1 • Without the ERI,Regular Tier 1 members can retire at age 55.With ERI,they can retire at age 50 provided they have 20 years of service credit before adding the incentive. • Without the ERI,Regular Tier 1 members receive reduced benefits if they are less than age 60 with less than 35 years of service credit when they retire.Under ERI,Regular Tier 1 members age 55 to 60 can avoid the reduction by purchasing sufficient service/age to reach age 60 or 35 years. TIER 2 • Without the ERI,Regular Tier 2 members can retire at age 62.With ERI,they can retire at age 57 provided they have 20 years of service credit before adding the incentive. • Without the ERI,Regular Tier 2 members receive reduced benefits if they are less than age 67 with less than 35 years of service credit when they retire.Under ERI,Regular Tier 2 members age 62 to 67 can avoid the reduction by purchasing sufficient service/age to reach age 67 or 35 years. REGULAR AND SLEP MEMBERS • Both Regular IMRF and SLEP pensions are based on a formula which provides a member with a percentage of his or her final rate of earnings(up to the wage cap for Tier 2 members)for each year of service credit.A member will be able to increase the percentage he or she receives by purchasing one month to five years of additional service credit. Adopting the IMRF ERI • All IMRF employers can adopt the IMRF ERI,unless the employer is dissolved or considering dissolving.Refer to page 4. • Federal law requires an employer who is seriously considering offering early retirement benefits to inform certain employees who ask about such benefits.A unit of government which intends to keep its investigation into IMRF's ERI confidential may want to consult with its attorney about this issue. • If an employer is considering adopting the ERI,a cost estimate must be prepared and shared with the employer's governing body before it adopts ERI.(See"Cost Estimate Requirement"on page 3.)If an employer is dissolved or considering dissolving,refer to page 4. 2 EMPLOYER IMRF Early Retirement Incentive • The governing body would pass a resolution or ordinance adopting the ERI and attach a copy of the cost estimate to the resolution.(See"Suggested Form of Resolution to Adopt IMRF Early Retirement Incentive,"Form 6.77,on page 5.) • The ERI would be available for one year from the program effective date. • If an employer adopts the program,the ERI applies to all eligible IMRF members, regardless of the position held or length of service with the unit of government.The ERI would also apply to elected officials participating in IMRF. • Please note:although an employer may believe it knows which/how many of its IMRF members will retire under the ERI,it is possible that other members may also be eligible.A member may have reciprocal service credit,previous IMRF service credit with a former employer,a separation refund he or she plans to repay,past service credit he or she plans to purchase,etc. • Employers may not adopt an Early Retirement Incentive(ERI)more frequently than once every five years after the close of a prior ERI.(See"Limitations on Subsequent ERI Offerings'on page 11.) Cost Estimate Requirement • Before an employer can adopt an ERI and in order to utilize the ERI as a budgeting tool, the employer must have IMRF prepare an actuarial cost estimate. • The cost estimate must be based on the same time period as the ERI being considered by the governing body.If your employer does not know when it will offer the ERI,your IMRF Field Representative can prepare multiple cost estimates each using a different time period. • If an employer submits the ERI resolution without a cost estimate,IMRF will not implement the program,and the employer will need to both conduct the cost estimate and adopt a second resolution. • Adoption of an ERI will result in increased pension costs because members will be allowed to retire earlier than normal with a larger pension benefit. • Increased pension costs may be offset by reductions in payroll and fringe benefit costs through eliminating vacated positions,delaying filling vacated positions and/or paying replacement employees lower salaries. 3 IMRF Early Retirement Incentive EMPLOYER • Past study results indicated that most employers who reduce salary expenses of the employees retiring under ERI by 30%can expect to offset increased pension costs.An employer could accomplish the 30%reduction through any combination of not re-staffing positions or by paying lower salaries to replacements.For example,an employer could re-staff 85%of the positions and pay the new employees 80%of the former salaries.Or, an employer could re-staff 80%of the positions and pay the new employees 85%of the salaries. • To request a cost estimate,please contact your IMRF Field Representative.The cost estimate will be completed at no charge to the employer. • ERI cost estimates prepared by IMRF will not include potential cost savings of the ERI.Because the figures used to estimate cost savings are not under IMRF's control, estimates of potential cost savings are more appropriately prepared by the employer using the ERI costs provided by IMRF. • Your local Field Representative will be able to calculate the annual increased pension costs. Dissolving units of government • If an employer is aware—or has reason to be aware—of its future dissolution under state law,the process of adopting an ERI differs.If a dissolving employer is being succeeded by: —One successor unit of local government The employer must provide the ERI Cost Study to the successor,and the successor must also approve the ERI. Submit to IMRF a copy of the resolution of the successor unit of local government's approving the adoption of the ERI program. —More than one successor unit of local government The employer must provide the ERI Cost Study to each successor,and a majority of the successors must pass resolutions approving the adoption of the ERI program. Submit the IMRF copies of the resolutions of successor unit(s)of local government's approving the adoption of the ERI program. —No successor unit(s)of local government and the law does not specify responsibility for the IMRF assets and obligation -The employer must submit its ERI resolution to IMRF with a request for IMRF Board of Trustees approval. • If a dissolving employer submits the ERI resolution without approval by successor unit(s) of local government or without a request for IMRF Board of Trustees approval when no 4 successors exist, IMRF will not implement the ERI program. SUGGESTED FORM OF RESOLUTION TO PLEASE ENTER ADOPT EARLY RETIREMENT INCENTIVE Employer IMRF I.D Number IMRF Form 6.77 (Rev_ 04/2015) See next page for additional ERI infonnation_ RESOLUTION Number WHEREAS,Section 7-141.1 of the Illinois Pension Code provides that a participating employer may elect to adopt an eady retirement incentive program offered by the Illinois Municipal Retirement Fund by adopting a resolution or ordinance;and WHEREAS,the goal of adopting an early retirement program is to realize a substantial savings in personnel costs by offenng early retirement incentives to employees who have accumulated many years of service,ifedit and WHEREAS,IMRF has prepared an actuarial estimate of the cost of an E-Y V retirement incentive program for and rie addilIpnal liability created by the early retirement incentive EMPLOYER NAME is estimated to be S ,and the 10-year amortiz3spn cost is stimatetlto be$ WHEREAS,the X51 1e cost 448iate anddP>�V,—,qn that the adoption of an early BOA D.COUNCIL.ETC. *L N76 <T- retirement incentive is in the best interests of therefore be it MPLOYERNAME j RESOLVED by the , at "'—BIS RD, OU,(yC � AME � (1)The ` do Cl by a6 th unicipal Retirement Fund P. .i \%, early retirement incentive pro 1 7=141.1 LIQ IfUnas Pension C_oye.711�early retirement Incentive program shall take effect on ,r DAT (2)In order to help achie UeLavings,an e pfo e--.e who retires and ea rly retirement incentive program shall lose those Incentives if he or she later accept t wi ti arr,IV,employer in any p 4!iod(Excep ion employee can hold an elected position if he/she chooses to not participate I and the nfi!Enot based otr ►jy seri ce earned rn that position during any term of office) (3)In order to utilize an early retirement s a budgepg to,he A, ' EMPLOYER NAME will use its best efforts either to limit t t fof retiring em "placed or to limit the salaries paid to the replacement employees (4)The effective date of VOh e&sretir£ rtl3q>'this early retirement incentive program shall beset by and4al meGr�h earlier than the effective date of the program and no later than one year after EMPLOYER NAME that effective date,except that thelemployee AA�q require that the retirement date set by the employer be no later than the June 30 next occurring after the effective date of the pend no earlier than the date upon which the employee qualifies for retirement (5)To be eligible for the earty retIr@ a rtentive under this Section,the employee must have attained age 50 and have at least 20 years of creditable service by his pr.ber retilement date,and (6)As of the date of the al{D),t&of this Resolution,the is( ) Is not( )aware of the BOARD.COUNCIL,ETC. pending dissolution of EMPLOYER NAME (Note Failure to disclose a potential dissolution shall void this Resolution.If the Board.Council,etc,is aware of the pending dissolution of the IMRF employer,then the successor unit(s)of local government must approve the adoption of the early retirement incentive in order for this Resolution to be effective.If there is no successor,submit your resolution for approval from the IMRF Board of Trustees.) (7)The shall promptly file a certified copy of this resolution(ordinance)with the CLERK OR SECRETARY Board of Trustees of the Illinois Municipal Retirement Fund CERTIFICATION I, the of the NAME CLERK OR SECRETARY EMPLOYER NAME of the County of COUNTY-- State of Illinois,do hereby cerldy that I am the keeper of the books and records of the and that the foregoing is a thie and EMPLOYER NAME correct copy of a resolution(ordinance) duly adopted by the at a meeting ORD NANCE BOARD,COUNCIL,ETC. duly convened and held on the __day of 20 _ If applicable,I further certify that this Resolution has been submitted to the successor unit(s)of local government and that said unit(s)of local government has/have adopted a resolution approving the adoption of the early retirement Incentive for EWLOYERNAME A copy of the approval resolution is attached hereto. SEAL CLERK OR SECRETARY OF THE BOARD IMRF 2211 York Road Suite 500 Oak Brook,IL 60523-2337 Employer Services Representatives 1-800-728-7971 Fax:(630)706-4289 IMRF Form 6.77(Rev.042015) www-inrrf.org ADDITIONAL EMPLOYER ERI INFORMATION AVAILABLE Before Passing an ERI Resolution: Employers should review the"IMRF Early Retirement Information Incentive(ERI)Booklet-Employer Information"for a more compete explanation of he ERI program and employer responsibilities before Passing an ERI resolution.The booklet can be found at wwwimrfag. You may request a copy of this booklet from IMRF by calling our Employer Services Representabves at 1-800-728-7971. Limitation on Frequency • Employers may not adopt an Early Retirement Incentive(ERI)undue frequently man once every five years after the close of a prior ERI. An ERI resolution adopting a program earlier than five years after the dose or a prior FRI shall not be given effect by IMRF ERI cost estimates • When an employer submits the ERI resolution to IMRF,it should include a copy o1 the cost estimate for the period of the adopted ERI. Contact your IMRF Field Representative to request a cost estimate.Your local Field Representative will be able to calculate the annual increased pension costs.The cost estimate will be completed at no charge to the employer. • If an employer submits the ERI resolution without a cost estimate. —IMRF will not implement he program,and —The employer will need to both conduct the cost estimate and adopt a second resolution. Dissolutions • Ilan employer is dissolving and its IMRF assets and liabilities will be transferred to: One successor unit of government--me dissolving employer must provide the ERI Cost Sludy to the successor,and the successor must also approve the ERI.A copy of the successor unit's resolution approving the ERI must be available to IMRF upon request. More than one successor unit of government-4he dissolving employer must provide the ERI Cost Study to each successor.and a majority of the successors null approve the ERI.Copies of he successor units' resolutions approving the ERI must be available to IMRF upon request. No successor unit of government and the law does not specify responsibility for the IMRF assets and obligations—the IMRF Board of Trustees must approve he ERI. If a dissolving employer submits the ERI resolution wi houl approval by successor unit(s)of local govemmenl or without a request for IMRF Board of Trustee approval when no successors exist,IMRF will not implement the ERI program. • If IMRF Is unaware mal these requirements were not met and pays an ERI enhanced pension to a member who: —Retired at age 55 or older under Regular Tier 1(age 50 for SLEP and SLEP ECO)or at age 62 or older under Regular Tier 2.the member will lose the ERI enhancements and be required to pay IMRF the difference between the ERI enhanced pension and the pension he or she would have received without the ERl�ess the amount he or she paid for the ERI. —Retired at less than age 55 under Regular Tier 1 or less than age 62 under Regular Tier 2,the member will be required to repay IMRF for all pension payments received--less the amount paid for the E RI IMRF 2211 York Road Suite 500 Oak Brook,IL 605232337 Employer Services Representatives 1-800-728-7971 Fax:(630)706-4289 1-tdi16 771Re,04/10157 www.imff.org EMPLOYER lMRF Early Retirement Incentive • If IMRF is unaware that these requirements were not met and pays an ERI enhanced pension to a member who: —Retired at age 55(Tier 1)or older(age 50 for SLEP and SLEP ECO)or age 62 or older (Tier 2),the member will lose the ERI enhancements and be required to pay IMRF the difference between the ERI enhanced pension and the pension he or she would have received without the ERI—less the amount he or she paid for the ERI. —Retired at less than age 55(Tier 1)or less than age 62(Tier 2),the member will be required to repay IMRF for all pension payments received—less the amount he or she paid for the ERI. Informing members of the ERI Federal law requires an employer who is seriously considering offering early retirement benefits to inform certain employees who ask about such benefits.A unit of government which intends to keep its investigation into IMRF's ERI confidential may want to consult with its attorney about this issue. • After an employer adopts the ERI by resolution,it should inform its members of the program for two reasons: 1)IMRF will not inform members of an individual employer that their employer has adopted the program.Adoption of the program is an internal personnel matter for the employer.To assist you,we have developed a member ERI booklet you can duplicate and give to your members. 2)The legislation requires members who intend to retire under the ERI to notify IMRF of their intention to do so by completing Form 5.21,"Notice of Intent to Retire Under IMRF ERI." • Although a member can file the Letter of Intent as late as his or her retirement date,we encourage members to file Form 5.21 as soon as they decide to retire under ERI. • IMRF will acknowledge receipt of the member's Notice of Intent by mailing a letter and the publication,"Can I Afford to Retire?"to the member.A courtesy copy of the letter will also be mailed to the member's employer. • Acknowledgment of the Notice of Intent does not guarantee the member's eligibility for the ERI nor for an IMRF pension. 7 IMRF Early Retirement Incentive EMPLOYER • As a general rule,a member's Notice of Intent is not a letter of resignation.Although a member may file a Notice,he or she is not required to apply for an IMRF pension and may subsequently decide not to retire.The Notice of Intent is a tool employers can use to gauge the number of anticipated retirements.The Notice is also used by IMRF to identify members who should receive detailed information regarding ERI.However,an employer could use the Notice of Intent as a letter of resignation provided the employer informs its members in advance of such treatment. Determining member termination dates • The ERI legislation provides flexibility for employers by allowing the employer to determine the timing of member terminations.A member may terminate up to one year from the effective date of the employer's ERI program. Example: Effective date of ERI program: September 30,2011 Termination date can be: September 30,2011,through September 30,2012 • If a member requests to retire before July 1st so he or she will be eligible to receive the following year's Supplemental Benefit Payment("13th payment"),the employer must allow the member to do so. • Employers are to give a member at least 30 days notice of his or her designated termination date.The 30-day notice may be waived by the member. 8 EMPLOYER IMRF Early Retirement Incentive Resolution to Adopt Amortization Period • Employers can customize the ERI to the financial circumstances of their own unit of local government.This flexibility is provided by allowing employers to determine the amount of time needed to pay off the incurred pension liability.(Please refer to page 11 for detailed information on employer costs.) • An amortization period of 10 years is assumed.Amortization of the incurred pension liability can take no longer than 10 years and no less than five years. • If an employer would like an amortization period of other than 10 years,it would submit a resolution doing so.(See IMRF Form 6.78,"Suggested Form of Resolution to Adopt Amortization Period for IMRF Early Retirement Incentive,"on the following page.)Please note:due to the method IMRF uses to calculate employer contribution rates,only whole year(5,6,7,8,9,10)amortization periods are allowed. • The amortization period resolution should be received in the IMRF office no later than six months from the effective date of the employer's ERI program.If no resolution is received, a 10-year amortization period will be assumed.If an employer would like an amortization period of less than 10 years,it would submit IMRF Form 6.78. 9 IMRF Early Retirement Incentives----- ---- -------EMPLOYER �°TE SUGGESTED FORM OF RESOLUTION TO ADOPT AMORTIZATION PERIOD toFOR IMRF EARLY RETIREMENT INCENTIVE (7/2003) PLEASE ENTER Employer IMRF I.D.Number RESOLUTION Number _ WHEREAS,on—__ _ the of DATE BOARD,COUNCIL,ETC. adopted Resolution(Ordinance)No which established an early retirement EMPLOYER NAME incentive(incentive)through the Illinois Municipal Retirement Fund for its employees.and, WHEREAS,Section 7-141.1 of the Illinois Pension Code provides that a par cipating employer may select an amortization period for the actuarial costs of the incentive which may be no greater than 10years;and, WHEREAS, _is prDh)bited frofn adopting asubsequent incentive until EMPLOYER NAME the actuarial costs of the previous programs are paid. RESOLVED(ORDAINED)by the __of that BOARD CtuJNC ,E C. EMPLOYER NAME the _ _a es hereby request the Illinois Municipal Retirement Fund to amortize the cost EMPLOYER NAME of the incentive over a period of ears This page intentionally blank. ` NUMBER CERTIFICATION I, the of the '.NAME CLERK OR SECRETARY of the County of EMPLOYER NAME COUNTY State of Illinois,do hereby certify that i am keeper of the books and records of the and EMPLOYER NAME that the foregoing is a true and correct copy of a resolution(ordinance)duly adopted by the at BOARD,COLING L.EfC. a meeting duly convened and held on the—_ day of .20 SEAL CLERK OR SECRETARY OF THE BOARD Illinois Municipal Retirement Fund Suite 500,2211 York Road,Oak Brook Illinois 60523-2337 www imrf org Member Services Representatives 800/ASK-IMRF (I-800-275A673) IMRF Form 6 78 (Rev.07/2003) 10 EMPLOYER lMRF Early Retirement Incentive Limitations on Frequency of Subsequent ERI offerings • An employer cannot adopt later ERI programs until the cost of the previous ERI is paid in full. • Employers may not adopt an Early Retirement Incentive(ERI)more frequently than once every five years after the close of a prior ERI. • An ERI resolution adopting a program earlier than five years after the close of a prior ERI shall not be given effect by IMRF. • An employer must again have IMRF prepare a cost estimate before a second ERI program can be adopted. Employer costs for the ERI • Once an employer adopts the ERI and a member retires under it,a separate ERI reserve account will be established. • Annually,the employer's ERI Reserve Account and amortization period is sent to IMRF's actuary.The actuary calculates the employer's ERI rate based upon that information. Please note:Employer rates are on a two-year lag-2013 information sent to the actuary in 2014 is used to determine 2015 rates.If a member retires under ERI in 2013, the employer does not begin paying its ERI costs until 2015. • The Advance Rate Notice,which is available in the Document Archive of Employer Access in April,and the Official Notice which is available in the Document Archive in November,include a breakdown of an employer's IMRF rate,including the employer's rate for ERI liability.The employer rate also includes costs for retirement,death,disability, and supplemental retirement.The employer's contribution will equal the total rate times payroll. 11 IMRF Early Retirement Incentive EMPLOYER Concurrent/multiple employers • Concurrent employers If a member participates with more than one IMRF employer, the employer cost for the ERI is determined as follows: - If one employer adopts ERI and the other doesn't, the employer adopting ERI bears the entire cost. - If both employers adopt ERI, both employers will share the cost proportionately based on years of service credit. For example, if the member has 15 years with the first employer and five years with the second employer, the first employer will incur 75% of the cost, and the second employer will incur 25% of the cost. • Multiple employers If a member participated with more than one IMRF employer during his or her IMRF career, the member's current employer would need to adopt the ERI in order for the member to retire under it. - The current employer would bear the entire employer cost for the ERI because the current employer will benefit from reduced payroll/fringe benefit costs. - The member's previous employer(s) would not be affected; they would not share the ERI costs nor would their IMRF rate be affected. This is true even if the previous employer adopts ERI. A member can retire under ERI only if his or her current employer adopts it. 12 EMPLOYER lMRF Early Retirement Incentive Paying member costs for the ERI Lump sum payments for sick,vacation time,personal time If payments for sick,vacation or personal time are to be considered IMRF earnings, they must be reported to IMRF no later than one month after the member's termination date.For example,if a member terminates on June 15,but is paid for sick,vacation or personal time in July,those earnings are reportable to IMRF.However,if the member's earnings are paid in August(or later),those earnings are not reportable to IMRF. If the employer will pay the member a lump sum payment for sick,vacation,and/or personal time,the employer must submit the net payment(gross payment less taxes, IMRF contributions,etc.)to IMRF via govONE EFT pay-by-phone or pay online system and identify the payment as member ERI cost. If the member's net payment for sick,vacation,and/or personal time is greater than the member's ERI cost,the employer would pay IMRF via govONE EFT an amount required to pay the member's cost.The employer would pay the member any remaining balance of the net payment. If payment for sick,vacation,and/or personal time is spread over several months,the employer must still forward the net payment to IMRF.As long as the lump sum payment for sick,vacation,and/or personal time is due to the member's retirement,the net amount is payable to IMRF. The gross amount of the payment would be reported to IMRF as earnings,but the net payment would be held by the employer until it receives an invoice from IMRF for the member cost. Members terminating IMRF participation for retirement remain eligible to earn additional service credit for unpaid and unused sick leave.For every 20 days of unused,unpaid sick leave(or fraction thereof),a member can earn one month of additional service credit, not to exceed 240 days(one year). 13 IMRF Early Retirement Incentive EMPLOYER If employer pays member cost(contributions) • If the employer pays the member cost for the ERI,that payment will be taxable to the member unless the employer passes a resolution specifically stating that the contributions are being made in lieu of the member's contributions,and the member is prohibited from receiving any part of those contributions.(See IMRF Form 6.85,"Suggested Form of Resolution for Employer Pick-Up(Payment)of Contributions for Member's Contributions for Purchase of Additional Service under the IMRF Early Retirement Incentive,"on page 15.) • Please note:IMRF is not suggesting that an employer pay the member's ERI costs.This information is provided in the event such action is considered.If the employer does not pass the pick-up resolution,the employer payment of the member's ERI contributions will be taxable income to the member in the year it is paid and must be included on the member's W-2.If the pick-up resolution is passed,the payment will not be taxable when paid.In either case,the payment is not considered IMRF earnings. • Employer cost savings will be reduced significantly if an employer pays the member cost. ERI invoice for member cost • Once IMRF receives a member's final wages(usually one month after retirement),an ERI invoice will be forwarded to the employer detailing the member's ERI cost. • The employer would submit the net payment for any sick,vacation,and/or personal time and any other payments toward the member cost via govONE EFT pay-by-phone or pay online system and identify the payment as member ERI cost. • After the employer returns(any)payment for the member's cost,if a balance for the member's cost remains,an ERI invoice will be mailed to the member. • After receiving(any)payments from the member,if a balance for the member's cost remains, IMRF will begin deducting the balance from the member's pension in 24 equal installments. Health Insurance Continuation • Public Act 86-1444,effective January 1,1991,allows members entering retirement to continue health insurance coverage through their employer. • Members retiring under ERI will be eligible for continued insurance coverage as early as age 50(Tier 1)and age 57(Tier 2). 14 Cr-m-W�� SUGGESTED RESOLUTION (ORDINANCE) FOR EMPLOYER PICK-UP imI (PAYMENT) OF MEMBER CONTRIBUTIONS REQUIRED FOR PURCHASE OF EXTRA SERVICE UNDER THE IMRF EARLY RETIREMENT INCENTIVE IMRF Form 6.85(12/2005) RESOLUTION (ORDINANCE) Number WHEREAS,Section 7-141.1 of the Illinois Pension Code allows certain IMRF members to purchase additional service credit in order to induce those members to retire early;and WHEREAS,Section 7-141.1 of the Illinois Pension Code requires a member contribution for the early retirement service credit;and WHEREAS,Section 414(a)of the Internal Revenue Code provides that contributions designated as member contributions but picked-up by the employer shall be excluded from to able income until distributed as a refund,annuity or death benefit;and WHEREAS,it is desirable that the member contribu tons required by the IMRF early retirement incentive be paid by the employer. NOW THEREFORE BE IT RESOLVED( RDAINED) v the NAME OF GOVERN NG BOD (BOARD OF COMMISSIONERS.ETC) of the _ __ that the member contributions required by the IMRF early NAME OF UNITOF OVERNMENT retirement incentive be paid by th on behalf of all its employees who retire NAME OF UNIT OF GOVERNMENT under the IMRF early retirement inc ntive. BE IT FURTHER RESOLVED(ORDAINED)that the payment shall be made by a reduction in earnings payments to those employees. BE IT FURTHER RESOLVED(ORDAINED)that the pick-up of member contributions shall be effective for all employees of the who retire under the IMRF early retirement incentive adopted by NAME OF UNIT OF GOVERNMENT the on NAME OF UNIT OF GOVERNMENT DATE OF ERI RESOLUTION(ORDINANCE) CERTIFICATION I, the of the NAME CLERK OR SECRETARY of the County of State of EMPLOYER COUNTY Illinois, do hereby certify that I am the keeper of the books and records of the _ EMPLOYER NAME and that the foregoing is a true and correct copy of resolution(ordinance)number duly RESOLUTION(ORDINANCE)NUMBER adopted by the at a meeting duly convened and held on the day of 20_ BOARD,COUNCIL,ETC SEAL CLERK OR SECRETARY OF THE BOARD Illinois Municipal Retirement Fund Suite 500, 2211 York Road,Oak Brook Illinois 60523-2337 Form 6.85 (12/2005) Service Representatives 8001ASK-IMRF 15 IMRF Early Retirement Incentive EMPLOYER Steps to Adopt and Retire Under IMRF ERI Step 1 Employer requests its IMRF Field Representative to conduct a cost estimate to determine the cost of the ERI. Step 2 Governing Body reviews the cost estimate and determines the adoption of an early retirement incentive is in the best interests of the employer.If an employer is aware—or has reason to be aware—of its future dissolution under state law, the process of adopting ERI differs.Refer to page 4 in this booklet. Step 3 Governing Body passes resolution adopting the IMRF ERI,attaches a copy of the cost estimate,and files the resolution with IMRF.See Limitations on Subsequent ERI Offerings on page 11. Step 4 Employer informs its IMRF members of the adoption of the ERI and the program's effective date. Step 5 Members intending to retire under ERI notify IMRF of their intent by completing Form 5.21,"Member's Notice of Intent to Retire Under the IMRF ERI,"or by calling an IMRF Member Services Representative at 1-800-ASK-IMRF(1-800- 2754673).The Notice of Intent does not guarantee a member's eligibility for the ERI nor for an IMRF pension.Although a member can file the Letter of Intent as late as his or her retirement date,we encourage members to file Form 5.21 as soon as they decide to retire under ERI. Step 6 IMRF acknowledges receipt of the member's intent,to the member and to the employer. Step 7 Employer determines retiring members'termination dates.Employer is to give members 30 days notice of the date.Members may waive the 30-day notice. Step 8 If the employer wants an amortization period of less than 10 years,the employer passes a resolution adopting an amortization period,preferably within six months of the program's effective date. Step 9 Member submits IMRF Form 5.20,"Application for Retirement Annuity,"to IMRF 30 days before termination. Step 10 Employer submits IMRF Form 6.41,"Notice of Termination of IMRF Participation" for member. 16 EMPLOYER 1MRF Early Retirement Incentive Step 11 IMRF begins paying an estimated ERI enhanced pension.If the member is eligible for a refund of contributions(surviving spouse,SLEP,voluntary additional),IMRF notifies member of refund.Members can use their refunds to pay their ERI cost,if desired. Step 12 Employer sends member's final payroll report. Step 13 After final payroll received,IMRF recalculates member's pension to determine final pension amount. Step 14 If member eligible for optional pension(Tier 1 member actual age less than 62), IMRF notifies member of the option. Step 15 IMRF calculates member's cost for the ERI and sends invoice to employer. Step 16 If the employer will pay the member a lump sum for sick,vacation,and/or personal time,the employer must submit the net payment(gross payment less taxes,IMRF contributions,etc.)to IMRF via govONE EFT pay-by-phone or pay online system and identify the payment as member ERI cost. Step 17 After 30 days,IMRF sends invoice to member indicating ERI service purchased, payments received,and balance remaining.Member can return invoice with payment toward his or her cost of the ERI. Step 18 After 30 days have passed or payment received from member,if a balance for member's ERI cost remains,IMRF begins deducting 24 equal installments from member's pension. Step 19 The following March or April,IMRF provides the employer its Advance Rate Notice which details the employer's IMRF rate,including a breakdown for the employer's ERI cost for members who have retired under the ERI. 17 IMRF Early Retirement Incentive EMPLOYER This page intentionally blank. 18 Inside back cover IMRF Early Retirement Incentive Employer Information Illinois Municipal Retirement Fund Oak Brook Office Springfield Regional Counseling Center 2211 York Road 3000 Professional Drive Suite 500 Suite 101 Oak Brook,IL 60523-2337 Springfield, IL 62703 Members and employers should mail all correspondence,forms,payments,etc.to our Oak Brook office(2211 York Road,Suite 500,Oak Brook,IL 60523-2337). ��';�,� Employer Services: 1-800-728-7971 IMRF Member Services Representatives: 1-800-ASK-IMRF(1-800-275-4673) www.imrf.org Rev.04/2015