1999 IMRF Comprehensive Annual Financial Report

Introductiond. Tax Deferred Payroll Deduction Program (TPDP)Based on legislation passed in 1998 and with the cooperation of participating employers, we were able toimplement a program whereby active members may purchase past service credits through payroll deductions on atax deferred basis. Through the end of 1999, more than 700 members have taken advantage of this program.e. Changes to the Elected County Officials Plan (ECO)The General Assembly passed legislation in 1999, which was signed into law by the Governor in 2000, thatchanges provisions of the Elected County Officials Plan (ECO). The changes are:• The ECO benefit formula is limited to service in an elected county office.• The final rate of earnings is changed from the last salary to a four-year average calculated separately for eachoffice held.• Eight years of service in each office is required to qualify for an ECO formula.• Counties may opt out of the ECO Plan, prospectively.f. Investment ActivitiesThe Board of Trustees, consultants, and IMRF staff review the asset allocation annually. By diversifyinginvestment type (stocks, fixed income, real estate, etc.), region (domestic, international, global, etc.) andmanagement style (growth, value, small, medium, or large capitalization, etc.), we try to improve expected longtermreturns while maintaining an acceptable level of risk.Major investment activities for the year include:• Retained Investment Counselors of Maryland to manage a small capitalization value portfolio.• Retained Jacobs Levy Equity Management to manage a structured growth equity portfolio.• Retained NewBridge Partners to manage a large-capitalization growth equity portfolio.• Retained Northern Trust Quantitative Advisors to manage an S&P/BARRA Value Index portfolio.• Retained Northern Trust Quantitative Advisors to manage an EAFE Index portfolio.• Retained Oak Associates to manage a large capitalization growth equity portfolio.• Sold the Meridian Industrial Park in Aurora, Illinois.• Sold the Fleetway House and Friary Court office buildings in London.• Sold the Old Square shopping center in Bristol, U.K.Major investment activities occurring during the beginning of 2000 included:• Retained Wellington Management Company to manage a domestic fixed-income portfolio.• Retained BlackRock Inc. to manage an enhanced fixed-income index portfolio.g. Full FundingAfter years of striving to achieve full funding, IMRF achieved that goal in aggregate. The overfunding is a resultof strong investment returns over the last 10 years. Out of the over 3,000 rate groups, 56 percent have assets thatequal or exceed their actuarial liabilities. This happy event has posed new challenges unforeseen by the creatorsof IMRF in 1939. Our challenge now is to maintain both stable contribution rates and full funding of pensionbenefits without creating unnecessary financial burdens on employers. In March 1999 the Board established anew policy for determining employer contribution rates for fully funded employers. The policy considers thelevel of overfunding and the size of the employer. For most employers, any overfunded amounts are amortizedover a 10-year period. Large overfunded employers may choose a period shorter than 10 years. This policy wasimplemented with the 2000 employer rates.11 Illinois Municipal Retirement Fund