1999 IMRF Comprehensive Annual Financial Report

IntroductionThe increase in member contributions is due to an increase in total member earnings to $3,933 million (Table I).The member contribution rate remained at 4.5 percent of earnings for Regular members, 6.5 percent for Sheriff ’sLaw Enforcement Personnel (SLEP), and 7.5 percent for the optional Elected County Officials (ECO) plan.The increase in employer contributions is the net effect of several factors. Member earnings increased overall by6 percent. This increase, combined with increased enrollment in ECO and higher average SLEP and ECO rates,caused employer contributions to increase. These factors were offset by lower average Regular rates. The averageRegular Plan employer rate decreased to 9.19 percent from 9.64 percent. The average SLEP Plan employer rateincreased to 14.02 percent from 13.94 percent. The average ECO Plan employer contribution rate increased to36.01 percent from the initial rate of 20.0 percent.In 1999, appreciation in the value of investments was $2,389 million. This was a 112 percent increase from the$1,126 million recorded in 1998. Investment income increased by $90 million over 1998. Securities lendingincome net of related expenses was $5.7 million for 1999, an increase over the $5.4 million for 1998. Directinvestment expenses increased from $40.4 million in 1998 to $43.3 million in 1999.The total rate of return for the portfolio in 1999 was 20.93 percent compared to 12.63 percent in 1998. IMRF'sU.S. stock portfolio returned 29.61 percent compared to 21.05 percent for the S&P 500. The U.S. fixed incomeportfolio returned 0.28 percent compared to –0.83 percent for the Lehman Aggregate Index. Our internationalstock portfolio returned 40.17 percent compared to 31.01 percent for the EAFE (Europe, Australia, and Far East)50 Percent Hedged Index. The global fixed income portfolio returned –5.55 percent compared to –4.30 percent forthe Salomon World Government Bond Index. The real estate portfolio returned 2.76 percent compared to 12.76percent for the NCREIF Classic Property Index. The alternative investment portfolio returned 32.60 percent versusa target return of 15.00 percent per annum.When comparing returns it is important to remember that as a pension fund, IMRF’s investment program has avery long time horizon. Some of the longer-term results for the total fund are:PeriodThree yearsFive yearsTen yearsAnnualized returns16.41 percent per year17.27 percent per year12.29 percent per yearThe Investment Section of this report shows investment returns by asset class for 1999 as well as three-, five-, andten-year returns.ExpensesThe expenses paid by IMRF include benefit payments, refunds, and administrative expenses. Expenses for 1999totaled $540.7 million, an increase of $45.6 million over 1998.in millions 1999 1998 Increase/(Decrease)500Expenses (millions) (millions) Amount % Change400Benefits $496.4 $451.5 $ $44.9 9.9%300Refunds 28.1 27.1 1.0 3.7%200100Administrative expenses 16.2 16.5 (0.3) -1.8%019991998$540.7 $495.1 $45.6 9.2%The increase in benefit payments to members and beneficiaries resulted primarily from growth in the number ofannuitants to 69,716 (Table II) page 55.9 Illinois Municipal Retirement Fund