===== PDF PAGE 9 ===== [Extraction: OCR (rendered-page OCR)] CITY OF WEST CHICAGO FINANCE COMMITTEE AGENDA ITEM SUMMARY ITEM TITLE: AGENDA ITEM NUMBER: 4.6.«C. Resolution No. 25-R-0020 — IMRF ERI Program FILE NUMBER: Resolution No. 25-R-0021 — Amortization Schedule COMMITTEE AGENDA DATE: 03/03/2025 COUNCIL AGENDA DATE: 03/17/2025 STAFF REVIEW: SIGNATURE APPROVED BY CITY ADMINISTRATOR: SIGNATURE ITEM SUMMARY: During early conversations about the State’s elimination of the grocery tax, one of the options available to the City to help address the approximately $425,000 shortfall is to approve an early retirement incentive, replacing any vacated positions at salaries/benefits at least 80% of what they are today. While it is clear that this Program will save the City money in the long-run, the amount will not be known until the organization knows who, if anyone, will take advantage of this Program. If the Program is adopted, management will be talking with any eligible employees about the details to gauge interest in participation. Attached is more information about the Program, including a Resolution setting the one-year window at June 1, 2025 through June 1, 2026, as well as a Resolution establishing an amortization schedule; staff is recommending that a ten-year schedule be adopted, with the City Council always able to pay any outstanding amounts earlier. The City approved the same Program in 2002, with six employees taking advantage of the Program at that time, and also with the City paying off its responsibility earlier than the chosen ten-year window. STAFF RECOMMENDATION: Consideration of Resolution Nos. 25-R-0020 and 25-R-0021. COMMITTEE RECOMMENDATION: ===== PDF PAGE 10 ===== [Extraction: OCR (rendered-page OCR)] RESOLUTION NO. 25-R-0020 A RESOLUTION AUTHORIZING THE ACCEPTANCE OF THE IMRF EARLY RETIREMENT INCENTIVE WHEREAS, Section 7-141.1 of the Illinois Pension Code provides that a participating employer may elect to adopt an early retirement incentive program 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 an early retirement incentive program for the City of West Chicago and the additional liability created by the early retirement incentive is estimated to be $2,416,269; and the 10-year amortization cost is estimated to be $3,407,728. WHEREAS, the City Council has revived the cost estimate and determined that the adoption of an early retirement incentive is in the best interests of the City of West Chicago; therefore be it BE IT RESOLVED by the City Council of the City of West Chicago that: (1) The City of West Chicago does hereby adopt the Illinois Municipal Retirement Fund early retirement incentive program as provided in Section 7-141.1 of the Illinois Pension Code. The early retirement incentive program shall take effect on June 1, 2025. (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 City of West Chicago will use its best efforts either to limit the number of retiring employees replaced or to limit the salaries paid to replacement employees. (4) The effective date of each employee’s retirement under this early retirement incentive program shall be set by the City of West Chicago and shall be no earlier than the effective date of the program and no later than one year after 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. ===== PDF PAGE 11 ===== [Extraction: OCR (rendered-page OCR)] (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) The Finance Director shall promptly file a certified copy of this resolution with the Board of Trustees of the Illinois Municipal Retirement Fund. APROVED this 17" day of March 2025. AYES: NAYES: ABSTAIN: ABSENT: Mayor Ruben Pineda ATTEST: Valeria Perez, Executive Office Manager ===== PDF PAGE 12 ===== [Extraction: OCR (rendered-page OCR)] Actuarial Analysis of The Potential Effect of IMRF's Early Retirement Incentive Progam For 00106 - CITY OF WEST CHICAGO (Regular Members) 1 Year Window Beginning 6/1/2025 ===== PDF PAGE 13 ===== [Extraction: OCR (rendered-page OCR)] IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 00106 - CITY OF WEST CHICAGO (Regular Members) Summary of Valuation Results and Input Variables Window Period: 06/01/2025 Through 06/01/2026 EMPLOYEES AFFECTED BY WINDOW * . Presently eligible to retire with full or reduced benefits a. Number 6 b. Annual Payroll $813,445 . Number newly eligible to retire a. Number 3 b. Annual Payroll $341,471 INPUT VARIABLES . Employees presently eligible to retire, who a. Would have retired without this window b. Are induced to retire during this window ** . Employees newly eligible to retire who are induced to retire during window period ** . Total number assumed to retire during window period: (3a) + (3b) + (4) . Total across-the-board pay increase since 12/31/2023 * 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. 2/19/2025 8:17 AM 00106 2 v1.0.7761.20343 s15 ===== PDF PAGE 14 ===== [Extraction: OCR (rendered-page OCR)] IMRF Retirement Incentive 5-Year Window Program Actuarial Analysis for 00106 - CITY OF WEST CHICAGO (Regular Members) Summary of Valuation Results Window Period: 06/01/2025 Through 06/01/2026 IMRF COSTS 1. Unpaid ERI Liabiltity Exists? (See Note Below) 2. Additional Liability Created by 2,416,269 Window 3. Schedule of Increase in Employer Contribution to IMRF based on indicated amortization of liability increase Amortization Years 7 Years 8 Years 9 Years 10 Years First Year 546,690 465,574 407,753 364,490 330,933 304,170 Second Year 560,357 477,213 417,946 373,602 339,206 311,774 Third Year 574,366 489,144 428,395 382,942 347,686 319,568 Fourth Year 588,726 501,372 439,105 392,516 356,379 327,557 Fifth Year 603,444 513,907 450,082 402,329 365,288 335,746 Sixth Year 526,754 461,335 412,387 374,420 344,140 Seventh Year 472,868 422,697 383,781 352,744 Eighth Year 433,264 393,375 361,562 Ninth Year 403,210 370,601 Tenth Year 379,866 Total Estimate Cost 2,873,583 2,973,964 3,077,484 3,184,226 3,294,278 3,407,728 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 1 800 ASK IMRF and ask to speak with Dionne Green, Employer Account Analyst, to request a written confirmation of the current balance. 2/19/2025 8:17 AM 00106 3 v1.0.7761.20343 s15 ===== PDF PAGE 15 ===== [Extraction: OCR (rendered-page OCR)] RESOLUTION NO. 25-R-0021 A RESOLUTION TO ADOPT AMORTIZATION PERIOD FOR IMRF EARLY RETIREMENT INCENTIVE WHEREAS, on March 17, 2025, the City Council of the City of West Chicago adopted Resolution No. 25-R-0020 which established an early retirement incentive through the Illinois Municipal Retirement Fund for its employees; and WHEREAS, Section 7-141.1 of the Illinois Pension Code provides that a participating employer may select an amortization period for the actuarial costs of the incentive which may be no greater than 10 years; and WHEREAS, the City of West Chicago is prohibited from adopting a subsequent incentive until the actuarial costs of the previous programs are paid. BE IT RESOLVED by the City Council of the City of West Chicago that the City of West Chicago does hereby request the Illinois Municipal Retirement Fund to amortize the cost of the incentive over a period of ten years. APPROVED this 17" day of March 2025. AYES: NAYES: ABSTAIN: ABSENT: Mayor Ruben Pineda ATTEST: Valeria Perez, Executive Office Manager ===== PDF PAGE 16 ===== [Extraction: OCR (rendered-page OCR)] EARLY RETIREMENT INCENTIVE Guidelines for Employers Locally funded, financially sound. ===== PDF PAGE 17 ===== [Extraction: OCR (rendered-page OCR)] Table of Contents Features of the IMRF Early Retirement Incentive..............ccccsssssssseseseseseeeeseseseseneeseseneeeseeseneenes 2 Incentive formembers to retirelearl yc... ceecccccteencstecsecrsvessesctosessaresetstsesscacteeeseactuonteserr acer suse 3 Adopting thewB RU re. koccnscccstscststssstscvesterstoesesestocsestsratorstonecncsasngcatteatassetactssravssesegnrnsreatnsnsresentts 3 CostEstimate Requirementirs. eccetereccereten creer cescreceertpete tetra tsstrsiseesste care! onasencnete tacaewecesetrctsre 4 DissolvingsUnitsofiGovernment 1.2 2a iin serases.csrscteccotsevesesnsssasesoetteatuctsusnetenensiecscseesees tensnesezes 5 IMRF Form 6.77, “Suggested Form of Resolution to Adopt IMRF ERI... 6 Informingimemberstofsthe ERM ce ties a csciattsaraslonseserecansecchorsvettestaueessencrcacservenerecaecezae 8 Determining member termination dates. ..............sscssscssesssssesssssscsesceeecesesenceesenseensseseaeacaeeeseceaees 9 Resolution to Adopt Amortization Period ..........c.cccsssseesesesssesescseseseeeeesceneeseneaeseseseeseeeeeenees 10 IMRF Form 6.78, “Suggested Form of Resolution to Adopt Amortization Period........... 11 Limitations on Frequency of Subsequent ERI offerings.............cccscsecssesseseseseeseeesetenseteneeeenees 12 Em ployercosteforthe ERM ccs: csevsrne tacos ranuatentensrsceen Mnesals cass ershesticreeeeceen tert rerttcacesttes 12 If a member has Concurrentiem Ploy ers yeaa eee reece eee ae ane ia ese saan aa snes Seatare ts cnea ses tances cee os 13 Multipletemployerse sete sctcterserirtc arenas uaetee steer tt rectaens reicemlannetetsesteerseumar tr secacenceetes. 13 Paying member costs for the ERI Lump sum payments for sick, vacation, personal tiMe ...........cssecseesesseseeeetenteneeneeeenteneeees 14 If employer pays member cost (Contributions ...........:ccesesseesesseesseseseeseeeetencseeeeneneetensneeneataeees 15 ER linvoicestorsmembericostarecorssctscee ss ttersscees cena ae eanscreatets aeccactae tet easaeealcaserattrscesentee ts 15 Healthiinsurance'continuation cts wt.scceccste ete anet ne ente eerctert estos tes ccsrscetsteratins ssearectoctet ts 15 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.............c.cssssssssssssssssssssssseseseseeeeseeseseaeaceceeaees 16 Stepsito;Adoptiand Retire UndenmPR in, te ernie ecerssecsctsterneetserscestaceertenceccesteteneetrtscres 17 Revised March 2021 ===== PDF PAGE 18 ===== [Extraction: OCR (rendered-page OCR)] 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 | 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 12.) Before an employer can adopt ERI, it must have a cost estimate completed by IMRF. If an employer adopts the program, the ERI applies to all IMRF members, including elected officials participating in IMRF. www.imrf.org IMRF Early Retirement Incentive - Employer 2 ===== PDF PAGE 19 ===== [Extraction: OCR (rendered-page OCR)] 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 3 All IMRF employers can adopt the IMRF ERI, unless the employer is dissolved or considering dissolving. Refer to page 5. 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 4.) If an employer is dissolved or considering dissolving, refer to page 5. 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. IMRF Early Retirement Incentive - Employer www.imrf.org ===== PDF PAGE 20 ===== [Extraction: OCR (rendered-page OCR)] 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 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. 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. 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. www.imrf.org IMRF Early Retirement Incentive - Employer 4 ===== PDF PAGE 21 ===== [Extraction: OCR (rendered-page OCR)] Dissolving units of government ¢ Ifan 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 IMREF assets and obligation - The employer must submit its ERI resolution to IMRF with a request for IMRF Board of Trustees approval. ¢ Ifadissolving 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 successors exist, IMRF will not implement the ERI program. ¢ 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. 5 IMRF Early Retirement Incentive - Employer www.imrf.org ===== PDF PAGE 22 ===== [Extraction: OCR (rendered-page OCR)] pe" SUGGESTED FORM OF RESOLUTION TO PLEASE ENTER agree ADOPT EARLY RETIREMENT INCENTIVE ETpyen RF LD. Namen IMRF Form 6.77 (Rev. 04/2015) See next page for additional ERI information. RESOLUTION Number 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 and the additional liability created by the early retirement incentive EMPLOYER NAME is estimated to be $ ; and the 10-year amortization cost is estimated to be $ WHEREAS, the has reviewed the cost estimate and determined that the adoption of an early BOARD, COUNCIL, ETC. retirement incentive is in the best interests of the ; therefore be it EMPLOYER NAME RESOLVED by the of. that: BOARD, COUNCIL, ETC. EMPLOYER NAME (1) The 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~ _, retirement incentive program shall take effect on DATE (2) In order to help achieve a true cost savings, an employee who retires under the early reti' ver’ -entive program shall lose those incentives if he or she later accepts employment with any IMRF employer in any posit’ ». (Exception: er. yee can hold an elected position if he/she chooses to not participate in IMRF and the pension is not based on any serv. earned in that, sition dus | any term of office.) (3) In order to utilize an early retirement incentive as a budgeting to~” EMPLOYER aod will use its best efforts either to limit the number of retiring employe. replacedo limi salarie- »aid to the re,iave nent employees. (4) The effective date of each employee's retirement u- »rthis ‘rly retir ent ince ve -yram shall be set by and shallben . ‘liert! >‘ crfective date ine program inc'no later than one year after EMPLOYER NAME that effective date; except that the employee m?” =quire tha. he tirem + date set by the empluyr ye no later than the “une 30 next occurring after the effective date of the program %. .earlie ha: veda. pon which the €71p:9,'ec qualifies fe, rourererit. (5) To be eligible for the early retirement inc tiv ‘nder iis tion, ..¢ employe? :nist save attaines age 5° and have at least 20 years of creditable service by his or retirement te;< ' (6) As of the date of the adopt av is Resoh 1n, th and ~_1s( ) ~~ isnot() aware of the BOARL, sOUNCIL, ETC, pending dissolution °” EM 2% wAML (Note: Fai re to disclose ap:_-ntial dissovution sic! voic tuis Resolutic.. It the Board, Council, etc. is aware of the pending dissolt >. 07” Sen ‘oyer, then the sucezssc. unit(s) of . scal :overnment must approve the adoption of the early retirement incentive «order fe this ‘esolutior te > eft 2ctive. If ther2 is 1.0 successor, submit your resolution for approval from the IMRF Board of Trustees.) (7) The > \ehall promptl; “le a certified copy of this resolution (ordinance) with the CLE -.. SECRETARY. Board of Trustees of the Illinois Mu “ic ca tetirement Funa CERTIFICATION I, the of the NAME CLERK OR SECRETARY of the County of , State of Illinois, do hereby EMPLOYER NAME COUNTY certify that | am the keeper of the books and records of the and that the foregoing is a true and EMPLOYER NAME correct copy of a resolution (ordinance) duly adopted by the. at a meeting ORDINANCE BOARD, COUNCIL, ETC. duly convened and held on the day of , 20. 5 If applicable, | 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 EMPLOYER NAME 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 Only Phone: 1-800-728-7971 Member Services Representatives: 4-800-ASK-IMRF (1-800-275-4673) Fax: (630) 706-4289 IMRF Form 6.77 (Rev. 04/2015) www.imrf.org ===== PDF PAGE 23 ===== [Extraction: OCR (rendered-page OCR)] 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 complete explanation of the ERI program and employer responsibilities before passing an ERI resolution. The booklet can be found at www.imrf.org. You may request a copy of this booklet from IMRF by calling our Employer Services Representatives at 1-800-728-7971. ERI cost estimates When an employer submits the ERI resolution to IMRF, it should include a copy of th ust estimate for the period of the adopted ERI. * Contact your IMRF Field Representative to request a cost estimate. Your local Field -sentative will be able to calculate the annual increased pension costs. The cost estimate wil completed at: ‘charge to th” employer. + Ifan employer submits the ERI resolution without a cos*” aman. — IMRF will not implement the program, and — The employer will need to both conduct the:coste. mate ane doptas ond -ulution. Dissolutions * Ifanemployer is dissolving and . ?Fasse .an ‘abilit, ‘will be transferre drove the ERI.A ccov or the success 9r \n.t’s resolution aporoving the | ¢I mus >.avail ‘¢ to IMF upon rec,uest. dlore than one suc sur unit 01 -vernmeni —the cissolving emplo ‘er 1. ist provide the ERI Cost Study to each.-2>essor, 1d a majority of the succe ssurs must f Trustee approval when no successors exist, IMRF will not implement the ERI program. * If MRF is unaware that 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 ERI—less 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 ERI. IMRF 2211 York Road Suite 500 Oak Brook, IL 60523-2337 Employer Only Phone: 1-800-728-7971 Member Services Representatives: 1-800-ASK-IMRF (1-800-275-4673) Fax: (630) 706-4289 IMRF Form 6.77 (Rev. 04/2015) www.imrf.org ===== PDF PAGE 24 ===== [Extraction: OCR (rendered-page OCR)] Informing members of the ERI 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 Employer IMRF Early Retirement Incentive.” 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. 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. www.imrf.org IMRF Early Retirement Incentive - Employer 8 ===== PDF PAGE 25 ===== [Extraction: OCR (rendered-page OCR)] 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, 2019 Termination date can be: September 30, 2019, through September 30, 2020 * Ifamember requests to retire before July 1 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. 9 IMRF Early Retirement Incentive - Employer www.imrf.org ===== PDF PAGE 26 ===== [Extraction: OCR (rendered-page OCR)] 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 12 for detailed information on employer costs.) * Anamortization 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. + fan 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. www.imrf.org IMRF Early Retirement Incentive - Employer 10 ===== PDF PAGE 27 ===== [Extraction: OCR (rendered-page OCR)] YZ SUGGESTED FORM OF RESOLUTION TO ADOPT AMORTIZATION PERIOD FOR IMRF EARLY RETIREMENT INCENTIVE IMRF Form 6.78 (7/2003) PLEASE ENTER Employer IMRF |.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 participating employer m2" >lect an amortization period for the actuarial costs of the incentive which may be no greater than 10 years; and, WHEREAS, is prohibited from ado, %9 7° .sSequent incentive until EMPLOYER NAME the actuarial costs of the previous programs are paid. RESOLVED (ORDAINED) by the of VA Wet BOARD, COUNCIL, ./LOYER NAME the does € byre the Illinois Murucipal Retirere at und to amortize the cost EMPLOYER NAME of the incentive over a period of__.»"_».vears. NUMB ?° CERTIFICATION A NY I, We Ui Sa =, the of the AME CLERK OR SECRETARY -\ "EAN oof the County of : EMPIOME? NAME COUNTY State of Illinois, do hereb zeny that | am, €2p.3r’of the books and records of the and EMPLOYER NAME that the foregoing is a true and co:ect copy of a resolution (ordinance) duly adopted by the at BOARD, COUNCIL, ETC. a meeting duly convened and held on the day of , 20. 5 SEAL CLERK OR SECRETARY OF THE BOARD IMRF Suite 500, 2211 York Road, Oak Brook Illinois 60523-2337 Employer Only Phone: 1-800-728-7971 Member Services Representatives: 1-800-ASK-IMRF (1-800-275-4673) www.imrf.org IMRF Form 6.78 (Rev. 07/2003) ===== PDF PAGE 28 ===== [Extraction: OCR (rendered-page OCR)] Limitations on frequency of subsequent ERI offerings * Anemployer cannot adopt later ERI programs until the cost of the previous ERI is paid in full. ¢ Anemployer 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—2019 information sent to the actuary in 2020 is used to determine 2021 rates. If a member retires under ERI in 2019, the employer does not begin paying its ERI costs until 2021. * 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. www.imrf.org IMRF Early Retirement Incentive - Employer 12 ===== PDF PAGE 29 ===== [Extraction: OCR (rendered-page OCR)] 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. 13 IMRF Early Retirement Incentive - Employer www.imrf.org ===== PDF PAGE 30 ===== [Extraction: OCR (rendered-page OCR)] 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). www.imrf.org IMRF Early Retirement Incentive - Employer 14 ===== PDF PAGE 31 ===== [Extraction: OCR (rendered-page OCR)] If employer pays member cost (contributions) * Ifthe 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 16.] * 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 * Illinois law 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). 15 IMRF Early Retirement Incentive - Employer www.imrf.org ===== PDF PAGE 32 ===== [Extraction: OCR (rendered-page OCR)] pe N\"Z SUGGESTED RESOLUTION (ORDINANCE) FOR EMPLOYER PICK-UP Pre (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 taxable income until distributed as a refund, annuity or death benefit; and WHEREAS, it is desirable that the member contributions required by the IMRF ea. retirement incentive be paid by the employer. NOW THEREFORE BE IT RESOLVED (ORDAINED) by the ‘SOF. YERNING BODY (t ‘RO vOMMISSIONERS, ETC.) of the that t| member ntrib. ons rec ed by the inf eurly NAME OF UNIT OF GOVERNMENT retirement incentive be paid by the 0. vehalf of a'l ‘ts amployees who retire NAME OF UNIT =. VERN: NT under the IMRF early retirement incentive. BE IT FURTHER RESOLVE ‘“°RDAINE \th. the oayn at shall be made oy a reduction in 2arnings payments to those employees. BEIT FURTH 2. OLVEL OT an) tr at the pick--'7 of niember cortr be'ions shall be effective for all employees of the wt.c- rete under th. IMrt= early retirement incentive adopted by NAME Ur unif OF GOV (NM T the f on NAME OF UNIT UF GOVERNMENT LATE OF ERI RESOLUTION (ORDINANCE) CERTIFICATION Il, the of the NAME CLERK OR SECRETARY of the County of , State of EMPLOYER COUNTY Illinois, do hereby certify that | 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 800/ASK-IMRF ===== PDF PAGE 33 ===== [Extraction: OCR (rendered-page OCR)] Steps to Adopt and Retire Under IMRF ERI Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 17 Employer requests its IMRF Field Representative to conduct a cost estimate to determine the cost of the ERI. Governing Body reviews the cost estimate and determines the adoption of an early retirement incentive is in the best interests of the employer. Jf 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 5 in this booklet. 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 12. Employer informs its IMRF members of the adoption of the ERI and the program’s effective date. 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 (275-4673). 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. IMRF acknowledges receipt of the member’s intent, to the member and to the employer. Employer determines retiring members’ termination dates. Employer is to give members 30 days notice of the date. Members may waive the 30-day notice. 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. Member submits IMRF Form 5.20, “Application for Retirement Annuity,” to IMRF 30 days before termination. IMRF Early Retirement Incentive - Employer www.imrf.org ===== PDF PAGE 34 ===== [Extraction: OCR (rendered-page OCR)] Step 10 Employer submits IMRF Form 6.41, “Notice of Termination of IMRF Participation” for member. 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 Contributions), 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 | 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. www.imrf.org IMRF Early Retirement Incentive - Employer 18 ===== PDF PAGE 35 ===== [Extraction: OCR (rendered-page OCR)] Oak Brook Office 2211 York Rd. Suite 500 Oak Brook, IL 60523-2337 Springfield Regional Counseling Center 3000 Professional Dr. Suite 101 Springfield, IL 62703 Dedicated Employer Line: 1-800-728-7971 www.imrf.org Members and employers should mail all correspondence, forms, payments, etc. to our Oak Brook Office (2211 York Rd., Ste. 500, Oak Brook, IL 60523-2337). ===== PDF PAGE 36 ===== [Extraction: OCR (rendered-page OCR)] RWB 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 ifthe 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: e Number of eligible members e Number of members electing to retire under the ERI e —Employer’s re-staffing plans e 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, 2022, 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 2022, the cost for ERI will be first reflected in your 2024 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 Tier | 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. These ERI requirements apply to regular Tier 1 IMRF members, Sheriff's Law Enforcement Personnel (SLEP) members, and Elected County Officials (ECO). A Tier 2 member must be at least age 57 years old and have 20 or more years of IMRF service credit by their date of retirement. 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. 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.imrf.org. ===== PDF PAGE 37 ===== [Extraction: OCR (rendered-page OCR)] NZ 2211 York Road, Suite 500 Oak Brook, IL 60523-2337 1-800-728-7971 — www.imrf.org 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, 2022 Member files Notice of Intent by retirement date* Effective date of ERI program. ......... December 31, 2022 Last eligible termination date: December 31, 2023 * 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. # Ifa 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 Employer 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 Employer 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.imrf.org. Your IMRF Employer Representative is also available to meet with your employees to discuss the ERI program. Please contact your Employer 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. Contact IMRF by Secure Message or call 1-800-728-7971, IMRF’s employer number, to request a written confirmation of the current balance.