Section 6 - IMRF

Illinois Municipal Retirement Fund Member Accounts / Past Service / Employer Resolutions / SECTION 6
i. Employer costs
The cost of military leave to the employer equals the difference between the value of the increased
benefit to the member and the contributions paid by the member. Therefore, the eventual employer
cost is dependent upon the member’s benefit and the member’s payment. This can be expressed as
follows:
Estimated cost for the increase in member’s benefit
Less: Member total cost for military leave
Equals: Estimated employer cost (b)
j. Estimated cost for the increase in member’s benefit
The exact increase in the member’s benefit cannot be determined until the member retires. To
calculate the exact amount IMRF must know:
1. The age of the member at retirement
2. The amount of service the member has upon retirement
3. The amount of the member’s final salary
4. Whether the member has an eligible spouse
IMRF developed guidelines for estimating the costs for the increase in member’s benefit if the
member purchased two years of military service. Multiply the member’s current salary times the cost
factor to estimate the total cost for the increase:
Member Age When
Purchasing the Service
Increase in Member’s Benefit
Age Based Cost Factor
Less than 35 22%
35 to 40 29%
41 to 45 37%
46 to 50 47%
51 to 55 60%
56 to 62 55%
63 to 67 50%
68 to 73 45%
k. Estimated employer cost
The difference between the increase in the member’s benefit and the member’s cost is the employer
cost. The employer cost is paid through future employer rates.
l. Examples of member and employer costs
Assume an employer has three eligible members with an annual increase in payroll of 4%. The chart below shows
their current and starting salaries, years of service credit and their member costs for purchasing two years of military
service:
January 2014 Page 247