Note 4PensionsPlan DescriptionAll <strong>of</strong> the ISBI employees participate in the <strong>State</strong> Employees’Retirement System (SERS), which is a pension trust fund in the<strong>State</strong> <strong>of</strong> <strong>Illinois</strong> reporting entity. The SERS is a single-employer,defined benefit, public employee retirement system (PERS) inwhich <strong>State</strong> employees participate, except those covered bythe <strong>State</strong> Universities, Teachers’, General Assembly, andJudges’ Retirement Systems. The financial position andresults <strong>of</strong> operations <strong>of</strong> the SERS for fiscal years <strong>2009</strong> and 2008are included in the <strong>State</strong> <strong>of</strong> <strong>Illinois</strong>’ Comprehensive <strong>Annual</strong>Financial <strong>Report</strong> (CAFR). The SERS also issues a separateCAFR that may be obtained by writing to the SERS, 2101Veterans Parkway, Springfield, IL 62794-9255 or by calling217/785-7202. The <strong>State</strong> <strong>of</strong> <strong>Illinois</strong> CAFR may be obtained bywriting to the <strong>State</strong> Comptroller’s Office, Financial <strong>Report</strong>ingDepartment, 325 West Adams Street, Springfield, IL 62704-1858or by calling 217/782-2053.A summary <strong>of</strong> SERS’ benefit provisions, changes in benefitprovisions, employee eligibility requirements includingeligibility for vesting, and the authority under which benefitprovisions are established, are included as an integral part <strong>of</strong>the SERS’ CAFR. Also included is a discussion <strong>of</strong> employer andemployee obligations to contribute, and the authority underwhich those obligations are established.Funding PolicyISBI pays employer retirement contributions based upon anactuarially determined percentage <strong>of</strong> payroll. For fiscal year<strong>2009</strong> and 2008 the employer contribution rates were 21.049%and 16.561%, respectively. ISBI contributions to SERS forfiscal years <strong>2009</strong> and 2008 were $241,690 and $172,154,respectively, and were equal to the required contributions foreach fiscal year.Effective for pay periods beginning after December 31, 1991,the Board opted to pay the employee portion <strong>of</strong> retirement forISBI employees covered by the <strong>State</strong> Employees’ RetirementSystems. Generally, this pickup <strong>of</strong> employee retirement waspart <strong>of</strong> the budget process and was, in part, a substitute forsalary increases. ISBI contributions to SERS for the employeeportion for fiscal years <strong>2009</strong> and 2008 were $44,104 and$37,225, respectively.with the Department <strong>of</strong> Central Management Services.Substantially all <strong>State</strong> employees become eligible for postemploymentbenefits if they eventually become annuitants <strong>of</strong>one <strong>of</strong> the <strong>State</strong> sponsored pension plans. Health, dental andvision benefits include basic benefits for annuitants under the<strong>State</strong>’s self-insurance plan and insurance contracts currentlyin force. Annuitants may be required to contribute towardshealth, dental and vision benefits with the amount based onfactors such as date <strong>of</strong> retirement, years <strong>of</strong> credited servicewith the <strong>State</strong>, whether the annuitant is covered by Medicare,and whether the annuitant has chosen a managed health careplan. Annuitants who retired prior to January 1, 1998, and whoare vested in the <strong>State</strong> Employees’ Retirement System, do notcontribute toward health, dental and vision benefits. Forannuitants who retired on or after January 1, 1998, theannuitant’s contribution amount is reduced five percent foreach year <strong>of</strong> credited service with the <strong>State</strong> allowing thoseannuitants with twenty or more years <strong>of</strong> credited service tonot have to contribute towards health, dental and visionbenefits. Annuitants also receive life insurance coverageequal to the annual salary <strong>of</strong> the last day <strong>of</strong> employment untilage 60, at which time the benefits become $5,000.The total cost <strong>of</strong> the <strong>State</strong>’s portion <strong>of</strong> health, dental, visionand life insurance benefits <strong>of</strong> all members including postemploymenthealth, dental, vision and life insurance benefits,is recognized as an expenditure by the <strong>State</strong> in the <strong>Illinois</strong>Comprehensive <strong>Annual</strong> Financial <strong>Report</strong>. The <strong>State</strong> financesthe cost on a pay-as-you-go basis. The total costs incurred forhealth, dental, vision and life insurance benefits are notseparated by department <strong>of</strong> component unit for annuitants andtheir dependents nor active employees and their dependents.A summary <strong>of</strong> post-employment benefit provisions, changes inbenefit provisions, employee eligibility requirements includingeligibility for vesting, and the authority under which benefitprovisions are established are included as an integral part <strong>of</strong>the financial statements <strong>of</strong> the Department <strong>of</strong> Healthcare andFamily Services. A copy <strong>of</strong> the financial statements <strong>of</strong> theDepartment <strong>of</strong> Healthcare and Family Services may beobtained by writing to the Department <strong>of</strong> Healthcare andFamily Services, 201 South Grand Ave., Springfield, <strong>Illinois</strong>62763-3838.Post-retirement BenefitsThe <strong>State</strong> provides health, dental, and life insurance benefitsfor retirees and their dependents in a program administeredby the Department <strong>of</strong> Healthcare and Family Services alongILLINOIS STATE BOARD OF INVESTMENT25
NOTES TO FINANCIAL STATEMENTSJUNE 30, <strong>2009</strong> (CONTINUED)Note 5New Governmental Accounting Standards<strong>State</strong>ment No. 51, Accounting and Financial <strong>Report</strong>ing forIntangible Assets, establishes accounting and financialreporting requirements for intangible assets (including certaininternally developed s<strong>of</strong>tware). All intangible assets notspecifically excluded by the scope <strong>of</strong> this <strong>State</strong>ment should beclassified as capital assets. All existing authoritative guidancefor capital assets should be applied to those intangible assets,as applicable. ISBI is required to implement this <strong>State</strong>ment forthe year ending June 30, 2010.<strong>State</strong>ment No. 53, Accounting and Financial <strong>Report</strong>ing forDerivative Instruments, issued June 2008, is effective for ISBIbeginning with its year ending June 30, 2010. This <strong>State</strong>mentaddresses the recognition, measurement, and disclosure <strong>of</strong>information regarding derivative instruments entered into bythe <strong>State</strong> and local governments. Derivative instruments are<strong>of</strong>ten complex financial arrangements used by governments tomanage specific risks or to make investments.ISBI has not currently determined what impact, if any, theseStandards may have on its financial statements.ILLINOIS STATE BOARD OF INVESTMENT26
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