Eliminating Credit Card Debt from Divorce by ilu15146


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									                                                                                                              Vol. 14, No.3
Illinois Municipal Retirement Fund Employee Member Edition                                                    Summer 1999

Remember this key part of your financial planning
Have you considered health insurance?
Melanie works for an IMRF employer and is 57 years old.       Two different laws
Her 66-year-old husband retired last year. Melanie plans      Understand that these two laws were written at different
to retire when she turns 60. She will receive an IMRF         times, by different governmental bodies. COBRA is federal
pension. Melanie and her husband have been planning           legislation covering health insurance continuation and
for their retirement for many years. For example, they:       applies to employers with 20 or more employees. Public Act
  • Contributed the maximum annual amounts to                 86-1444 is Illinois legislation covering health insurance
     their employer-sponsored deferred compensation           continuation and applies to most,but not all,IMRF employers
     savings plans [457 or 403(b)]                            who provide group health insurance for active employees.
                                                                 One law is not designed to make up for the deficiencies
 • Worked at eliminating credit
                                                                                    of the other. Although your cost may
   card debt
                                                                                    be identical under both options, a
 • Paid extra toward their home                                                     major difference between them
   mortgage when possible and                                                       exists: the length of time coverage is
   plan to pay it off over the next                                                 provided. Also, you must choose at
   three years                                                                      retirement which law you will be
                                                                                    covered by. Once the time to make
What have they forgotten?
                                                                                    your choice is past, you cannot
           elanie has planned for very

M         important aspects of her
        retirement, but she may
have forgotten one of the most
                                                                                    change your mind.

                                                                                     Continuing under COBRA
                                                                                    Under federal law, most employers
important—health insurance.
                                                                                    must allow you to continue your
   If you plan to retire before age 65,
                                                                                    insurance for a minimum of 18
you will need to find coverage and
                                                                                    months after you retire.
budget for premiums. One option
                                                                                       If you choose health insurance
is purchasing an individual health
                                                                                    continuation under COBRA, you can
insurance policy. But the cost is likely
                                                                                    continue the
to be so expensive that most of us
                                                                                    insurance for
could not afford an individual policy—especially when                                                   In This Issue:
                                                              18 months or until you reach age 65
premiums are based on age and health status.
                                                              (Medicare age if earlier). When you
   Another solution may be health insurance continuation.                                               page one
                                                              become eligible for Medicare, you are     Have you considered
Federal and state legislation may require your employer to
                                                              no longer eligible for federal health     health insurance?
continue your health insurance.To learn more, you should
                                                              insurance continuation. However, if       page two
ask your employer the following questions:
                                                              you are already eligible for Medicare     Executive Director
 • Can I continue my group health insurance once I retire?    when you stop working, you can            Looking back at 1998
                                                              continue the insurance for 18 months.
 • If I can continue it, what benefits will be provided and                                             page three
                                                                 However, with COBRA, certain
   for how long?                                                                                        Trustee Corner
                                                              “qualifying events”allow your spouse      Legislative News
 • Can I continue coverage for my dependents?                 and dependent children to extend
                                                              the health insurance for an additional    pages four and five
 • How much will the insurance cost?                                                                    Annual Financial Report ‘98
                                                              18 months. One such qualifying
   As you make plans for your own retirement, you should      event is when the covered employee        page six
ask your employer if you are eligible for health insurance    qualifies for Medicare after COBRA        Workshop schedule
continuation under COBRA (federal legislation), or under      continuation began. Even though
                                                                                                        page seven
Public Act 86-1444 (Illinois legislation), or under both.     Continue to page 8                        New Mini workshops
                                            ach Spring, IMRF        Tax-Deferred Payroll Deduction Program (TPDP)

                                  E       compiles its Annual
                                          Financial Report.
                                  During this process, we
                                                                    New legislation passed in 1998 allows IMRF members to
                                                                    purchase service credit using a tax-deferred payroll
                                                                    deduction.This program can be used to reinstate refunds or
                                  review the previous year and      purchase service credit available under the Pension Code.
                                  assess IMRF’s financial situa-    Members are informed about the program when they
                                  tion. The article on pages 4      receive the cost estimate for their service. IRS regulations
                                  and 5 features financial infor-   require that the member sign an irrevocable agreement
                                  mation from IMRF’s 1998           committing to the payroll deductions in order to receive
                                  Annual Report and provides        the tax deferral.
                                  details about IMRF’s net asset
                                  growth, investment portfolio,     Military Service Credit
         Robert L. Cusma         and benefit payments.We are        1997 legislation allowed members who served in the U.S.
      IMRF Executive Director    pleased to share with you          armed forces to purchase up to 24 months of military
                                 that IMRF’s net assets contin-     service credit in IMRF. This program is optional for each
    ue to grow and have reached an asset base of $13.1 billion.     employer. Members must pay member contributions, a
       While compiling the Annual Report, we also have the          portion of the employer cost, and interest. Over 4,500
    chance to review events and accomplishments for the             members have applied for military service credit since the
    previous year.The following list highlights a few of IMRF’s     legislation was enacted.
    many 1998 achievements:
                                                                    Qualified Illinois Domestic Relations Orders (QILDRO)
    Year 2000 (Y2K)                                                 The General Assembly passed legislation allowing pension
    IMRF has been preparing for the year 2000 and its potential     benefits to be divided between divorced spouses.
    problems for computer systems for many years. When we           Previously, anti-alienation requirements prohibited IMRF
    rewrote our wage reporting and benefit processing               pension benefits from being divided as part of a divorce
    computer systems earlier this decade, we made sure the          property settlement.This legislation took effect July 1, 1999.
    new systems could handle dates after 1999. We have been
    systematically replacing computer equipment that cannot         Certificate of Achievement—Excellence in Financial Reporting
    handle these dates. In December 1998, we tested our             The Government Finance Officers Association of the United
    systems and discovered a few minor problems which have          States and Canada (GFOA) awarded IMRF a Certificate of
    been remedied.We will continue with further testing but, as     Achievement for Excellence in Financial Reporting for its
    of now, all of our internal systems are Y2K compliant.          comprehensive annual financial report for the fiscal year
                                                                    ended December 31, 1997. IMRF has received a Certificate
    Board of Trustees                                               of Achievement for the last eighteen consecutive years
    John Lotus Novak, DuPage County Treasurer, was elected as       (fiscal years 1980-1997). v
    an Executive Trustee. His term expires December 2003.

    IMRF’s web page, www.imrf.org, has been on-line since
    mid-1997. Among the services available to users of the web
    page is the ability to download forms and publications. In
    1999, a simple pension estimator was added. This allows                I M R F website
    members to do a rough estimate of future pension benefits
    on-line. One exciting service that started June 1999 is
    employer access to some IMRF records via the Internet.To
    start, employers with appropriate security will be able to
    check their employer rates, their resolutions filed with
    IMRF, and the receipt of their payroll reports.

Election Schedule Approved
           MRF Board of Trustees approved the schedule below at the May Board meeting for the 1999 Employee Trustee

I      election. On June 30, 1999, a General Memorandum was mailed to IMRF employers announcing the employee
       trustee election. Included in the mailing was an explanation of the nominating procedures for an employee trustee.
Members can also contact IMRF directly for a nominating petition and instructions. The petition must have at least 350
signatures of IMRF members who must have participated in IMRF during July 1999. This includes members on seasonal leave.
Election Timetable                                              November 5
July 30 through September 15                                    Ballots for the employee trustee election will be mailed to
Nominating petitions for employee trustee candidates will       all members who participated in IMRF in September 1999.
be accepted in the IMRF office located in Oak Brook.
                                                                December 6
September 24                                                    Last day voted ballots for the employee trustee election will
Nominees for employee trustee will be certified at the          be accepted. Any envelopes received after this date will not
IMRF Board of Trustee’s September Board meeting.                be opened and the enclosed ballot will not be counted.
September 27                                                    December 17
Letters will be mailed to all candidates who submitted          Results of the employee trustee election will be certified at
nominating petitions informing them of whether or not           the December IMRF Board of Trustee meeting. Written
their names will appear on the ballot.                          notice of certification will be mailed to all candidates. v

Legislative News
The Illinois General Assembly adjourned in late May             Benefit (“cost") bill, House Bill 2074 & Senate Bill 662 No
without any IMRF legislation being approved. IMRF’s             action was taken on this bill which contained proposals to
Legislative Liaison Nick Yelverton reports on the status of     increase the retiree lump sum death benefit from $3,000 to
IMRF legislation at the time the General Assembly               $5,000. It would also eliminate the pre-existing condition
adjourned:                                                      requirement for temporary disability benefits.

Senate Bill 100 & House Bill 672 will be the subject of         Elected County Official (ECO) bill, House Bill 1658 & Senate
summer negotiations. This bill contained a proposal for         Bill 661 was incorporated into Senate Bill 1103 and awaits
IMRF to administer a health insurance program for retired       action by the Senate in its fall veto session. It contains
members and their dependents using a comprehensive              proposals that will reduce the cost of the ECO plan to
approach to retiree health insurance. This proposal would       employers. Proposals include granting ECO service credit
require active IMRF members to contribute 1% of salary          only for service earned in an elected county position,
toward their retiree health insurance and employers would       requiring eight years in an elected county position to earn
contribute 1.25% of payroll.                                    ECO benefits, and changing the ECO final rate of earnings
                                                                from the last salary to a four-year average. The legislation
Administrative (“no cost”) bill, House Bill 1651 was approved   contains language that allows counties to “opt out” of the
by the Pension Laws Commission but was not approved by          program.This language is identical to Senate Bill 1219 that
the General Assembly. It would eliminate the requirement        was approved by the Pension Laws Commission.
that a member submit Form 5.21,“Notice of Intent to Retire
Under Employer’s IMRF Early Retirement Incentive” within        Annuitant Trustee bill, House Bill 1943 was not approved for
60 days of the beginning of the employer’s ERI program.         consideration by the Pension Laws Commission. It contained
(IMRF will still require submission of the form prior to a      a proposal that will allow the IMRF Annuitant Trustee to vote
member’s termination date because in it you acknowledge         on all Board actions. Currently, the Annuitant Trustee cannot
that you understand the conditions of retiring under ERI,       vote. v
e.g., financial penalties for working for any IMRF employer
after ERI retirement.)

    Annual Financial Report ‘98
                our IMRF Board of Trustees       1998 Revenues by Source
    Y          is charged with the
            responsibility of safely invest-
    ing IMRF’s assets at the least cost while

    protecting those assets against erosion
    from inflation. In other words, IMRF’s
    Board of Trustees is obligated to grow
    and protect IMRF’s assets so funds will              Employers
    be available when you retire.                           18.6%
    Net assets grow
    Revenues needed to fund benefits are
    accumulated through employer and
    member contributions and returns on
    invested funds. In 1998, the IMRF’s
    financial position improved as the
    result of strong investment returns.
    IMRF’s investment return provided            fund assets in order to minimize the     expenses. Benefits continue to
    71.7 percent of total additions to           risk of large losses.                    account for 97 percent of IMRF
    IMRF’s net assets. Employers contrib-                                                 expenditures.
    uted 18.6 percent of the revenues and        Growing reserves                            In 1998, these benefits increased
    members contributed 9.7 percent of           The money used to meet current and       from $410.5 million to $451.5 million.
    the revenues.                                future benefit obligations to retirees   The increase came about due to
                                                 and beneficiaries comes from the         growth in the number of retirees (to
    Investing contributions                      excess of revenues over expenses.        66,272) and to higher average
    As these figures show, one of the            Additions to IMRF’s net assets of        retirement and disability payments.
    Board’s most important responsibil-          $1,970.7 million exceeded deductions        IMRF members can consider IMRF’s
    ities is the investment of member and        of $495.1 million by $1,475.6 million.   net asset base as assets irrevocably
    employer contributions. In 1998              This addition brought the IMRF’s net     committed to the payment of your
    IMRF’s investment portfolio earned           asset base to $13.1 billion.             pension.
    12.63 percent.                                                                           Visit IMRF Online (www.imrf.org/
        IMRF continues to follow an              Rise in benefit payments                 pubs/annualrpt.pdf) to view an online
    investment plan of continued growth          Expenses paid by IMRF include benefit    version of IMRF’s Annual Financial
    and diversity. IMRF’s plan is to diversify   payments, refunds, and administrative    Report. v

      IMRF Net Assets as of December 31, 1998 (in millions)
       ASSETS                                        Millions           RESERVES                                  Millions
       Cash                                         $     3.0           Member (contributions
       Receivables                                      160.8               and interest)                       $ 2,086.7
       Investments (Fair Value)                     12,975.8            Annuitant (amount required
       Prepaid Expenses                                  24.4               to pay pensions granted)              4,485.7
       Equipment and Fixtures                             1.5           Employer (amount accumulated
         Total Assets                               13,165.5                to pay benefits to be
       Less Payables                                     79.9               awarded in the future)                6,513.2
       Net Assets                                 $ 13,085.6            Total Reserves                         $ 13,085.6

                                                              Changes in IMRF Net Assets (in millions)
1998 Revenues by Application
                                                                                                  1998        1997
                   Death 1.1%
                                 Administrative 0.8%          ADDITIONS
             Refunds 1.4%
                                   Disability 0.4%              Member IMRF contributions $ 190.3          $ 168.5
                                                                Employer IMRF contributions       364.2       336.3
       Annuities                                                Income from Investments         1,416.2     1,550.4
                                                                   Total additions            $ 1,970.7   $ 2,055.2

                                                                Benefits                       $ 451.5     $ 410.5
                                                                Refunds                            27.1        26.1
       Reserves                                                 Administrative expenses            16.5        14.7
                                                                   Total deductions               495.1       451.3
                                                                Net increase                  $ 1,475.6   $ 1,603.9

 How do you compare?                                          NET ASSETS HELD IN TRUST FOR PENSION BENEFITS
 Average age of an active member: 44.3 years.                       Beginning of year          11,610.0    10,006.1
 Average years of service for an IMRF member: 8.2 years.
                                                                    End of year               $13,085.6   $11,610.0
 In fiscal year 1998, 150,428 IMRF active members worked
    for 2,744 IMRF employers.
 Of these members, 57,181 are male and 93,247 are female.
 Service for these members:
    Under 1 year ........21,503
    1 to 4 years ..........46,464     10 to 14 years ..........22,291
    5 to 9 years ..........32,060     15 years and over ....28,110

 Investment Portfolio Summary as of December 31 (in millions)
                                         1998                              1997
                             Market Percent of Total           Market      Percent of Total
      Type                      Value     Market Value          Value       Market Value
 U.S. Bonds                 $ 3456.7          26.6%          $ 3,192.3            27.6%
    Tuesday,August 24, 1999              Saturday, September 18, 1999         Tuesday & Wednesday
    River Trails Park District    IR     Gladys Fox Museum             PP     October 12 & 13, 1999          TA
    Weiss Community Center               231 9th Street                       Village of Westmont Police Dept.
    1500 E. Euclid Avenue                Lockport, IL                         Westmont, IL
    Meeting Room                         9:00 am - 12:00 noon MINI Workshop   7:00 pm - 9:30 pm Workshop
    Prospect Heights, IL
    9:00 am - 12:00 noon MINI Workshop   Wednesday, September 22, 1999        Tuesday, October 19, 1999
                                         Springfield School District 186 BP   Best Western—Cunningham Ave. BP
    Monday,August 30, 1999               Board Room                           (Intersection of I-74 & Rte.45)
    Roselle Park District        TA      1900 West Monroe                     Urbana, IL
    555 W. Bryn Mawr                     Springfield, IL                      6:30 pm - 9:30 pm MINI Workshop
    Roselle, IL                          6:30 pm - 9:30 pm MINI Workshop
    9:30 am - 4:30 pm Workshop                                                Thursday, October 28, 1999
                                         Wednesday, September 29, 1999        Barrington Area Library District IR
    Tuesday,August 31, 1999              Metropolitan Airport Authority JR    505 N. Northwest Highway
    Wilmette Public Library       IR     Quad City Airport                    1st Floor Meeting Room
    1242 Wilmette                        2200 69th Avenue                     Barrington, IL
    Auditorium                           Moline, IL                           9:30 am - 12:00 noon MINI Workshop
    Wilmette, IL                         9:00 am - 12:00 noon MINI Workshop
    9:00 am - 12:00 noon MINI Workshop                                        Tuesday, November 16, 1999
                                         Saturday, October 2, 1999      CG    Village of East Alton          BP
    Saturday, September 11, 1999         McDonough County Health Dept.        Safety Building—across parking
    Palos Township                PP     505 East Jackson (Route 67 East)     lot from Village Hall
    10802 S. Roberts Road                Macomb, IL                           West Main
    Palos Hills, IL                      9:30 am - 4:00 pm Workshop           East Alton, IL
    9:00 am - 12:00 noon MINI Workshop                                        6:30 pm - 9:30 pm MINI Workshop
                                         Saturday, October 9, 1999
    Wednesday, September 15, 1999        Village of East Hazel Crest   PP
    DuPage Library System         JR     1904 W. 174th Street
    127 South First Street               East Hazel Crest, IL
    Geneva, IL                           9:00 am - 12:00 noon MINI Workshop
    9:00 am - 4:00 pm Workshop

Planning to retire in 1999 or 2000?
            hen you should attend one of IMRF’s new “Mini”      begin your retirement planning process today—regardless

T       workshops—designed for IMRF members who plan
        to retire during the 1999 or 2000 calendar year.
   The new half-day “Mini” workshops feature Social
                                                                of your age or the number of years away from retirement.
                                                                   “Planning for the Future” workshops feature speakers on
                                                                estate planning and financial planning, as well as IMRF and
Security and IMRF representatives who will outline the          Social Security. Workshop attendees receive a 100+ page
steps retiring members must take during the retirement          workbook which includes tools such as worksheets for
application process. Speakers also detail what retiring         calculating your net worth and current expenses.
members should expect once the process begins.                     At left is the late summer and fall schedule for 1999
   IMRF representatives will go over IMRF forms and             which includes both “Mini” and “Planning for the Future”
documents, as well the different health insurance               workshops. If a workshop isn’t listed in your area, check
options retiring members may wish to consider. Be sure          future issues of Fundamentals for additional dates.
to read this issue’s cover story on page 1 to learn more           There is no charge for IMRF members and spouses to
about health insurance continuation                             attend the workshops. Dates, locations, and the registration
   If your retirement is further down the road (that is, not    form are listed below. Use this registration form for both the
during the next two years), you should consider attending       “Mini” and regular workshops. One-day sessions are
IMRF’s “Planning for the Future” workshops.                     scheduled for an entire day. Evening sessions are two half
   These popular IMRF workshops are geared to help you          sessions scheduled for two evenings. v

          You will receive a confirmation of your registration and directions to the workshop location
                               approximately 10 days prior to the workshop date.
                 Please plan on arriving one-half hour prior to the workshop start time.
                                         Spouses are encouraged to attend.
     £                                £                                 £                                 £

       IMRF 1999 Retirement Planning Workshop Registration
      Please mail your completed registration no later than two weeks prior to the workshop to:
                       IMRF, Suite 500, 2211 York Rd., Oak Brook, IL 60523-2374.

         WORKSHOP DATE                   WORKSHOP LOCATION (CITY)

         NAME                                                            DAY TIME PHONE
                                                                         (        )

         CITY                            ZIP                             NUMBER OF PERSONS ATTENDING

                                      YOU CAN ALSO FAX YOUR REGISTRATION TO

                                                      Sarah Taylor
                                                  Field Service Clerk
                                                IMRF’s Oak Brook Office
                                                  FAX: 630-368-5397

           Please allow adequate time to receive confirmation of your registration and directions to the workshop.

   Have you considered
   Continued from page 1
   you are no longer covered under your employer’s health         Rule of thumb
   insurance, your spouse and dependents can be. Their            Often, a simple rule of thumb can be used in choosing
   coverage will continue for an additional 18 months after       which health insurance continuation to choose:
   your coverage ends.                                               If your actual age is less than 63-1/2 when you retire,
                                                                  (more than 18 months away from age 65), you may wish to
   The 1996 Health Insurance Portability and Accountability Act   continue your health insurance under Illinois legislation.
   The 1996 Health Insurance Portability and Accountability       You will not be limited to 18 months of coverage and the
   Act (HIPAA)—also federal legislation—may provide               insurance will continue until you reach age 65. At age 65
   additional COBRA related rights. It may allow workers with     coverage terminates both for you and your dependents.
   COBRA benefits to purchase private individual policies            If your actual age is 63-1/2 or older and your spouse is
   with no preexisting-condition exclusions after 18 months       younger than you when you retire, health insurance
   of COBRA coverage. Check with your employer regarding          continuation under COBRA may be more desirable. Under
   both COBRA coverage and the HIPAA rights.                      COBRA, your spouse has the option of extending the health
                                                                  insurance for 18 additional months once your reach age 65.
   Continuing under Illinois law
   Under Illinois legislation, health insurance continuation is   Individual answers
   not limited to a specific number of months. The health         Health insurance continuation coverage is a complex
   insurance will continue until you reach Medicare age,          subject. The right answer for you may not be the right
   regardless of your age when you retire. However, once you      answer for someone else. Regardless of your situation you
   reach age 65, the coverage stops for you and your              should be aware of which legislation—federal or state—you
   dependents. No extension is available for dependents.          plan to use to continue your health insurance in retirement.
   And, if you have not retired using COBRA, you cannot              If you have questions, you should contact your
   choose COBRA coverage after retirement.                        employer’s personnel office. v

                                                                                          Jane A. Campbell, editor
                                                                                          Linda B. Horrell, publications manager
                                                                                          Illinois Municipal Retirement Fund.
                                                                                          148,000 employee members of the
                                                                                          is published quarterly for the approximately

                                                                                  Executive Trustee
                                                                                  Thomas C. Setchell        Peoria County
                                                                                                            Executive Trustee
                                                                                  Oak Park                  secretary
                                                                                  Executive Trustee         R. Steven Sonnemaker
                                                                                  Gerald J. Sebesta, Jr.
                                                                                  DuPage County                    Kane County
                                                                                  Executive Trustee                Employee Trustee
                                                                                  John Lotus Novak                 vice president
                                                                                  Village of Matteson              Heidi Baxter
                                                                                  Employee Trustee
                                                                                  Rita Miotti                  City of Peoria
                                                                                  Elk Grove Village            Employee Trustee
                                                                                  Annuitant Trustee            President
                                                                                  Jack A. Claes                Marvin R. Shoop Jr.
                                                                                  IMRF 1999 Board of Trustees
 Permit No.
                                                                                  Oak Brook, IL 60523-2374
 Chicago, IL                                                                      2211 York Road
  PAID                                                                            Suite 500
U.S. POSTAGE                                                                      Drake Oak Brook Plaza
 BULK RATE                                                                        Illinois Municipal Retirement Fund

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