IMRF ENDORSES A SECTION 457
DEFERRED COMPENSATION PROGRAM

The IMRF Board of Trustees is pleased to announce the endorsement of a Section 457 deferred compensation plan for its members. The IMRF Board of Trustees interviewed several national plan administrators to identify a plan best suited to meet the diverse needs of IMRF members. The various administrators were compared on such factors as employee plan education, servicing, investment choices and returns, fees, and ease of payroll deduction for IMRF employers. The endorsed Section 457 deferred compensation plan is the National Association of Counties (NACo) Program, administered by Public Employees Benefit Services Corporation (PEBSCO).

In the fall of 1993 a questionnaire was sent to the 2,600 units of government in Illinois who offer the IMRF pension. The questionnaire was designed to learn how IMRF units of government were helping employees better prepare for retirement by offering tax-deferred savings arrangements.

The questionnaire responses indicated that a great many IMRF members were not offering such arrangements. Over 1,000 of the IMRF 2,600 units of government indicated they wanted to offer such a plan but had never been approached by a plan administrator or they offered a plan but employees were not participating primarily because of lack of understanding and services, or poor investment choices offered in the plan.

Retirement planners for years have used the analogy of a milking stool in relation to retirement income. Two legs of the retirement income stool are composed of your pension and Social Security. The third leg is made up of the individual's personal savings. The most efficient method of saving long term is to participate in an employer-sponsored pre-tax savings plan.

Seventeen associations of public employers in Illinois including the Illinois Association of County Officials, and all of its affiliate associations, have already endorsed PEBSCO administered plans to their membership. Over 300 IMRF member units of government already offer PEBSCO administered deferred compensation plans in Illinois.

The advantages offered by the IMRF endorsed plan include high performing and diversified investment choices, fees among the lowest in the industry and a well designed and comprehensive method of employee education including written materials, on-site seminars and ongoing service visits. All IMRF employers have the opportunity to adopt the NACo Plan. Those members who currently offer a plan not administered by PEBSCO will be able to adopt the IMRF endorsed plan. Some members indicated they wanted to offer only one plan and will replace what they offer with the IMRF endorsed plan. Others said they would adopt the NACo Plan to allow employees a choice. In either case, the NACo Plan will allow employees participating in other plans currently offered by their employer the opportunity to transfer assets into the NACo Plan.

Many IMRF member units of government employ fire and police personnel who have their own pensions. Any employee, full or part-time, will be able to participate after their employer adopts the NACo Plan.

IMRF member units of government have received packets recently with specific NACo Plan information including the documents necessary to establish the Plan for the benefit of all employees.

To learn more about the advantages the IMRF endorsed NACo Plan offers, please call PEBSCO at (800) 252-1551. •

October 1995 / Illinois Municipal Review / Page 21