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player ready...Niles library officials are expected to make a decision next month on whether or not to enroll employees in a state pension fund.
Business manager for the library district, Greg Pritz, unveiled two other possible retirement options—alternatives to the Illinois Municipal Retirement Fund (IMRF)—for employees at a board of trustees meeting last week.
Details about the alternative options and the plan provided through the state pension fund will be presented to employees in the coming weeks. Their feedback on the range of choices will be compiled and presented to the board at their next meeting slated for June 15, Pritz said. He said he’ll also provide the board with a comparative presentation.
Pritz said he expects trustees to make a final selection at their June 15 meeting. The decision will end what has been a nearly year long investigation into retirement offerings for the library district’s employees.
Pritz, library director Susan Lempke and board president Linda Ryan have previously said revising the library’s current retirement offerings would help the district attract and retain qualified staff members.
Earlier this year the library commissioned an actuarial study to determine how much it would cost the district were the board to vote to join IMRF. Pritz said in an interview following last week’s meeting that the study concluded the library would need to contribute 8.12 percent of employees’ salaries for the first two years of enrollment in the pension fund. The annual cost to the library for the first two years would total $221,000.
He said the amount the library would need to contribute in its third year in the pension system would likely increase. A number of factors, including the number of people retiring from the library and returns on IMRF’s investment portfolio, would impact the amount the library is required to contribute. The contribution amount is recalculated on an annual basis. Employees would be required to contribute a flat 4.5 percent of their earnings to the fund. Staff would also be offered the option to buy back prior years’ service, which would cost the library between $850,000 and $3.6 million. Contributions for prior service would be paid by the library over a 30-year period, Pritz said.
The library currently offers employees 7.5 percent of their annual salary through a defined contribution plan. Staff are not required to contribute anything to the plan and may take a portion or all of the amount offered as additional salary. The cost of the current plan totals $210,000 annually with the inclusion of part-time employees.
Pritz said board members indicated they would like to phase out the practice of allowing employees to take retirement money as salary.
Pritz presented the board with two alternatives to the IMRF option: a hybrid plan and a 401(a) plan. Under the hybrid plan Pritz presented, the library would be required to contribute 7.5 percent of an employees earnings to a retirement fund. The library would also match any employee contribution to their retirement fund dollar for dollar up to five percent. The cost of the plan, if both part and full-time employees are enrolled, would range between $205,000 and $342,000 annually. Employees would not be able to access their retirement money until they leave the district, nor would they be able to purchase past service through the hybrid plan.
Under the 401(a) plan, employees would be required to contribute 4.5 percent of their earnings to the plan, while the library would contribute 10 percent of their annual wages. The cost of the plan to the library, with the inclusion of both part and full-time employees, would total $273,000.
Employees would be permitted to withdraw money from the plan after leaving their job at the library with a 10 percent penalty assessed if they did so before age 59.5.
Staff would also be allowed to purchase up to five years of past service at a cost of 4.5 percent of their gross salary for each year. The library would be required to contribute 2.5 percent of the employees’ salary for each year purchased.
Pritz said it’s unlikely the board would choose to stick with the current retirement offering even if they opt not to join IMRF.
“I think they recognize they have to do something that’s different,” he said.
Pritz told the board last week that “it would be pretty much impossible to have this implemented by July 1” which marks the start of the new fiscal year. He said it would likely take somewhat longer to get employees enrolled in either the alternative 401(a) or hybrid plans versus IMRF.
“I’d much rather be right than on time,” Pritz said in an interview following the meeting. “If it takes an extra 30 days, I think kicking it off on Aug. 1 works just as well.”
Lee V. Gaines is a freelance reporter for Pioneer Press.