Illinois Compiled Statutes 40 ILCS 5/7-208 – Earnings and experience variation reserve
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One earnings and experience variation reserve shall be maintained. All other accounts for this purpose shall be abolished upon the effective date of this amendatory Act of 1995. Moneys in abolished reserve accounts shall be transferred to the earnings and experience variation reserve. No more than one-half of all interest income and earnings on investments of whatever type, including realized gains on disposition of investments and unrealized gains in market value, shall be credited thereto. All investment earnings expense of whatever type, including realized losses on disposition of investments and unrealized losses in market value, shall be charged thereto. All administrative expenses directly relating to investments may be charged thereto. Excess or deficiencies in the annuity and disability reserves shall be charged or credited to this reserve. Whenever a balance exists in such reserve, it shall be included in the basis used for determining the effective interest rate. The balance in the reserve shall be distributed as of the end of each year, but a contingency balance of not more than twice the projected interest requirement for the next year may be maintained. If the balance ever exceeds twice the projected requirement, the excess shall be distributed to municipality reserves.
If the Board determines that the funds available in this reserve, after required transfers, will not be sufficient to provide administrative expenses of the fund, the Board may include in the municipality contribution rate authorized by Section 7-172 a percentage of earnings on the earnings of all participating employees to provide an amount required for the administrative expenses.
Upon adoption of generally accepted accounting procedures that allow for the recognition of unrealized gains or losses in market value, those gains or losses shall be allocated to employer accounts including the earnings and experience variation reserve in the same proportion those accounts were to total assets prior to the implementation of market value accounting.
If the Board determines that the funds available in this reserve, after required transfers, will not be sufficient to provide administrative expenses of the fund, the Board may include in the municipality contribution rate authorized by Section 7-172 a percentage of earnings on the earnings of all participating employees to provide an amount required for the administrative expenses.
Terms Used In Illinois Compiled Statutes 40 ILCS 5/7-208
- Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
Upon adoption of generally accepted accounting procedures that allow for the recognition of unrealized gains or losses in market value, those gains or losses shall be allocated to employer accounts including the earnings and experience variation reserve in the same proportion those accounts were to total assets prior to the implementation of market value accounting.