COUNTY EMPLOYEES' ANNUITYAND BENEFIT FUND OF COOK COUNTY

ACTUARIAL VALUATIONAS OF DECEMBER 31,2011

GOLDSTEIN & ASSOCIATESActuaries and Consultants

29 SOUTH LaSALLE STREETCHICAGO, ILLINOIS 60603PHONE (312) 726-5877

SUITE 735

FAX (312) 726-4323

April 25, 2012

Board of TrusteesCounty Employees' Annuity

and Benefit Fund of Cook County33 North Dearborn Street, Suite 1000Chicago, Illinois 60602

Re: Actuarial Valuation as of December 31, 2011

Dear Board Members:

We are pleased to submit our actuarial report on the financial position and funding requirementsof the County Employees' Annuity and Benefit Fund of Cook County based on the actuarialvaluation as of December 31,2011.

The report consists of 10 Sections and 4 Appendices as follows:

Section A - Purpose and SummarySection B - Data Used For ValuationSection C - Fund ProvisionsSection D - Actuarial Assumptions and Cost MethodSection E - Actuarial LiabilitySection F - Reconciliation of Change in Unfunded LiabilitySection G - Employer's Normal CostSection H - Actuarially Determined Contribution RequirementSection I - Solvency TestSection J - CertificationAppendix 1 - Summary of Actuarial Assumptions and Actuarial Cost MethodAppendix 2 - Summary of Principal ProvisionsAppendix 3 - Glossary of TermsAppendix 4 - Summary of Legislative Changes

Page No.

12

111112141617192122253132

We would be pleased to discuss any aspects of this report with you at your convenience.

Respectfully submitted,

Sander Goldstein,Consulting Actuary

MAAA

Carl J. Smedinghoff, ASAActuaiy

A. PURPOSE AND SUMMARY

For purposes of GASB Statement No. 25 and GASB Statement No. 43, we have performed separate

actuarial valuations of the pension benefits and retiree health insurance benefits provided by the

County Employees' Annuity and Benefit Fund of Cook County and have prepared actuarial reports

based on these valuations.

As has been done in past years, we have also performed a combined actuarial valuation of the

pension and retiree health insurance benefits provided by the Fund to measure the overall funded

status and contribution requirements of the Fund. We believe that such a combined valuation is

required under Section 9-199 of the Illinois Pension Code which provides that the Fund shall submit

a report each year "containing a detailed statement of the affairs of the Fund, its income and

expenditures, and assets and liabilities ". This report is intended to present the results of the

combined valuation. The results of the combined valuation are summarized below:

1. Total Actuarial Liability $ 13,724,012,3992. Actuarial Value of Assets 7,897,102,1163. Unfunded Actuarial Liability 5,826,910,2834. Funded Ratio 57.5%

5. Employer's Normal Cost for 2012 as a Percent of Payroll 12.46%6. Actuarially Determined Contribution Requirement

For Year Beginning January 1, 2012 655,800,1007. Expected Employer Contribution from Tax Levy for 2012 193,372,210

B. DATA USED FOR THE VALUATION

Participant Data. The participant data required to carry out the valuation was supplied by the Fund.

The membership of the Fund as of December 31, 2011, on which the valuation was based, is

summarized in Exhibit 1. It can be seen that there were 22,037 active contributors, 15,866 members

receiving benefits, and 12,584 inactive members included in the valuation. The total active payroll as

of December 31,2011 was $1,456,444,123.

EXHIBIT 1

Summary of Membership Data

1. Number of Members(a) Active Members

(i) Vested(ii) Non-vested(iii) Total Active Members

(b) Members Receiving(i) Retirement Annuities(ii) Surviving Spouse's Annuities(iii) Children's Annuities(iv) Ordinary Disability Benefits(v) Duty Disability Benefits

(c) Inactive Members(d) Total

2. Annual Salaries(a) Total Salary(b) Average Salary

3. Total Accumulated Contributionsof Active Members

4. Annual Benefit Payments Currently Being Made(a) Retirement Annuities(b) Surviving Spouse's Annuities(c) Children's Annuities(d) Ordinary Disability Benefits(e) Duty Disability Benefits(f) Total Annual Benefit Payments

Year Ending December 31,2011 2010

13,7848,25322,037

13,0232,4091233029

12,584

14,2798.88623,165

12,4602,39412433718

12.14850,487

$ 1,456,444,12366,091

$1,641,038,477

$ 447,109,00733,216,512

628,4686,824,370

77,189$ 487,885,546

50,646

$1,494,093,56964,498

$ 1,639,114,558

$ 406,441,20430,699,418

683,0877,975,420

110.144$ 445,909,273

An age and service distribution for active members is provided in Exhibit 2. A breakdown of

retirement and surviving spouse annuitants classified by age is provided in Exhibit 3. Age and salary

statistics for male and female active members are provided in Exhibit 4. Exhibit 5 provides similar

age and salary statistics by age at entrance.

EXHIBIT 2

AGE AND SERVICE DISTRIBUTION OF ACTIVE MEMBERSYear 2011

Number of Members and Average Salaries by Age and Service Grouping

(Male and Female Combined)

Years of Service

Age

under 25

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70+

Number

Salary

<i

60

$40.562

312

$42.923

192

$55,137

125

S63.091

97

$58,164

83

S58.516

70

$61,785

47

$81.852

26

$95,084

7

$122.054

17

$59.069

1,036

$55.309

1 to 4

50

$44,259

702

$48,666

733

S56.527

443

$67,548

314

$62,611

278

$60,190

230

$64.825

192

$68.203

97

$80.863

29

$91.750

8

$98,888

3,076

$59.632

5 to 9

1

$43,817

189

$51,250

941

$60,028

818

$66.744

641

$70.294

465

$65,916

374

$64,062

319

$60,833

255

$64.784

98

$63,359

40

$76,166

4,141

$64,154

10 to 14

10

$45,657

249

$54.527

899

$64.579

851

$68.260

624

$70.345

570

$68,641

427

$70,471

316

$65.698

153

$68,049

66

$57.144

4,165

$66,803

15 to 19

7

$50.575

283

$60,394

962

$68.906

825

$71.733

711

$72.072

596

$69.770

353

$66.726

164

$65.048

88

$61.822

3,989

$69.040

20 to 24

19

$59.251

403

$62.689

933

$69,809

808

$73.822

601

$73.152

307

$68,504

166

$61.436

83

$62.636

3,320

$69.747

25 to 29 30 to 34

16

$62.392

282 17

$64,908 $67,861

632 159

$74.099 $62,607

469 2 1 2

$79,096 $73,023

173 78

$69,025 $70.715

68 30

$65,553 $73,795

36 24

$55,440 $60,721

1.676 520

$72,568 $68.800

35+ Total

1 1 1

$42,257

1.213

$47.567

2.122

$57.699

2,587

$65.203

3.284

$67.296

3.507

S68.407

2 3.556

$71.560 $70.343

19 2,882

$58.597 $71.366

41 1,646

$62.327 $68.162

21 736

$71,633 $66.818

31 393

$69.061 $63.223

114 22.037

$65.413 $66.091

EXHIBIT 3

ANNUITANTS CLASSIFIED BY AGE AS OF DECEMBER 31, 2011

Retirement Annuities (Including Reciprocal)

Age

Under 4545-4950-5455-5960-6465-6970-7475-7980-8485-89

90 & upTotals

Number

1

8255995

2,3742,8522,4101,8291,232

695370

13,023

Annua l Payments

$ 6,644

48,56310,738,95342,893,55494,295,480

108,089,48379,632,45356,113,29032,196,16016,275,7076,818,720

$ 447,109,007

AverageAnnual

Payments$ 2,215

6,07042,11443,10939,72037,90033,04330,68026,13323,41818,429

$ 34,332

Average Age 70.6

Surviving Spouses (Including Reciprocal)

Age

Under 4545-4950-5455-5960-6465-6970-7475-7980-8485-89

9 0 & u pTotals

Number

385182

201217259326375347299214

2,409

Annual Payments

$ 266,612420,435851,113

2,816,9623,518,8914,578,0434,934,6385,215,6474,737,0563,810,7962,066,319

$ 33,216,512

AverageAnnual

Payments$ 7,016

8,24410,37914,01516,21617,67615,13713,90813,65112,7459,656

$ 13,789

Average Age 73.5

EXHIBIT 4

SALARY AND AGE STATISTICSAges and Salaries as of December 31, 2011

Age NumberAnnualSalaries

AverageAnnualSalary

Male

Under 20

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70 and Over

Total Male

2 $

64

672

1,083

1,242

1,587

1,586

1,501

1,189

668

335

!89

10,118 $

46,261

2,851,000

32,444,965

61,783,039

84,061,058

112,462,316

116,505,763

114,608,560

93,081,579

49,850,717

25,324,084

13,555,626

706,574,968

$ 23,131

44,547

48,281

57,048

67,682

70,865

73,459

76,355

78,286

74,627

75,594

71,723

$ 69,833

Female

Under 20

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70 and Over

Total Female

Male and Female

1 $

44

541

1,039

1,345

1,697

1,921

2,055

1,693

978

401

204

11,919 $

22,037 $

28,000

1,765,213

25,253,344

60,655,935

84,618,882

108,536,973

123,399,500

135,529,681

112,593,815

62,343,112

23,853,795

11,290,905

749,869,155

1,456,444,123

$ 28,000

40,118

46,679

58,379

62,914

63,958

64,237

65,951

66,506

63,746

59,486

55,348

$ 62,914

$ 66,091

EXHIBIT 5

SALARY AND AGE STATISTICSAges and Salaries as of December 31, 2011

Ages at Entrance

AP? atEntrance Number

Under 25 1,987

25-29 2,878

30-34 1,883

35-39 1,201

40-44 775

45-49 576

50-54 399

55-59 273

60-64 102

65 and Over 44

W/O Record

Totals 10,118

Male

Annual Salaries

$ 129,230,336

192,139,228

138,200,048

90,225,839

55,744,020

39,681,179

28,796,964

20,374,630

7,827,793

4,354,933

-

$ 706,574,968

Number

2,040

3,059

2,115

1,731

1,284

816

547

244

59

24

-

Female

Annual Salaries

$ 116,424,269

195,628,733

144,268,067

110,769,416

79,708,741

49,414,056

32,548,096

16,390,742

3,482,461

1,234,576

-

11,919 $ 749,869,155

Average Annual Salary

Average Attained Age

Average Service

Average Age at Entrance

$ 69,833

46.5

13.3

33.2

$ 62,914

48.0

14.1

33.9

Assets. In November of 1994, the Governmental Accounting Standards Board (GASB) issued

GASB Statement No. 25, which establishes standards of financial reporting for governmental

pension plans. The statement is effective for periods beginning after June 15, 1996. Under GASB

Statement No. 25, the actuarial value of assets to be used for determining a plan's funded status and

annual required contribution needs to be market related. In determining the actuarial value of assets,

smoothing changes in the market value of assets over a period of three to five years is considered to

be appropriate.

The asset values used for the valuation were based on the asset information contained in the financial

statements for the Fund for the year ending December 31, 2011. The actuarial value of assets was

determined by smoothing unexpected gains or losses over a period of 5 years.

The resulting actuarial value of assets is $7.897,102,116. The development of this actuarial value of

assets is outlined in Exhibit 6. The market value of assets as of December 31, 2011 amounted to

$7,441,243,250. A reconciliation of asset values from the beginning of the year to the end of the year

is provided in Exhibit 7.

EXHIBIT 6

Actuarial Value of Assets

A. Development of Investment Gain for 2011

1. Market Value of Assets as of 12/31/2010 $ 7,574,653,612

2. Employer and Miscellaneous Contributions 212,951,937

3. Employee Contributions 127,577,473

4. Benefits and Expenses 556,640,805

5. Expected Market Value (Based on 7.5% assumed rate of return) 7,918,683,569

6. Actual Market Value 7,441,243,250

7. Investment Gain (Loss) (6 - 5) (477,440,319)

B. Development of Actuarial Value of Assets as of 12/31/11

8. Market Value of Assets as of December 31, 2011 $ 7,441,243,250

9. Investment GaiiV(Loss) for 2008 (2,458,448,408)

10. 20% of Gain/(Loss) for 2008 (491,689,681)

11. Investment Gain/(Loss) for 2009 564,068,096

12. 40% of Gain/(Loss) for 2009 225,627,238

13. Investment Gain/(Loss) for 2010 320,259,720

14. 60%ofGain/(Loss)for2010 192,155,832

15. Investment Gain/(Loss) for 2011 (477,440,319)

16. 80% of GaiiV(Loss) for 2011 (381.952.255)

17. Actuarial Value of Assets as of December 31, 2011 (8 - 10- 12 - 14 - 16) S 7.897.102.116

EXHIBIT?

RECONCILIATION OF ASSET VALUES - DECEMBER 31, 2011

NET ASSETS BEGINNING OF YEAR (A)

ADDITIONSContributions

Cook CountyEmployee ContributionsOther

Employer Federal Subsidized ProgramsEarly Retirement Reinsurance ProgramMedicare Part D Subsidy & Prescription RebatesMiscellaneousEmployee Transfer from Forest Preserve

Total Contributions

Investment IncomeInterestAlternative Investment IncomeDividendsNet AppreciationSecurities Lending

Total Investment IncomeLess Investment Fees

Net Investment Income (I)

Total Additions

DEDUCTIONSAnnuit ies and Benefits

Employee AnnuitantsSurviving Spouse and Children AnnuitantsOrdinary Disability BenefitsDuty Disability BenefitsGroup Health Benefits

Total Annuit ies and Benefits

Refunds of Employee ContributionsNet Administrative Expenses

Total Deductions

NET INCREASE (DECREASE)

NET ASSETS END OF YEAR (B)

RATE OF RETURN -(2x1)- (A+B-I)

RATE OF RETURN FOR YEAR ENDING 12/31/10RATE OF RETURN FOR YEAR ENDING 12/31/09RATE OF RETURN FOR YEAR ENDING 12/31/08RATE OF RETURN FOR YEAR ENDING 12/31/07

MARKET

$ 7,574,653,612

195,337,621127,577,473

3,499,8035,514,8458,719,034

209,220(328,586)

340,529,410

429,527,59933,003,05713,290,425

671,20646,904,340

523,396,627

29,165,3354,078,843

556,640,805

(133,410,362)

7,441,243,250

1.11%

12.19%16.91%

-23.23%6.22%

ACTUARIAL

$ 7,982,368,659

195,337,621127,577,473

3,499,8035,514,8458,719,034

209,220(328,586)

340,529,410

107,036,3799,806,225

88,803,655(108,798,586)

2,507,150

99,354,823(16,653,790)

82,701,033

423,230,443

107,036,3799,806,225

88,803,655(60,654,767)

2,507,150

147,498,642(16,653,790)130,844,852

471,374,262

429,527,59933,003,05713,290,425

671,20646,904,340

523,396,627

29,165.3354,078,843

556,640,805

(85,266,543)

S 7,897,102,116

1.66%

2.86%0.79%1.48%9.06%

10

C. FUND PROVISIONS

Our valuation was based on the provisions of the Fund in effect as of December 31, 2011 as provided

in Article 9 of the Illinois Pension Code. Senate Bill 1946, which was signed into law on April 14,

2010 as Public Act 96-0889, created a "second tier" of benefits for employees who first become

participants under the Fund on or after January 1, 2011. A summary of the principal provisions of

the Fund on which the valuation was based is provided in Appendix 2.

D. ACTUARIAL ASSUMPTIONS AND COST METHOD

We have used the same actuarial assumptions for the December 31, 2011 actuarial valuation as were

used for the December 31, 2010 valuation. These actuarial assumptions are based on an experience

analysis of the Fund over the period 2005 through 2008.

The actuarial assumptions used for the December 31, 2011 valuation are outlined in Appendix 1. In

our opinion, the actuarial assumptions used for the valuation are reasonable, taking into account Fund

experience and future expectations and represent our best estimate of anticipated experience.

The entry age actuarial cost method was used for the December 31, 2011 valuation, with costs

allocated on the basis of earnings. This is the same actuarial cost method that was used for the

December 31, 2010 valuation.

11

E. ACTUARIAL LIABILITY

The actuarial liability as determined under the valuation for the various classes of members is

summarized in Exhibit 8. The total actuarial liability is then compared with the actuarial value of

assets in order to arrive at the unfunded actuarial liability.

As of December 31, 2011, the total actuarial liability is $13,724,012,399, the actuarial value of assets

is $7,897,102,116 and the unfunded actuarial liability is $5,826,910,283. The ratio of the actuarial

value of assets to the actuarial liability, or funded ratio, is 57.5%.

12

EXHIBIT 8

Actuarial Liabilitv and Funded Status

Year Ending December 312011 " 2010

1. Actuarial Liability For Active Members

(a) Basic Retirement Annuity $ 3,804,245,568 $ 3,828,137,890(b) Automatic Increase in Retirement Annuity 1,157,228,670 1,161,328,844(c) Additional Benefits Under Optional Plan 208,511,805 234,682,617(d) Post-retirement Survivor's Annuity 421,954,403 402,528,524(e) Pre-retirement Survivor's Annuity 114,350,973 115,746,084(£) Lump Sum Payments and Refunds 192,707,593 197,552,750(g) Retiree Health Insurance 643.269.558 666.280.588(h) Total $ 6,542,268,570 $ 6,606,257.297

2. Actuarial Liability For Members Receiving Benefits

(a) Retirement Annuities $ 3,941,954,679 $ 3,587,423.273(b) Automatic Increase in Retirement Annuities 1,141,486,330 1,039,888,474(c) Survivor Annuities to Survivors of Current Retirees 474,548,419 427,611,021(d) Survivor Annuities to Current Survivors 339,735,879 314,026,356(e) Lump Sum Death Benefits 5,054,457 4,841,463(f) Retiree Health Insurance 452.468.280 452.633.702(g) Total $ 6,355,248,044 $ 5,826,424,289

3. Actuarial Liability For Inactive Members 826.495.785 709.455.589

4. Total Actuarial Liability £13.724.012.399 $13.142.137.175

5. Actuarial Value of Assets 7.897.102.116 7.982.368.659

6. Unfunded Actuarial Liability $ 5.826.910.283 S 5.159.768.516

7. Funded Ratio 57.5% 60.7%

13

F. RECONCILIATION OF CHANGE IN UNFUNDED ACTUARIAL LIABILITY

The net actuarial experience during the period January 1,2011 to December 31, 2011 resulted in an

increase in the Fund's unfunded actuarial liability of $667,141,767. This increase in unfunded

actuarial liability is a result of several kinds of gains and losses. The financial effect of the most

significant gains and losses is illustrated in Exhibit 9.

The employer contribution requirement for the year of normal cost plus interest on the unfunded

actuarial liability amounted to $574,323,841. The total actual employer contribution for the year

with interest amounted to $202,530,356. Thus, the employer contribution for the year with interest

fell short of the funding requirement of normal cost plus interest on the unfunded liability by

$371,793.485. Had all other aspects of the Fund's experience been in line with the actuarial

assumptions, the unfunded liability would have increased by this amount.

The net rate of investment return earned by the Fund during the year, based on the actuarial value of

assets, was approximately 1.66%, in comparison to the assumed rate of 7.5%. This resulted in an

increase in the unfunded liability of $459,875,129. Salaries increased at an average rate of 3.05% in

comparison with the 5.0% assumed rate of increase, resulting in a decrease in the unfunded liability

of$138,554,686.

14

The various other aspects of the Fund's experience resulted in a net decrease in the unfunded liability

of $25,972,161. The aggregate financial experience of the Fund resulted in an increase in the

unfunded liability of $667,141,767.

EXHIBIT 9

Reconciliation of Change in Unfunded Actuarial LiabilityOver the Period January 1. 2011 to December 31, 2011

1. Unfunded Actuarial Liability as of 01/01/11 $ 5,159,768,516

2. Employer Contribution Requirement ofNormal Cost Plus Interest on UnfundedLiability for Period 01/01/11 to 12/31/11 574,323,841

3. Actual Employer Contribution for the Year, Plus Interest 202.530.356

4. Increase in Unfunded Liability Due toEmployer Contribution Plus Interest Being Less ThanNormal Cost Plus Interest on Unfunded Liability (2-3) $ 371.793,485

5. Increase in Unfunded Liability Due to InvestmentReturn Lower Than Assumed 459.875,129

6. Decrease in Unfunded Liability Due to SalaryIncreases Lower Than Assumed (138,554,686)

7. Decrease in Unfunded Liability Due toOther Sources ' (25.972.161)

8. Net Increase in Unfunded Liability for theYear (4 + 5 + 6 + 7) " S 667.141.767

9. Unfunded Actuarial Liability as ofDecember 31,2011 (1 +8) $ 5.826.910.283

15

G. EMPLOYER'S NORMAL COST

The employer's share of the normal cost for the year beginning January 1, 2012 is developed in

Exhibit 10, The total normal cost is $305,471,598, employee contributions are estimated to be

$123,987,010, resulting in the employer's share of the normal cost of $181,484,588.

Based on a payroll of $1,456,444,123 as of December 31, 2011, the employer's share of the normal

cost can be expressed as 12.46% of payroll.

EXHIBIT 10

Employer's Normal Cost For Year Beginning January 1. 2012

1. Basic Retirement Annuity2. Automatic Increase in Retirement Annuity3. Additional Benefits Under Optional Plan4. Post-retirement Survivor's Annuity5. Pre-retirement Survivor's Annuity6. Lump Sum Benefits and Refunds7. Retiree Medical8. Duty Disability Benefits9. Ordinary Disability Benefits

10. Children's Benefits11. Administrative Expenses12. Total Normal Cost13. Employee Contributions14. Employer's Share of Normal Cost

Note. Normal costs for duty disability benefits, ordinary disability benefits, and children's benefitsare calculated on an annual payout basis. The above figures are based on a total active payroll of$1,456,444,123 as of December 31, 2011.

Dollar Amount

$136,346,10942,312,257

6,321,02714,948,2907,031,570

60,311,72326,387,810

77,1896,824,370

628,4684.282,785

$305,471,598123.987.010

S.181.484.588

PercentOf Payroll

9.36%2.910.431.030.484.141.810.010.470.040.29

20.97%8.51

12.46%

16

H. ACTUAR1ALLY DETERMINED CONTRIBUTION REQUIREMENT

GASB Statements No. 25 and 27 provide for annual employer contribution requirements determined

on an actuarial basis. According to the GASB statements, the actuarially determined contribution

requirement is equal to the employer's normal cost plus an amortization of the unfunded actuarial

liability. For a period of 10 years, the maximum acceptable amortization period is 40 years. After

the 10-year period, the maximum acceptable amortization period is 30 years. The 10-year period

expired on January 1, 2006. We have therefore calculated the actuarially determined employer

contribution for the year beginning January 1, 2012 as the employer's normal cost plus a 30-year

level-dollar amortization of the unfunded actuarial liability. The results of our calculation are shown

in Exhibit 11.

Employer contributions come from a tax levied by the County upon all taxable property within the

County equal to the total amount of contributions made by employees in the calendar year 2 years

prior to the year of the levy, multiplied by 1.54. The 1.54 is known as the tax multiple.

As can be seen from Exhibit 11, for the year beginning January 1, 2012, the actuarially determined

contribution requirement amounts to $655,800,100. The expected employer contribution from the

tax levy, after a 3.0% loss on the net tax levy, amounts to $193,372,210. Thus, the employer

contribution is expected to fall short of meeting the actuarially determined contribution requirement

by $462,427,890. In order to have the employer contribution for the year 2012 sufficient to meet the

actuarially determined contribution requirement, it is estimated that a tax multiple of 5.22 would

have been required.

17

EXHIBIT 11

Actuariallv Determined Contribution Requirement

Year Ending December 31,2011 " 2010

1. Employer's normal cost2. Annual amount to amortize the unfunded liability

over 30 years as a level dollar amount3. Actuarially determined contribution requirement for

year beginning January 1, 20114. Expected net employer contribution from tax levy,

after a 3.0% loss on net tax levy5. Amount by which employer contributions are

expected to fall short of the actuariallydetermined contribution requirement

6. Required tax multiple for employercontribution to meet actuariallydetermined contribution requirement

181,484,588 $ 193,943,250

474.315.512 420.009,598

655,800,100 $ 613,952,848

193,372210 190.901.487

$ 462.427.890

5.22

423.051.361

4.95

18

I. SOLVENCY TEST

A short term solvency test is a measure that can provide additional insight into the adequacy of

pension funding. In this type of solvency test, a pension fund's current assets are compared with:

1. Active member accumulated contributions;2. The liability for future benefits to current pensioners;3. The employer's share of the liability for service already rendered by active members

In the case of a pension fund that is actuarially funded, the active member accumulated contributions

and the liability for future benefits to present pensioners should generally be fully covered by plan

assets. In addition, the employer's share of the liability for service already rendered by active

members should be at least partially covered by the remainder of plan assets. In Exhibit 12, the

actuarial value of the assets of the Fund is compared with: (1) active member accumulated

contributions, (2) the liability for future benefits to current pensioners; and (3) the employer's

liability for service already rendered by active members. The portion of each of the three liabilities

that is covered by the actuarial value of assets is shown.

19

EXHIBIT 12

SOLVENCY TEST

ACCRUED LIABILITIES FOR

NJO

FiscalYear

2002200320042005200620072008200920102011

(1)

Active andInactive Member

AccumulatedContributions

$ 1,245,347,9071,141,964,2971,275,497,1671,322,128,5981,496,918,4271,569,401,1441,650,186,2091,749,058,8341,824,472,7531,662,273,117

(2)

MemberCurrentlyReceivingBenefits

$ 2,498,721,2284,021,001,4254,423,092,1624,023,901,8964,149,302,1734,466,816,2424,649,512,5155,479,822,8365,826,424,2896,355,248,044

(3)

Active andInactive Member

EmployerPortion

$ 4,102,238,8563,618,003,9823,752,194,7573,923,913,6394,258,357,5744,387,512,5144,773,482,6255,346,634,0795,491,240,1335,706,491,238

ActuarialValue ofAssets

$ 5,861,233,5065,929,201,1426,700,845,1117,027,508,1387,462,683,1228,059,879,8048,036,074,7977,945,567,0967,982,368,6597,897,102,116

Percent of Accrued LiabilitiesCovered By Assets

0)

100%100%100%100%100%100%100%100%100%100%

(2)

100%100%100%100%100%100%100%100%100%98%

(3)

52%21%27%

43%

43%46%36%13%6%0%

J. CERTIFICATION

This actuarial report has been prepared in accordance with generally accepted actuarial principles and

practices and to the best of our knowledge, fairly represents the financial condition of the County

Employees' Annuity and Benefit Fund of Cook County as of December 31, 2011.

Respectfully submitted,

Sandor Goldstein, FSA, MAAAConsulting Actuary

Carl J. Smedinghoff, ASAActuary'

21

Appendix 1

Summary of Actuarial Assumptions and Actuarial Cost Method

The actuarial assumptions used for the December 31, 2011 actuarial valuation are summarizedbelow. These assumptions are based on an experience analysis of the fund over the period 2005through 2008. The assumptions were adopted by the board as of December 31, 2009 based on therecommendation of the actuary.

Mortality Rates. The UP-1994 Mortality Table for Males, rated down 2 years, and the UP-1994Mortality Table for Females, rated down 1 year.

Termination Rates. Termination rates based on the recent experience of the Fund were used. Thefollowing is a sample of the termination rates used:

Rates of Termination

Age at Entrance

Attained Males Females

.145

.116

.030

.030

.030

.165

.105

.030

.030

.141

.085

.030

.183

.117

.030

.030

.030

.165

.093

.030

.030

.114

.060

.030

Age 27 32 37 27 32 37

2732374247

Retirement Rates. For persons who became participants prior to January 1, 2011, rates of retirementfor each age from 50 to 75 based on the recent experience of the Fund. The following are samples ofthe rates of retirement used:

Less Than 30 Years of Service at Retirement

Rates of RetirementAge Males Females

50 .010 .01255 .060 .07260 .250 .21665 .150 .12070 .250 .20075 1.000 1.000

30 Or More Years of Service at Retirement

Rates of RetirementAge Males Females

505560657075

Retirement Rates for Deputy

.150

.300

.375

.270

.4501.000 1

.128

.213

.230

.120

.200

.000

Sheriffs Who Are Members of the Cook CountyPolice Department With 20 or More Years of Service at Retirement

Rates of RetirementAge Males Females

50 .211 .21155 .169 .16960 .382 .38265 1.000 1.000

Retirement Rates. For persons who became or will become participants on or after January 1, 2011,rates of retirement for each age from 62 to 75 were used. The following are samples of the rates ofretirement that were used:

Rates of RetirementAge Males Females

6264677075

Salary Progression. 5.0% per year, compounded annually.

Interest Rate. 7.5% per year, compounded annually.

Medical Trend Rate. 8% in the first year, decreasing by .5% per year until an ultimate rate of 5% isreached.

23

.400

.225

.400

.4501.000

.350

.150

.350

.2001.000

Loading For Reciprocal Benefits. Costs and liabilities of active employees were loaded by 1% forreciprocal annuities where the County is the last employer. It was assumed that 50% of inactivemembers with one or more year of service would receive a reciprocal annuity where the County isnot the last employer. These reciprocal annuities were valued as of the member's retirement date as10 times an inactive member's accumulated contributions.

Marital Status. 85% of participants were assumed to be married.

Spouse's Age. The spouse of a male employee was assumed to be four years younger than theemployee. The spouse of a female employee was assumed to be four years older than the age of theemployee.

Actuarial Cost Method. The entry age actuarial cost method was used, with costs allocated on thebasis of earnings. Actuarial gains and losses are reflected in the unfunded actuarial liability and areamortized over an open 30-year period.

24

Appendix 2

Summary of Principal Provisions

Participant. A person employed by the County whose salary or wages is paid in whole or in part bythe County. An employee in service on or after January 1, 1984 shall be deemed as a participantregardless of when he or she became an employee.

Service. For all purposes except the minimum retirement annuity and ordinary disability benefit,sendee during four months in any calendar year constitutes one year of service. For the minimumretirement annuity, all service is computed in whole calendar months. Service for any 15 days in acalendar month shall constitute a month of service.

For purposes of the minimum retirement annuity, service shall include:

a. Any time during which the employee performed the duties of his or her position andcontributed to the Fund.

b. Vacations and leaves of absence with whole or part pay.c. Periods during which the employee receives a disability benefit from the Fund, andd. Certain periods of accumulated sick leave.

Retirement Annuity - Eligibility. An employee who withdraws from service with 10 or more yearsof service is entitled to a retirement annuity upon attainment of age 50.

Retirement Annuity — Amount

Money Purchase Annuity. The amount of annuity based on the sum accumulated from theemployee's salary deductions for age and service annuity plus 1/10 of the sum accumulated from thecontributions by the County for age and service annuity for each completed year of sendee after thefirst 10.

Minimum Formula Annuity. The amount of annuity provided is equal to 2.4% of final average salaryfor each year of service. Final average salary is the highest average monthly salary for any 48consecutive months within the last 10 years of service. Salary for pension purposes is actual salaryearned exclusive of overtime or extra salary. The maximum amount of annuity is 80% of finalaverage salary.

If an employee retires before age 60, the annuity is reduced by .5% for each full month or fractionthereof that the employee is under age 60 when the annuity begins, unless the employee has 30 ormore years of service, in which case there is no reduction for retirement before age 60.

If the Minimum Formula Annuity is greater than the Money Purchase Annuity, the employee isentitled to receive the Minimum Formula Annuity.

25

Automatic Increase in Retirement Annuity. Employees who retire from service having attained age60 or more, or, if retirement occurs on or after January 1, 1991, with at least 30 years of service, 3%of the annuity beginning January of the year following the year in which the first anniversary ofretirement occurs. If retirement is before age 60 with less than 30 years of service, increases begin inJanuary of the year immediately following the year in which age 60 is attained. Beginning January 1,1998, increases are calculated as 3% of the monthly annuity payable at the time of the increase.

Optional Plan of Contributions and Benefits. During the period through June 30, 2005, an employeemay establish optional credit for additional benefits by making additional contributions of 3% ofsalary. The additional benefit is equal to 1% of final average salary for each year of service for whichoptional contributions have been paid. The additional benefit shall be included in the calculation ofthe automatic annual increase and the calculation of the survivor's annuity.

Alternate Annuity for County Officers. An alternate annuity is available for county officers electedon or before January 1, 2008. The amount of this alternate annuity is equal to 3% of final salary forthe first 8 years of service, 4% for the next 4 years of service, and 5% thereafter, subject to amaximum of 80% of final salary. The elected county officer is required to contribute an additional3% of salary to be eligible for the alternate annuity. The alternate survivor's annuity for survivors ofelected county officers is 66 2/3% of the amount of the elected county officer's earned retirementannuity on the date of death, subject to a minimum payment of 10% of salary.

Annuities for Members of the Cook County Police Department. In lieu of the regular of minimumretirement annuity, a deputy sheriff who is a member of the County Police Department may beentitled to the following annuity:

Upon withdrawal from service after having attained age 50 in service with 20 or more years ofservice credit as a police officer, the officer shall be entitled to an annuity computed as follows: 50%of final average salary, plus 2% of final average salary for each year of service in excess of 20 years,subject to a maximum of 80% of final average salary.

Surviving Spouse's Annuity — Death in Service

Money Purchase Annuity. The amount of annuity based on the accumulated salary deductions andCounty contributions for both the employee and the spouse.

Minimum Formula Annuity. A minimum annuity is provided for the eligible surviving spouse ofan employee who dies in service with any number of years of service. The amount of such minimumspouse's annuity is equal to 65% of the annuity the employee would have been entitled to as of thedate of death, provided the spouse on such date is age 55 or older, or that the employee had 30 ormore years of service. If the spouse is under age 55 and the employee had less than 30 years ofservice, the amount of the spouse's annuity shall be discounted by .5% for each month that thespouse is less than age 55 on the date of the employee's death. The amount of the surviving spouse'sannuity shall not be less than 10% of the employee's final average salary as of the date of death.

26

If the Minimum Formula Annuity is greater than the Money Purchase Annuity, the surviving spouseshall be entitled to receive the Minimum Formula Annuity.

Surviving Spouse's Annuity - Death after Retirement. The amount of the annuity is the greater ofthe money purchase annuity or the minimum formula annuity. The surviving spouse of an annuitantwho dies on or after July 1, 2002 shall be entitled to an annuity of 65% of the employee's annuity atthe time of death if the employee had at least 10 years of service, reduced by .5% per month that thespouse is under age 55 at the time of the employee's death. There is no reduction for age if theemployee had at least 30 years of service.

Automatic Annual Increase in Surviving Spouse's Annuity. On the January 1 occurring on orimmediately after the first anniversary of the deceased employee's death, the surviving spouse'sannuity shall be increased by 3% of the amount of annuity payable at the time of the increase. Oneach January 1 thereafter, the annuity shall be increased by an additional 3% of the amount of annuitypayable at the time of the increase.

Child's Annuity. Annuities are provided for unmarried children of a deceased employee who areunder age 18. An adopted child is entitled to the child's annuity if such child was legally adopted atleast one year before the child's annuity becomes payable. The child's annuity is payable under thefollowing conditions:

(a) the death of the employee was a duty related death; or (b) if the death is not a duty related death,the employee died while in service and had completed at least four years of service from the date ofhis or her original entrance in service and at least two years from the latest re-entrance: or (c) if theemployee died while in receipt of an annuity, her or she must have withdrawn from service afterattainment of age 50

The amount of the annuity is the greater of 10% of the employee's final salary at the date of death or$140 per month for each child.

Duty Disability Benefits. Duty disability benefits are payable to an employee who becomes disabledas a result of an accidental injury incurred while in the performance of an act of duty. Benefits beginon the first regular and normal work date for which the employee does not receive a salary. Theamount of the duty disability benefit is equal to 75% of the employee's salary at the date of injury,reduced by the amount the employee receives from Workers' Compensation. However, if thedisability, in any measure has resulted from any physical defect or disease that existed at the timesuch injury was sustained, the duty disability benefit shall be 50% of salary. The Fund contributes the8.5% (9% for County Police) of salary normally contributed by the employee for pension purposes.

If the disability commences prior to age 60, duty disability benefits are payable during disability untilthe employee attains age 65. If the disability begins after age 60, the benefit is payable duringdisability for a period of 5 years.

27

Recipients of duty disability benefits also have a right to receive child's disability benefits of $10 permonth on account of each unmarried child less than age 18. Total children's disability benefits shallnot exceed 15% of the employee's salary.

Ordinary Disability Benefits. Ordinary disability benefits are provided for employees who becomedisabled as the result of any cause other than injury incurred in the performance of an act of duty.The amount of the benefit is 50% of the employee's annual salary at the time of disability. The Fundalso contributes the 8.5% (9% for County Police) of salary normally contributed by the employee forpension purposes.

Ordinary disability benefits are payable after the first 30 days of disability provided the employee isnot then in receipt of salary. Ordinary disability benefits are payable until the first of the followingshall occur:

(a) the disability ceases; or(b) the date that total payments equal the lesser of (1) 14 of the total service rendered prior to

disability, and (2) five years.

An employee unable to return to work at the expiration of ordinary disability benefit is entitled to anannuity beginning on the date of the employee's withdrawal from service regardless of age on suchdate.

Death Benefit. Upon the death of an active or retired employee, a death benefit of $1,000 is payableto the employee's designated beneficiary or to the employee's estate if no beneficiary has beendesignated.

Group Health Benefits. The Fund may pay all or any portion of the premium for health insurance onbehalf of each annuitant who participates in any of the Fund's health care plans. As of January 1,2005, the Fund is paying 55% of the premiums for retiree annuitants and 70% of the premiums forsurvivor annuitants.

Refund to Employee Upon Withdrawal From Service. Upon withdrawal from service, an employeeunder the age of 55. or anyone with less than 10 years of service is eligible for a refund. Theemployee is entitled to a refund of the amount accumulated to his or her credit for age and serviceannuity and the survivor's annuity together with the total amount contributed for the automaticannual increase, without interest. Upon receipt of such refund, the employee forfeits all rights tobenefits from the Fund.

Election of Refund in Lieu of Annuity. If an employee's annuity or spouse's annuity is less than$150.00 per month, such employee or spouse annuitant may elect a refund of the employee'saccumulated contributions In lieu of a monthly annuity.

Refund For Surviving Spouse's Annuity. If an employee is unmarried at the time of retirement, allcontributions for surviving spouse's annuity will be refunded with interest at the rate of 3% per year,compounded annually.

28

Refund of Remaining Amounts. In the event that the total amount accumulated to the account ofemployee from employee contributions for annuity purposes has not been paid to the employee andsurviving spouse as a retirement or surviving spouse's annuity before the death of the survivor of theemployee and spouse, a refund of any excess amount shall be paid to the children of the employee, inequal parts, or if there are no children, to the beneficiaries of the employee or the administrator of theestate.

Employee Contributions. Employees contribute through salary deductions 8.5% (9% for CountyPolice) of salary to the Fund, 6.5% (7% for County Police) being for the retirement annuity, 1.5%being for the surviving spouse's annuity, and .5% being for the automatic increase in retirementannuity.

Employer Contributions. The County' levies a tax annually equal to the total amount of contributionsmade by employees in the calendar year 2 years prior to the year of the levy, multiplied by 1.54.

Employer Pick-up of Employee Contributions. Since April 15, 1982, regular employee contributionshave been designated for federal income tax purposes as being made by the employer. Theemployee's W-2 salary is therefore reduced by the amount of contribution. For pension purposes, thesalary remains unchanged. For purposes of benefits, refunds, and financing, these contributions aretreated as employee contributions.

Persons Who First Become Participants On or After January 1. 2011

The following changes to the aforementioned provisions apply to persons who first becomeparticipants on or after January 1,2011:

1. The highest salary for annuity purposes is equal to the average monthly salary obtained bydividing the participant's total salary during the 96 consecutive months of service within thelast 120 months of service in which the total compensation was the highest by the number ofmonths in that period.

2. For 2011, the annual salary is limited to the Social Security wage base of $106,800.Limitations for future years shall automatically be increased by the lesser of 3% or one-half ofpercentage change in the Consumer Price Index-U for the 12 months ending in September.

3. A participant is eligible to retire with unreduced benefits at age 67 with at least 10 years ofservice credit. However, a participant may elect to retire at age 62 with at least 10 years ofservice credit and receive a retirement annuity reduced by one-half of 1% for each month thathis or her age is under 67.

4. The initial survivor's annuity is equal to 66 2/3% of the participant's earned retirementannuity at the date of death, subject to automatic annual increases of the lesser of 3% or one-half of the increase in the Consumer Price Index-U for the 12 months ending in September,based on the originally granted survivor's annuity.

5. Automatic annual increases in the retirement annuity then being paid are equal to the lesser of3% or one-half the annual change in the Consumer Price Index-U, whichever is less, based onthe originally granted retirement annuity.

29

6. Refund upon withdrawal from service. Upon withdrawal from service, an employee whowithdraws from service before age 62 regardless of length of service or withdraws with lessthan 10 years of service regardless of age is entitled to a refund of total contributions made bythe employee without interest.

30

Appendix 3

Glossary of Terms used in Report

1. Actuarial Present Value. The value of an amount or series of amounts payable at various times,determined as of a given date by the application of a particular set of actuarial assumptions.

2. Actuarial Cost Method or Funding Method. A procedure for determining the actuarial presentvalue of pension plan benefits and for determining an actuarially equivalent allocation of such valueto time periods, usually in the form of a normal cost and an actuarial accrued liability.

3. Normal Cost. That portion of the present value of pension plan benefits, which is allocated to avaluation year by the actuarial cost method.

4. Actuarial Accrued Liability or Accrued Liability. That portion, as determined by a particularactuarial cost method, of the actuarial present value of pension benefits which is not provided for byfuture normal costs.

5. Actuarial Value of Assets. The value assigned by the actuary to the assets of the pension plan forpurposes of an actuarial valuation.

6. Unfunded Actuarial Liability. The excess of the actuarial liability over the actuarial value ofassets.

7. Entry Age Actuarial Cost Method. A cost method under which the present value of the projectedbenefits of each individual included in an actuarial valuation is allocated as a level dollar amount orlevel percent of the individual's earnings between entry age and assumed exit age. The portion ofthis actuarial present value of benefits allocated to a valuation year is called the normal cost. Theportion of this actuarial present value of benefits not provided at a valuation date by the actuarialpresent value of future value of normal costs is called the actuarial liability.

Under this method, the actuarial gains (losses), as they occur, generally reduce (increase) theunfunded actuarial liability.

8. Actuarial Assumptions. Assumptions as to future events affecting pension costs.

9. Actuarial Valuation. The determination, as of the valuation date, of the normal cost, actuarialliability, actuarial value of assets, and related actuarial present values for a pension plan.

10. Vested Benefits. Benefits that are not contingent on an employee's future service.

31

Appendix 4

Summary of Legislative Changes

1982 Session

SB 1147• Actuarial reporting to Insurance Department and Pension Laws Commission. Actuarial

statements prepared by a qualified actuary for plan years ending after December 31, 1984including actuarial present value of credited projected benefits.

SB 1452• Allows a participant who served as Village Trustee and was not then eligible to participate in

the IMRF for such service, to obtain credit in this fund by making the required contributions.Four-year maximum credit.

SB 1579• Permitted investment list moved to general section of the statute. Expanded fiduciary

standards, prohibited transactions, civil action may be brought by Attorney General or by aparticipant.

HB 2286• Deputy Sheriff may elect between January 1, 1983 and January 15, 1983 to transfer credit to

this Fund from the State Employees' Retirement System.

1983 Session

SB 22• Delegation of investment authority restrictions.

HB514• 10% prudent person investment category.• 10% increase in spouse benefits to spouses receiving benefits as of January 1, 1984.• Immediate participation rather than after 1 year of service.• Refunds if off the payroll at least 30 days.• Money purchase annuity for County Sheriffs service not counted for Sheriff Formula.• Elected sheriff may be covered by Sheriff Formula with contributions.

HB637• Allows an active member of the General Assembly to establish credit in this fund for time for

which he or she could have elected to participate with interest at 6% and to transfer credits tothe Park Fund.

1984 Session

• No legislative changes.

1985 Session

HB17• For withdrawals on or after July 1, 1985, 10 year vesting formula (for employee minimum

and spouse minimum annuity) providing the employee 2% of final average earnings for eachyear of service reduced 0.5% (for ages 55-60) for each month under age 60 (but no reductionwith at least 30 years of service). Spouse minimum amount is 50% of the employee'samount at retirement (reduced 0.5% for each month the spouse is under age 60) but not lessthan 10% of the final average earnings.

• Unisex money purchase factors for widows/widowers.• Disability provisions extended to 70 in certain cases.• Sheriff formula for withdrawals after December 31, 1985 after having attained age 50 in

service with 20 or more years of service of 50% of 4 year average earnings plus 2% for eachyear or fraction of service over 20.

• Changes in the reversionary annuity provisions.• Optional plan of 3% contributions for 1% optional benefit per year of service. Provisions for

payment of past service with interest. Provisions expire July 1, 1990. Such plan, if electedby a member, would require a 3% of salary contribution (with interest for past service) andwould produce an additional 1% per year of service benefit and would increase the employeeannuity, post-retirement increase and spouse annuity. Membership in this plan is optionaland as such, it is possible to delay election to just prior to retirement. Therefore, at this time,there is no accurate estimate of how many members will actually elect the optional benefits.The liabilities and the annual cost requirements of the fund may be substantially understated(up to 50% in some cases) if participation is high. It is difficult to pre-fund an unknownbenefit. Actuarial losses may occur as experience develops.

1986 Session

HB 2630• Allows for a member of a County police department to establish service credit for approved

leaves of absence without pay, during which the employee served as head of an employeeassociation consisting of other police officers by making the required contributions.

• Allows for the use of service of less than one year for calculating reciprocal annuities in thecase of employees who transfer or are transferred as a class from one participating system toanother.

33

1987 Session

HB2715• For withdrawals after January 1, 1988, and for employees with at least 10 years of service and

age 50, the minimum formula annuity is increased to 2.2% of the Final Average Salary foreach of the first 20 years of service and 2.4% for each year thereafter, not to exceed themaximum of 80% of Final Average Salary. For retirement between age 50 (new minimumretirement age) and age 60, the annuity thus computed will be reduced 0.5% for each monththe employee is under age 60 unless the employee has 30 or more years of service in whichcase no reduction will apply.

• The surviving spouse of an employee who retires on or after January 1, 1988, with at least 10years of service is entitled to 50% of the annuity including increases that the deceasedannuitant was receiving as of his or her date of death. Such annuity to be reduced 0.5% foreach month the surviving spouse is under age 60 at the date of the annuitant's death.

• Effective January 1, 1988, any child's annuity being paid shall be increased from $140 permonth to 10% of the employee's salary at the date of death provided that the increasedannuity would be greater than $140 per month, subject to Statutory maximums.

• Effective January 1, 1987, the maximum age conditions for any disability are removed foremployees whose disability continued past that date.

• A Deputy Sheriff with at least 15 years of service as a Deputy Sheriff can receive credit underthe Police formula for other Cook County service by electing to pay an additionalcontribution prior to retirement. In addition, any Police Officer who has rendered at least 20years of service and who separates from service prior to age 50 and does not withdraw his orher contributions can apply for pension benefits at age 50 without returning to duty.

• Effective July 1, 1988, all employee and surviving spouse annuitants will receive a one-timeincrease. Such increase to be an additional 1% for each full year that the annuitant hasreceived benefits as of July 1, 1988.

• An alternative plan for elected officials of 3% of the Final Average Salary for the first 8years, 4% for the next 4 years and 5% thereafter, subject to the maximum of 80%, isavailable. The elected official must contribute and additional 3% of salary to receive thesebenefits.

• Effective December 1, 1988, the Retirement Board will be increased from 5 to 7 Trustees.One annuitant Trustee to be elected for a 3 year term by those persons receiving annuity ordisability benefits and 1 Forest Preserve District Trustee to be elected by the Forest PreserveDistrict contributors for a term of 3 years beginning December 1, 1988.

1988 Session

• No legislative changes.

34

1989 Session

SB 95• Allows active members of the General Assembly to transfer credits and creditable service

established in the Fund to a Fund established under Article 5 of the Pension Code.• For withdrawals on or after July 1, 1985, provides that for employees with at least 30 years of

service, no reduction for age less than 60 will apply for the spouse annuity.

SB 1096• Extends the Optional Plan of benefits from the original expiration date of July 1, 1990 to July

1,1992.

HB332• Signed August 23, 1989.• Eliminated age-related discriminatory provisions as required by Federal law or regulations.• Provided for age discrimination changes effective January 1, 1988 to eliminate age 65

requirements for marriage in service and children's benefits, provided contributions after age65 for spouse benefits, provided employee accumulation annuities be computed after age 70,provided employee and spouse accumulation annuities not be "fixed" at age 65, provided noage 70 restriction on disability benefits, provided for active members over age 65 that theiraccounts be "unfixed" and accumulate interest until the date of withdrawal, and provided thatthere be no age 70 membership limitation and removed the permitted "no spouse" refund atage 65.

• Provides that for employees retiring after January 1, 1988, but before age 55, Section 20-131shall not apply; therefore, they are not entitled to the alternative formula set forth in Section20-122 repealed in 1975.

HB 158• Provides for payment by the Fund of 50% of the health care premiums for annuitants who

participate in any of the County's health care programs beginning January 1, 1990 and endingDecember 31, 1993, subject to the following maximums:

Single coverage, no Medicare $130.00 per monthSingle coverage, with Medicare 39.00 per monthAnnuitant + 1 family member, no Medicare 212.00 per monthAnnuitant + 1 family member, 1 with Medicare 168.00 per monthAnnuitant + 1 family member, both with Medicare 78.00 per monthAnnuitant + 2 or more family members, no Medicare 280.00 per month

35

1990 Session

SB 1951• Signed January 14, 1991.• Raises the maximum annuity for a Deputy Sheriff from 75% of final average salary to 80% of

final average salary.• Provides for a revised table to be used for reversionary annuities to allow for the younger age

50 retirement approved in previous legislation.• Allows for the refund of the additional 0.5% contributions that are paid by a Deputy Sheriff

for the special Sheriffs formula to be refunded if the regular formula is used to calculate theemployee annuity at the time of retirement. The refund, if given, is to include the interest aswell as the 0.5% contributions.

• In the case where an employee who is disabled and cannot return to work after all his/herdisability credit has expired, and chooses the option to pay for up to one additional year ofservice under Section 9-174, this additional service will not affect the resignation date forannuity purposes, but the salary and service will be used for such purposes.

• Provides for employees who retire on or after November 1, 1990, any accumulated vacationpaid out in a lump-sum at the time of retirement will not affect the employees' withdrawaldate for purposes of annuity. Any service will be granted and used for annuity purposes, butthe final average salary will not include the salary for any vacation paid out.

SB 136• Amends Chapter 120, Paragraph 671 of the Revenue Act to provide for a separate listing on

the tax bill of the dollar amount of tax due from the person assessed which is allocable to atax levied under the Illinois Pension Code, or any other tax levied by a municipality ortownship for public pension or retirement purposes. Effective January 1, 1990.

1991 Session

HB971• Signed November 19, 1991.• Early Retirement Window for employees attaining age 55 prior to withdrawal and

withdrawing on or after January 1, 1992, but before December 31, 1992, the servicerequirement for minimum formula annuity is reduced to 5 years. In addition, for the sameperiod above, the age discount for retirement prior to age 60 is reduced to 0.25% per monthunder age 60 at retirement. The widow(er)'s annuity for the above early retirement windowis 50% of the employee's annuity reduced by 0.5% for each month the widow(er) is underthe age 60 at the time of the employee's death.

Other Changes

• Provides that the 3% annuity increase will begin on January lbt following the first anniversaryof retirement for employees who retired with 30 or more years of service and were under age60 at retirement.

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Extends the Optional Plan of Benefits for an additional 5 years to July 1, 1997.Allows for an employee to make contributions and receive service credit for any unusedaccumulated sick leave up to 180 days, at retirement.Employees may now discontinue making contributions to the Pension Fund after 35(previously 42) years of contributing service upon notification to the Retirement Board atleast 60 days before the deductions cease.For widow(er)s of employees or annuitants who die after November 19, 1991, the maximumlimit on the spouse annuity is removed provided that the employee was at least 60 with atleast 20 years of service or also if retirement occurred on or after January 1, 1982, at age 65 orover with at least 10 years of service for retirements.For widow(er)s of employees who retired on or after January 1, 1984, but before July 1, 1985,with at least 30 years of service, the annuity is 50% of the employee's annuity as of the dateof retirement with no discount for under age 60.Beginning with retirements or deaths on January 1, 1992, with at least 10 years of service, theage discount for a widow(er)'s annuity will be 0.5% for each month the widow(er) is underage 55 at the date of the employee's death. This is reduced from age 60 for prior deaths orretirements.Beginning on November 19, 1991, provides for a $ 1,000.00 death benefit payable upon thedeath of employee or annuitant to the employee's designated beneficiary, or to theemployee's estate if no beneficiary has been named.Beginning December 1, 1991, the Fund may pay . on behalf of each of the Fund's annuitantswho chooses to participate in any of the County's health care plans, all or any portion of thetotal health care premium (including coverage for other family members) due from each suchannuitant.Allows the annuitant to authorize the withholding of dues from annuity checks for certainlabor organizations.Allows participation for all employees with at least one month of service.Provides for a repayment of contributions and transfer of service from the General Assemblyand for former members of the General Assembly through February 1, 1993.Grants the authority to rent or lease office space to the Board of Trustees when deemeddesirable for the purposes of the Fund.Allows the Pension Fund to withhold contributions to a labor organization from annuitychecks provided that at least 100 annuitants authorize withholdings from their checks.Provides for the repayment of contributions by former members of the County Police whowere the head of an employee association, to include both the employee and employer shares.

1992 Session

SB 1770• Signed September 16, 1992.• Early Retirement Incentive

o Provides an extra 1% per year of County service, up to 10 maximum, times the finalfour year average salary for those eligible employees. There is no cost to theemployee. The age discount from age 55 to 60 is eliminated if eligible.

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Eligible if a contributing member on May 1, 1992 and:• Retires on or after December 1, 1992 and on or before May 29, 1993;• Attains age 55 or more on or before the date of retirement; and• Has at least 10 years of creditable service.

1993 Session

SB 1650• Signed January 26, 1993.• Provides that the 3% annuity increase will begin no later than January 1, 1993 for employees

who retire before age 60 before January 1, 1991 with at least 3 0 years of service.• For widow(er)s of annuitants who die on or after January 1, 1993, the widow(er)'s annuity

shall be 50% of employee's retirement annuity at death discounted 0.5% per month thewidow(er)'s age is less than 55, except if the employee had 30 years of service.

• Allows an employee with 25 years of service to pay for up to 2 years of military service,whether or not followed by County service.

• Two year minimum subsequent service is changed to six months for employees who apply torepay a refund between January 1, 1993 and March 1, 1993.

• Employees may transfer to County up to 10 years with Municipal or Laborers' until March 1,1993.

• Allows for transfer of County sendee credit to Judges.• Allows a State Policeman to transfer all or some of his service with County Police to State

Employees Retirement System until July 1, 1993 and reinstate service credit terminated by arefund by paying 6% compounded annually until July 1, 1993.

• Former members of County Police who retire January 1, 1993 to March 1, 1993 do not haveto pay employer contribution for periods served as head of an employee association.

1994 Session

• No legislative changes.

1995 Session

SB 114• Approved July 14, 1995.• The amount of earnings that may be taken into account by any retirement system is limited to

the maximum dollar limitation specified in Section 401(a)(17) of the Internal Revenue Code,except for persons who became participants before 1996.

• Allows for active participants employed be the Cook County State's Attorney's office onJanuary 1, 1995 to transfer to this Fund credits accumulated under a pension fund establishedunder Article 5 of this Code and to transfer said credits from said fund to the Cook County

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fond upon payment of both employee and employer contributions with 6% interest to theCounty Employees' Annuity and Benefit Fund.

• The Fund is authorized to make certain involuntary distributions required by Section401(a)(9) of the Internal Revenue Code.

SB 424• Approved July 7, 1995.• The Pension Laws Commission was created as a legislative support services agency.

1996 Session

SB 1456• Approved August 9, 1996.• Any chief of the County Police Department or undersheriff of the County Sheriffs

Department may elect to be included as a deputy sheriff.

1997 Session

HB313• Signed June 27, 1997.• Change county size necessary for fund creation to 3,000,000 from the previously required

500,000.• As of January 1, 1998 the automatic annual increase for employee and spouse annuitants

changed to 3% compounded for all past, current, and future annuitants, regardless of theeffective date of the annuity. Term annuities are not eligible for the automatic annualincrease.

• Early Retirement Incentiveo Provides an extra 1% per year of County service, up to 10 maximum, times the final

four year average salary for those eligible employees. There is no cost to theemployee. The age discount from age 55 to 60 is eliminated if eligible.

o Eligible if a contributing member on May 1, 1997 and:• Retires on or after September 1, 1997 and on or before February 28, 1998;• Attains age 55 or more on or before the date or retirement; and• Has at least 10 years of creditable service.

• Effective January 1, 1998 all widow(er) annuitants will have their annuities increased by 3%and will receive the automatic increase of 3% compounded annually. Those widow(er)annuitants receiving a Term annuity will not be eligible for the automatic annual increase.

• Extends the Optional Plan of benefits to July 1, 2002.• Allows members of the Cook County police department to transfer their service into the

Policemen's fund until July 1, 1998, and to reinstate service credit terminated by a refund bypaying 6% compounded annually.

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• Allows members of the fund with at least 20 years of service credit to make contributions,until June 1, 1998; into the fund based on CTA compensation and creditable service isgranted for this period for up to 10 years of service credit.

1998 Session

• Effective July 1, 1999, Public Act 90-731, allows an alternate payee (former spouse, child, ordependent) designated in a Qualified Domestic Relations Order to receive all or a specifiedportion of a member's retirement benefits or refund otherwise payable to the member.

1999 Session

• No legislative changes.

2000 Session

• Passed Public Act 87-1130, which removes the remarriage penalty. Effective September 6,2000 widow annuities will no longer be ceased due to their remarriage.

2001 Session

• No legislative changes.

2002 Session

HB5168• Signed June 28, 2002.• Contractual service to the Retirement Board, of at least 5 years, can be purchased as

creditable service in the fund for up to 10 years of services by making a written application tothe board before July 1, 2003. A person who establishes such credit may, at the same time,reinstate credit in the Fund and repay a reftind without a return to service.

• An employee, who withdraws on or after July 1, 1996 but before August 1, 1996, at age 55 orover with 8 or more years of service, may elect to receive a minimum formula annuity equalto 2.2% of the Final Average Salary for each of the first 20 years of service and 2.4% for eachyear thereafter, not to exceed the maximum of 80% of Final Average Salary. There will bean age discount of 0.25% fore each month that the employee is under the age of 60, unless theemployee has at least 30 years of service.

• For withdrawals after June 30, 2002, with at least 10 years of service and age 50, theminimum formula annuity is increased to 2.4% of the Final Average Salary for each year ofservice, not to exceed the maximum of 80% of Final Average Salary.

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Early Retirement Incentiveo Provides an extra 1% per year of County service, up to 10 maximum, times the

highest consecutive four year average salary in the last 10 years of sendee for thoseeligible employees. There is no cost to the employee. The age discount for attainedage under 60 is eliminated if eligible.

o Eligible if a contributing member on January 1, 2001 and:• Retires on or after November 30, 2002 and on or before March 31, 2003;• Attains age 50 or more on or before the date of retirement; and• Has at least 20 years of creditable service in the Fund.

For widow(er)s of annuitants who die in service or after July 1, 2002, or has at least 10 yearsof service and dies on or after July 1, 2002 while receiving an annuity, the widow(er)'sannuity shall be 65% of employee's retirement annuity at death discounted 0.5% per monththe widow(er)'s age is less than 55, except if the employee had 30 years of service.For widow(er)s of annuitants who were not married at the time of retirement, but marriedafter retirement for at least one year prior to annuitant's death, the widow(er) will be eligiblefor an annuity if the refunded contributions for a widow(er)s annuity are repaid, plus interestat the rate of 6% per year. (The Pension Fund Board has received a legal opinion that hasinterpreted this to include the current widow(er). The legal opinion was that, since in theseinstances no refund of spouse contributions was made, there is no payment due from thewidow.)Extends the Optional Plan of benefits to July 1, 2005.

2003 Session

• No legislative changes.

2004 Session

• No legislative changes.

2005 Session

SB 1446• Made certain changes to the provisions relating to QILDRO, effective July 1, 2006. It makes

an alternate payee entitled to receive death benefits and allows the alternate payee to receive apercentage of the employee's retirement benefits (instead of only a fixed dollar amount).

• Public Act 94-0079, prohibits Illinois public pension funds from investing or depositing inentities doing business in or with the government of Sudan.

2006 Session

• No legislative changes.

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2007 Session

HB49• Public Act 95-279, effective January 1, 2008.• Provides that legally adopted children shall be entitled to the same benefits as other children.

and no child's or survivor's benefit shall be disallowed because the child is an adopted child.

HB 3578• Public Act 95-0654, effective January 1, 2008.• Eliminated the alternative formula for county officers elected after January 1, 2008.

HB5168• Signed into law on August 23, 2007 as Public Act 95-0369.• Provided that members who were in active employee status on December 31, 2006, applies

for a refund of contributions between the dates of August 23, 2007 and October 7, 2007, andresigns their position between August 23, 2007 and October 22, 2007, shall be entitled toreceive a one-time lump sum retirement cancellation payment equal to the member'saccumulated contributions with interest, multiplied by 1.5, in lieu of any retirement annuity orother benefit provided by the fund. An employee who receives a retirement cancellationpayment may not be rehired until after being out of service for at least 365 days. A personwho has received an alternative retirement cancellation payment and who returns to serviceunder the Fund must repay the regular refund with interest at 3% per year and the 50%enhancement payment with interest at 6% per year.

• Eliminated the requirement to maintain various reserve accounts no longer needed for theadministration of the fund.

SB 1380• Signed into law on August 28, 2007 as Public Act 95-0504.• Provides that for 6 months from the effective date, an employee may transfer to this Fund up

to 6 years of creditable service accumulated under Article 3 of the Pension Code uponpayment to this Fund of the amount of employee and employer contribution that would havebeen required if the employee had participated in this Fund during the period for whichcredits is being transferred plus interest at the rate of 6% per year.

2008 Session

SB 2520• Public Act 95-1036, effective February 17, 2009.• Provides that duty disability and child's disability benefits shall not be allowed unless

application therefor is made while the disability exists; except that this limitation does notapply if the Board finds that there was reasonable cause for delay in filing the applicationwhile the disability existed. Provides that this is intended to be a restatement and clarificationof existing law and does not imply that application for a duty disability benefit made after thedisability had ceased, without a finding of reasonable cause, was previously allowed underthis Article.

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Provides that (i) before any action may be taken by the Board of Trustees on an applicationfor duty disability benefit or widow's compensation or supplemental benefit, the relatedapplicant must file a timely claim under the Workers' Compensation Act or the Workers'Occupational Diseases Act, as applicable, to establish that the disability or death resultedfrom an injury incurred in the performance of an act or acts of duty, and the applicant mustreceive compensation or payment from the claim or the claim must otherwise be finallyadjudicated and (ii) with respect to duty disability, satisfactory proof must be provided to theBoard that the final adjudication of the claim established that the disability or death resultedfrom an injury incurred in the performance of an act or acts of duty.Amends the Cook County Forest Preserve Article of the Illinois Pension Code. Adds aprovision imposing forfeiture of benefits upon conviction of a felony arising out of or inconnection with the member's employment.

2009 Session

SB 0364• Public Act 96-0006 effective April 3, 2009.• Requires Board members to file a verified written statement of economic interest annually

with the office of the Clerk of Cook County.• Requires the Board to adopt a policy that sets quantifiable utilization goals for the

management of assets in specific asset classes for emerging investment managers. Goalsshall be separated by minority ownership, female ownership, and person with a disabilityownership.

• Requires that if at least one emerging firm meets criteria of search process, at least oneshall be invited to present to the Board for final consideration.

• Requires the Board to adopt a policy that sets forth goals for increasing the racial, ethnic,and gender diversity of its fiduciaries, including its consultants and senior staff.

• Requires the Board to adopt a policy that sets forth goals for utilization of WMDBE firmsfor all contracts and services, based on the percentage of total dollar amounts of allcontracts let.

• Requires the Board to adopt a policy that sets forth goals for increasing the utilization ofminority broker-dealers.

• Requires an annual report to the Governor and General Assembly on the utilization of"emerging firms" as defined by Article 1 of the Pension Code.

• Requires the Board to award all contracts for investment services using a competitiveprocess that is substantially similar to the process required for the procurement ofprofessional services under Article 35 of the Illinois Procurement Code. Requires theBoard to adopt a procurement policy which will be posted on the Fund's website and filedwith the Illinois Procurement Policy Board.

• Provides that a person may not act as a consultant or investment adviser unless that personis registered as an investment adviser or bank under the federal Investment Advisers Act of1940.

• Requires investment contracts between the Retirement Board and investment serviceproviders to include certain required information.

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• Provides consultant contracts cannot exceed five years in duration; however, incumbentconsultants may compete for new contracts.

• Requires investment consultants and advisers to disclose all direct and indirect fees,commissions, penalties, and other compensation paid by or on behalf of the investmentconsultant or adviser in connection with the services provided.

• Requires that a description of every contract let for investment services be posted on thewebsite, including name of entity awarded the contract, amount of contract, total fees paid,and disclosure describing the factors that contributed to the selection.

• Requires the Fund to maintain a website that shall include standard investment reporting, acopy of relevant Board policies, a listing of investment consultants and managers, anotification of any requests for investment services, and the names and e-mail addressed ofBoard members, Fund directors, and senior staff.

• Requires Board members to attend at least eight hours of ethics training per year andrequires each Board to annually certify its member's compliance and submit an annualcertification to the Division of Insurance of the Department of Financial and ProfessionalRegulation.

• Prohibits any Fund trustee or employee or their spouses or immediate family living withthem to intentionally solicit or accept any gift from any prohibited source as prescribed inArticle 10 of the State Officials and Employees Ethics Act, including educational materialsand missions and travel expenses for discussing Fund business.

• Provides that any person who knowingly makes any false statement or falsifies or permitsfalsifying any record of the pension fund in an attempt to defraud is guilty of a Class 3felony.

• Provides that no person or entity shall retain a person or entity to influence the outcome ofan investment decision or the procurement of investment advice to a pension fund forcompensation, contingent upon the decision of the Board.

• Requires approval for travel or education mission expense of a Trustee by a majority of theBoard prior to mission.

SB 0189• Public Act 96-0542 effective August 17, 2009.• Amends the Open Meetings Act and the Freedom of Information Act.

2010 Session

SB1946andSB550• Public Acts 96-0889, effective April 14, 2010, added 5/1-160 and Public Act 96-1490,

effective December 30, 2010, made technical changes 5/1-160. These acts created a 2"d

Tier of benefits for all reciprocal systems of the Pension Code.• Members first participating in any reciprocal fund, except Judges and GARS, on or after

January 1, 2011 will be Tier 2 members.• Tier 2 members will have their salary capped at $106,800 for all purposes. The amount of

the cap is subject to increase annually at the lesser of l/2 the change in CPI-u or 3%. If thechange in CPI-u is zero or negative, the cap will not change.

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• Tier 2 member's Final Average Salary (FAS) used in annuity benefit calculations will bebased on the highest consecutive 96 months in the last 10 years.

• Tier 2 members will not be able to receive an unreduced retirement annuity until age 67and the earliest they can receive any retirement annuity is age 62. Annuities payable beforeage 67 are reduced Vz% for each full month under 67 regardless of service. Tier 2 membersmust have at least 10 years of service to qualify for a retirement annuity.

• Tier 2 members will not be able to receive a COLA until the January 1 following their 67'1birthday or following the 1 year anniversary of retirement, whichever is later. The COLAwill not be compounded and will be the lesser of !/2 the change in CPI-u or 3%. If thechange in CPI-u is zero or negative, there will be no increase.

• The Tier 2 surviving spouse annuity will be 66-2/3% of the member's retirement annuity atdeath. If the member is not retired, it is 66-2/3% of the member's earned retirementannuity.

• The Tier 2 COLA for a surviving spouse annuity will begin the January 1 following themember's death if the member was retired. If they member was not retired it will begin onthe January 1 following the 1 year anniversary of the member's death. The COLA will notbe compounded and will be the lesser of !/2 the change in CPI-u or 3%. If the change inCPI-u is zero or negative, there will be no increase.

• Tier 2 members receiving a retirement annuity will have their annuity suspended if they goto work on a full time basis with any reciprocal fund except Judges and GARS.

• There was no change in the member's benefit accrual percentage (2.4% per year) or theemployee or employer contributions.

HB 4644• Public Act 96-0961 effective July 2, 2010 added 5/9-128.2 allows elected officials to

establish earnings credit for the amount of stipend that was not received.• Member must pay employee contributions and employer's normal cost on the stipend not

received and actuarially assumed interest. Payment must be received by January 2, 2011.

2011 Session

SB1716• Public Act 96-1513 effective June 1, 2011 allows 2 unmarried people to enter into a Civil

Union. Partners of a Civil Union are to be treated the same as a spouse in the State ofIllinois.

• The Fund will now grant spouse annuity benefits to a partner of a Civil Union andannuitants can cover their Civil Union partners under the Fund's Health Benefit plan. ACivil Union certificate will be treated as the equivalent to a Marriage certificate.

SB1672• Public Act 97-0530 effective August 23, 2011 requires all Funds to comply with the

Federal H.E.A.R.T. Act of 2008.

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SB1831• Public Act 97-0609 effective January 1, 2012 amends 5/l-160(h) stating members that first

become participants on or after the effective date will have their retirement annuitysuspended if they return to work for the employer on a contractual basis.

• The member is required to notify the Fund prior to accepting the contractual employment.

HB1670• Public Act 97-0504 effective January 1, 2012 amends the Open Meetings Act to require

elected or appointed members of public bodies to take electronic training by the AttorneyGeneral's Public Access Counselor. Training must be completed by the end of 2012.Members that are elected or appointed after January 1, 2012 must complete the trainingwithin 90 days of taking the oath or assuming the responsibilities of the position.

HB3813• Public Act 97-0651 effective January 5, 2012 amends Article 1 in regards to Fraud and

Fiduciary Liability.• Requires fiduciaries to report reasonable suspicion of false statements. The Board of

Trustees must report reasonable suspicion of false statements to the State's Attorney.• The Act also amends 5/9-219 requiring sheriff police and correction officers that purchase

service while on approved leave to represent a labor organization to remain in sworn statusduring the leave to be eligible to purchase service credit.

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