Participating Pension Fund Cash Management

FPIF has regularly received inquiries from member funds regarding cash management and the appropriate amounts of cash to keep in their local account. 

On February 8, 2024, the Illinois Department of Insurance (DOI) issued a Siren regarding Money Market Mutual Funds, but also addressing limits to the amount of cash and similar assets that should be held locally.  See the language below from the Siren:

Given that Article 3 and 4 funds are able to quickly access money from the consolidated funds, the amount of money any Article 3 and 4 fund may keep in a retained account (including money market mutual funds) is limited.  Amounts not imminently needed to make benefit payments or cover reasonable imminent expenses must be maintained in the consolidated fund and may not be maintained in a money market mutual fund.
Therefore, DOI’s direction is to only keep cash on hand to meet the local fund’s imminent liquidity requirements.

Under FPIF rules, and consistent with the language in the Siren, requests for transfers should be submitted by the first of the month and cash will be delivered by the fourteenth—and sooner in the case of an emergency.  FPIF recommends that local funds with regular cash needs work with the staff to establish recurring monthly withdrawals to improve their ability to manage their cash position.

A copy of DOI's Siren regarding the Use of Money Market Mutual Funds by Article 3 & 4 Funds can be found on the FPIF website under the IDOI Public Pension Division Reports & Communications heading here (link).