Pensions are funded by employee contributions, investment returns, and municipal contributions. Employee contributions are set by the State (9.91% of pay for police and 9.455% if of pay for fire). The State has created local boards to oversee the investments on behalf of active and retired police officers and firefighters. The City has two of the five seats on the pension board. Investment returns are set to achieve 6.5% annually, and if the investment target is not met, the City has to make up the difference. If the investment returns exceed expectations, it can reduce the amount the City has to contribute. The amount the City has to fund is determined by an actuary, or by the Illinois Department of Insurance every year. Under state law, police and fire pension systems must achieve 90% funding by 2040.