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This article was published 1/11/2016 (1422 days ago), so information in it may no longer be current.

Editorial

The City of Winnipeg is seeking co-operation from the police association in curbing its escalating costs for the police pension plan. The association should join in the search for an efficient solution that protects the interests of police officers and retirees and also protects the city and its taxpayers from unmanageable costs.

The Winnipeg Civic Employees’ Benefits Program, covering most city staff, contains limits on the employer’s contribution rate. This provision limits the city’s risk in future years in case the pension fund cannot sustain the level of benefits it is paying. That risk is shared between the employer and the plan members.

DALE CUMMINGS / WINNIPEG FREE PRESS FILES

The police have a separate plan which provides no such protection for the city. It is a defined-benefit plan in which the whole risk of funding shortfalls rests on the employer. The city is already assuming the burden of covering the funding deficiency that was identified by the actuaries at the end of 2013. The cost of benefits comes to about 23.1 per cent of pensionable earnings. Working police officers are contributing eight per cent of their earnings and the city is contributing the other 15.1 per cent. A new actuarial evaluation at the end of this year seems likely to increase the city’s burden.

There is always a temptation, in public-sector pension management, to promise the employees whatever they want and let a future generation take care of paying the bills when they fall due. That was part of what went wrong with the city of Detroit, which was forced into bankruptcy by the state of Michigan in 2013. At that time, one-third of Detroit’s spending consisted of pension benefits. Current municipal services to Detroit’s citizens could not be funded because of unmanageable pension costs. Everybody who could move out of Detroit did so, leaving a dwindling number of taxpayers to bear a swelling pension burden. Winnipeg is not close to that position, but that is where the process ends if the city solves all its pension problems by promising to pay more.

The Winnipeg Police Association reasons that the police pension fund would not be in trouble if the city would simply pay more. But the pension plan must be sustainable for the indefinite future — essentially forever — in order to ensure retirement income for officers who will retire this year and for those who will begin their careers next year and next decade. A funding solution that entails unlimited increases in employer contributions is not sustainable and is no kindness to the police officers who are counting on the plan to pay for their retirement years.

A solution similar to the principle of the Civic Employees’ Benefits Program, with built-in limits to the employer contributions, should be considered. If the police association has a better idea, that should also be considered. A limitless claim on the city treasury is not a solution.

Mayor Brian Bowman should keep Premier Brian Pallister fully informed about the police pension position. The file may eventually land on the premier’s desk if the police association takes a short-sighted view. Winnipeg police pensions are not directly his concern, but sustainable city finances and harmonious city-labour relations deserve his attention. Detroit’s pension problem eventually wound up in the lap of Michigan Governor Rick Snyder. If Winnipeg fails to keep its police pension costs within tolerable limits, it will become Manitoba’s problem.