WINNIPEG'S police union has rejected a city request to put off special payments to its pension fund.
On Tuesday, the City of Winnipeg announced it will have to obtain a letter of credit for $130 million after the Winnipeg Police Pension Plan members rejected a bid to allow a solvency exemption for their pension plan.
Actuaries evaluate pension plans to determine whether the fund has enough assets to meet its obligations if, hypothetically, the City of Winnipeg went bankrupt.
A city report, released Tuesday, said the police pension plan had a solvency deficiency of $120 million following an evaluation in 2011.
The city said it was unlikely to default on its pension contributions and requested an exemption for funding the deficiency.
Winnipeg Police Pension Plan members voted not to allow the exemption, which means the city must either spend $26 million a year over the next five years in special annual payments -- the amount equivalent to a 5.65 per cent property tax hike each year -- or obtain a letter of credit from a lender to offset the $130 million in pension obligations.
Winnipeg chief administrative officer Phil Sheegl said the city's 11 other unions agreed to an exemption, and obtaining a letter of credit will cost the city money.
An administrative report said Winnipeg will have to spend about $30,000 to obtain the credit this year and as much as $413,000 by 2018.
Winnipeg Police Association president Mike Sutherland said pension members want to protect their plan and were unable to reach a reasonable agreement with the City of Winnipeg. Sutherland said this is the first time the plan is in a deficiency, and he finds the city's position "strange" since the projected deficiency could drop if interest rates rise.
Sutherland called the issue a "non-story."
"Despite our numerous attempts to do so, the city expressed no sincere desire to get any reasonable agreement reached," he said.