Winnipeg’s Pension Reserves Quickly Depleting; Budget Pains Likely Coming

For years, Winnipeg has had a “rainy day fund”, worth hundreds of millions of dollars, that was used to pay pension expenses. It was advantageous for the city because the general budget could be insulated from rising pension costs.

But that may not last much longer. The rainy day fund is drying up, and pension costs are still rising: the city expects to use $16 million to pay down pension expenses in 2014, and for the first time that money might have to come straight from the general budget.

From the Winnipeg Sun:

The [rainy day] fund has dipped from $130 million in 2006 to $60 million in 2012.

“Once the fund is dry the city will likely be left scrambling to find $16 million (or more) each year to fulfil its pension obligations,” said CTF prairie director Colin Craig. “That’s the equivalent of about a 3% property tax increase each year.”

Craig said the city has indicated it withdrew $16.3 million in 2013 and expects to withdraw about the same in 2014.

“Candidates are currently having trouble finding $20 million annually for the proposed rapid transit expansion,” continued Craig. “Well, surprise! They’re likely going to have no choice but to start finding $16 million each year to pay for the city’s pension plan too. It’s pretty clear the taxpayer can’t afford everything that council candidates are promising.”

The city’s 2013 annual report states, “Until recently the Winnipeg Civic Employees’ Benefits Program’s special-purpose reserves have been used to subsidize the cost of benefits. … the Program’s reserve position is currently insufficient to continue to subsidize the cost of benefits on a sustainable basis.”

If the fund contained $60 million in 2012, it will likely contain less than $28 million when 2015 begins. By the time 2016 rolls around, the general budget will become exposed to the city’s pension expenses.