SAN DIEGO – The San Diego City Council approved a $173 million settlement Tuesday in a lawsuit filed by a retiree, who alleged the city failed to contribute the required amount into its debt-ridden pension system.

According to the lawsuit filed by William McGuigan through attorney Michael Conger, the city didn't pay its full contribution into the San Diego City Employees' Retirement System between 1996 and 2005.

Under the terms of the agreement, the city will receive credit for $100 million that will be infused into the retirement system through a recently approved bond secured through tobacco settlement funds.

An additional $73 million, secured through municipal property, must be paid into the pension system over the next five years.

The settlement was approved unanimously by the City Council in closed session Tuesday afternoon, City Attorney Michael Aguirre said.

Retired Judge Lawrence Irving mediated the deal last week through Conger and the city's outside legal counsel, Latham and Watkins.

It includes a provision that the complaint be amended to be a class-action on behalf of all municipal retirees, which would prevent the city from being sued on the same matter in the future, Mayor Jerry Sanders said last week.

The city, however, will be obligated to pay Conger's legal fees.