Canada’s pension funds are riding out the latest “storm” much better than expected.

The last time we witnessed an unpleasant mix of volatile markets and falling interest rates, it wasn’t a pretty sight. In 2002, during the height of what became known as the “perfect storm,” Canada’s largest pension funds saw their total assets drop by 5.6%. It was the biggest yearly decline recorded in Benefits Canada’s annual survey of the Top 100 Pension Funds. And it was the first time that the assets of the Top 100 decreased in consecutive years. After more than a decade of rising markets and double-digit returns, many pension plan sponsors found themselves facing significant deficits.

So when those same conditions reared their ugly heads yet again in the wake of the recent credit crunch, I thought we were in for the sequel. In fact, some industry commentators began labelling it “The Perfect Storm II.”

And that’s exactly what I planned to put on the cover of this month’s issue for our annual Top 100 Pension Funds report. I asked our art director, Elaine Fenech, to start digging up stock photos of thunderclouds and lightning bolts. The more ominous-looking, the better.

But when associate editor Brooke Smith started talking to the pension community about how they’re weathering the latest “storm,” she got a much different story. Turns out the situation isn’t nearly as ominous as we expected. One consultant even referred to the current conditions as “a cool breeze.”

More importantly, Canadian pension funds are much better prepared for the onslaught this time around. Seems they’ve been doing some weatherproofing in recent years. Yes, they’re certainly feeling the financial conditions—27 of the Top 100 Pension Funds saw their assets decline in 2007 compared with 90 in 2002—but the impact hasn’t been as severe this time. As a whole, the Top 100 Pension Funds actually grew by just under 4% in 2007. I suppose we’ll have to put those storm photos on file, at least for now.

Finally, I need to correct a mistake that appeared in last month’s editorial. In that column, I referred to an unscrupulous website that offers fake doctors’ notes. Unfortunately, I incorrectly cited the website address. It should have read However, I caution against actually visiting the site, as it now features some annoying pop-ups.

Don Bisch is the editor of BENEFITS CANADA.

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© Copyright 2008 Rogers Publishing Ltd. This article first appeared in the June 2008 edition of BENEFITS CANADA magazine.