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Pension funds dropped sharply in third quarter of 2008

Employer-sponsored pension funds lost over $82 billion in the third quarter of 2008, according to Statistics Canada.

The decline, says StatsCan, resulted from a sharp fall in stock prices and foreign investments.

Worse yet, pension funds were paying out more money than they were taking in:

Expenditures of $22.8 billion in the third quarter exceeded revenues of $17.0 billion, for a negative cash flow of $5.8 billion. This was the largest quarterly net income loss in six years and the second time in 2008 that pension funds had experienced a negative cash flow.

The negative cash flow resulted from significant net losses on the sale of securities. Collectively, pension fund managers reported $8.5 billion in third quarter losses, the largest net loss on sale of securities recorded for trusteed pension funds.

Total revenue from contributions in the third quarter of 2008 amounted to $8.3 billion, down 1.6% from the second quarter. Pension benefits paid to retirees grew 5.8%, reaching a high of $9.8 billion. Benefits exceeded pension contributions made by employers and employees for a fifth quarter in a row.

StatsCan's Labour Force Survey will release unemployment figures for February on March 13. Employment fell in January by 129,000 jobs, almost all of them full-time.

Crawford Kilian is a contributing editor of The Tyee.

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