In our self-congratulatory posting about our official opening, we noted what a beautiful day it was in Vancouver on Tuesday.

That nice spring weather is also symbolic of what is going on in the pension world these days.

Thursday’s papers reported on a study done by Watson Wyatt which indicated that the pension funding situation in Canada has improved dramatically. The funding ratio (plan assets divided by plan liabilities) has increased from 86% at the end of 2005 to 98% as of March 31st. A ratio of 100% means Canadian plans in aggregate are fully funded. The higher the number, the better.

What was labeled as the perfect storm a couple of years ago (declining interest rates, declining stock prices, overly generous benefit improvements) has abated and the sunny weather that followed has been downright glorious. It came in the form of:

• increased pension contributions - companies stepped up and put more money in
• flat to rising interest rates - in simple terms, higher rates translate into lower future liabilities
• rising stock prices

It was only two or three years ago that the doom and gloom stories about Canadian pensions were front page news. At that time, there were few comments about what would happen if the inputs into the pension equation went the other way. Well they did exactly that and the impact has been huge, even if it’s now a page 3 news item.

We’ll touch on this again at a later date, but suffice to say that this is also good news for individual investors, whether they’re part of a company pension plan or not. The variables that determine the future viability of a pension plan have the same impact on an individual’s retirement plan.

Time to crank up U2 on the car stereo. It’s a beautiful day.