The Canada Pension Plan fund saw its assets fall by $8.5 billion in the last three months of 2008 as falling stock markets hit it.

The CPP fund said Friday that it had $108.9 billion in assets as of the end of its third quarter on Dec. 31, 2008, down from $117.4 billion at the end of the second quarter.

"Sharp declines in global equity markets, especially in October and November, negatively impacted our results for the quarter," said David Denison, the president and CEO of the CPP Investment Board.

"The funding structure of the CPP means that it is able to weather an extended market downturn and the assets we are managing today are not required to help pay pensions for another 11 years," Denison said.

Falling market accounted for $7.9 billion of the fund's asset decline, while the remainder of the drop was due to about $600 million in outflows to be used for benefit payments.

The stock market carnage contributed to an investment rate of return of -6.7 per cent during the third quarter, the pension plan said.

Despite the weak markets and the pension plan's negative returns for the third quarter, Denison said the short-term problems also bring long-term investment opportunities.

"Since we are not forced to sell assets in these market conditions to pay current benefits, we instead are well-positioned to acquire assets at attractive prices," Denison said.