Pensions funds increase derivatives use

The number of pension schemes using derivatives to hedge their inflation and interest rate risks has trebled over the past year, according to a survey by Mercer Human Resource Consulting and the Association of Corporate Treasurers.

The survey revealed that 17.5% of respondents are now undertaking interest rate hedging compared with 6.3% in 2006, while 16.5% are hedging inflation, up from 4.2% last year.

Pension schemes are also using credit derivatives for the first time, with 5.8% of respondents