Pension funds should be taking advantage of low volatility and recent stock market gains to hedge against the risk of extreme events hitting their funding positions, according to leading investment advisers.

Hedging strategies can be used by schemes to limit downside risk from events such as a stock market crash, sharp interest rate movements and high inflation or deflation, all of which could significantly effect their funding levels. The 2008 financial crisis, for example, wiped out $5.4 trillion (more than 20%) of global pension assets by the end of 2008, according to OECD estimates.