A sophisticated derivatives strategy has helped the £26bn pension fund for the UK's Royal Mail Group to make a 29% return on its money last year, reducing the company's £10bn deficit and potentially helping along its privatisation.

The Royal Mail Pension Plan exploited the recovery in financial markets during the year by doubling its exposure to equity futures. These are contracts, usually with a bank, whereby the fund can purchase equities for an agreed price at a future date. It will then profit if equities rise, or lose out if they fall.