UK fund manager Schroders has signed an unusual £2.6bn deal with the South Yorkshire Pensions Authority to insure it against falls in the stock market, after offering a "keen fee" to win the business.

Under the terms of the arrangement, Schroders is using equity derivatives to insure the £8bn council workers' pension fund against a drop in the stock market larger than 5% and smaller than 30% in a single year.