Pension funds faced with pressure from new accounting standards in a time of depressed equity markets should consider using derivatives to modify the risk and return profile of their equity portfolios, according to Schroder Investment Management.

With the introduction of the FRS17 accounting standard in the UK, pension fund deficits that have been created by tumbling equity share prices are more transparent. This places pressure on fund trustees and makes it harder for them to try and ride out the tough markets.