The credit crisis that has engulfed the world's financial markets is also hampering the nascent efforts of UK pension schemes to employ derivatives strategies to hedge their liability and risks, according to investment consultancy Watson Wyatt.

The consultancy, which is the largest arranger of swap and derivative transactions for pension schemes by volume in the UK, said it had expected volume of £15bn (€21bn) by the end of the year. which is about 9% up on the previous year. However, the growth rate has slowed from 2005 to 2006 when volume doubled.