WSJ: Some pensions in U.K. have Lehman exposure

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http://online.wsj.com/article/SB122160182598045003.html?mod=

The collapse of Lehman Brothers Holdings Inc. has illustrated how U.K. pension funds that have turned to banks to help hedge their financial risks could find themselves in difficulty, according to consultants to pension funds.

Pension scheme finances have been hit hard in the past 12 months by falling equity and property prices, but some have tried to soften the impact of ballooning deficits by at least hedging the risk that their liabilities will rise depending on the direction of interest rates or inflation.

This approach is known as liability-driven investment, or LDI, and typically involves derivative contracts -- interest-rate ...

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