Higher interest rates are proving a boon to U.K. defined-benefit pension plans, while causing a headache for many of the private-equity firms that manage money for the systems.

The steady increase in U.K. interest rates since the start of last year has resulted in improved funding ratios for the plans that comprise this $1.67 trillion pool of capital, allowing them to move money out of buyout- and venture-capital funds and into less-risky assets, according to several pension system managers and consultants. 


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