When it comes to hedge funds and pension plans, there appears to be plenty of worry to go around. Jamie Murray, who runs HSBC Republic Investments’ institutional business development and sales, told Reuters that he expects pension plans in the U.K. to invest more in hedge funds as trustees are feeling pressure to produce better results. Currently, British pension schemes allocate on average about 1% of their assets to hedge funds, well below the Continental average. Murray says pension fund trustees are “still nervous” about hedge funds, which he believes is “understandable,” given the potential liability they face if the investment turns sour. He adds that, inevitably, they “wait and see what is going on at the regulatory level as well as their peers” before jumping. Murray projects that the HF allocation could rise to 5% in five years. Those great expectations could go slightly down the drain, however, depending on the Pension Protection Fund, which was set up to pay pensioners for companies that go bankrupt. According to Professional Pensions, hedge fund managers are worried that the PPF will label them all too risky, which would result in higher risk-based taxes for investors, which could lead pension plans to make a quick exit from hedge funds. Chris Rule of Old Mutual Asset Managers, acknowledging that some funds are riskier than others, told PP, “We have to make sure people are properly educated and the PPF’s bracketing is not too generic.” The PPF is planning on public consultation on hedge funds later this year; the resulting recommendations could have a significant impact on HFs in the U.K.