Mark Wood, the chief executive of Paternoster, today predicted that the pensions buyout market will double this year after his specialist insurer took on more than £1.4 billion of final salary schemes in 12 months - a more than twelvefold increase on the previous year.

"There is massive growth. Our estimate could even be conservative," Mr Wood said, as he estimated that the total market for 2007 would reach about £3 billion to £3.5 billion and that 2008 could see around £6 billion of scheme assets transferred.

Paternoster bought out 21 schemes last year, including landmark deals involving the £800 million former P&O shipping line pension fund and £170 million retirement scheme at Emap, the magazines publisher and radio group.

After operating assets under management of just £123 million as at the end of 2006, Paternoster now manages £1.54 billion, with obligations to 17,721 pensioners and 4,100 deferred members of a total of 29 pension schemes.

Paternoster's full-year premium income was £1.4 billion, a stunning 1,151 per cent higher than in 2006.

The buyout market took off last year after pension schemes operated by FTSE 100 companies went into surplus, making it cheaper for trustees to offload their funds.

Paternoster takes on all risks and obligations covering pension payments to retiring employees, meaning a company that sells its scheme offloads its exposure to the risks of its former workers living far longer than expected.

"There is now a solution to the risks associated with companies' defined benefit schemes," Mr Wood said.

Mr Wood said that he had been "staggered" that Paternoster had provided quotes on £3.5 billion of pensions business in the week before Christmas, as trustees rushed to offload their schemes before the year-end.

Paternoster is facing competition from rival incumbents such as Legal & General, the Prudential, whose UK arm Mr Wood used to run, and Pensions Corporation, the buyout firm run by Edward Truell and Charlotte Crosswell.

Banks including Goldman Sachs and Lehman Brothers have also moved in on the area.

Mr Wood said that, with the FTSE 100's pension assets currently estimated at £1.2 trillion, the market was perfectly capable of sustaining new entrants.

His confident projections came as a new company, Life Trust Insurance, launched an investment plan specifically aimed at dealing with the risk of an individual living longer than expected.

The Longevity Income Plan is aimed at individuals aged around 50, although it is open to anyone older than 18 with a minimum of £5,000 to invest.

As well providing an additional income after retirement, the Plan - which requires an individual to be invested for at least 10 years - returns a proportion of the initial capital to the estate once the policyholder dies.

Life Trust is run by Andy Briscoe, a former managing director at the Goldfish credit card company, and Roger Davis, former head of business banking at Barclays.

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