The private market for company pensions sprang back to life today as Edi Truell's Pension Corporation struck a deal to take on the retirement obligations of Leyland DAF, the former truck-maker that collapsed into liquidation more than 12 years ago.

Pension Corporation's deal guarantees future retirement payouts for almost 5,000 former staff at Leyland DAF, almost all of whom have retired.

It means that Pension Corporation, a specialist insurer and investment manager, has effectively bought the Leyland DAF scheme out of administration. It will receive about £230 million in assets in exchange for insuring former workers' payouts.

The Leyland DAF scheme operates a defined benefit policy and guarantees to pay out a pension based on a worker's final salary at retirement.

The company, once part of the former British Leyland, appointed Aon Corporation as the Trustees for the pension scheme in 1993, before filing for administration in 1996.

It has taken the administrator since then to resolve dispute with creditors and settle the pension fund's claim on the truck-maker's assets.

Mr Truell told Times Online that there were enough assets in the Leyland DAF scheme to ensure that pensioners - who receive about £5,000 a year on average - will collect a small increase in their payouts.

"Not only are they receiving security, but we will be able to give them a payments uplift as well," Mr Truell said.

Today's deal comes amid huge uncertainty for pension funds, which have seen big holes open up in their ability to pay existing and future pensioners as a result of stormy investment markets.

Companies have been rushing to shut final salary pension schemes, in some cases to existing as well as new members, as the crippling cost of underwriting members' retirement provisions poses a serious threat to their financial health.

It defies predictions that the buyout market - in which trustees offload their pension risks to the private sector - is poised for a deal drought because big deficits make it more expensive to transfer scheme risks.

Mr Truell said Pension Corporation had plenty of capital to support future deals. He added that Leyland DAF marked only the second time that his insurer had bought a pension scheme from a company in administration and predicted that many more deals will follow, particularly in the retail sector.

Last year, Pension Corporation bought the 900-member, £42 million pension scheme of UK Can Plan, a Welsh tin can manufacturer that collapsed into administration.

Mr Truell said that Pension Corporation was in talks with numerous struggling retailers and some that had already filed for administration.

Yesterday, the Pension Protection Fund, the Government-created pensions lifeboat, revealed that the net deficit in the 7,800 defined benefit schemes that it manages ballooned last month from £136 billion to £194.5 billion.

Although some observers have questioned the PPF's ability to sustain its obligations with a shortfall of such a size, a spokesperson dismissed worries.

The PPF has pledged not to increase the annual levy that it charges pension funds and relies on for funding.

"It is important to remember that the PPF is like a pension scheme and that it only pays out compensation when it falls due. Liquidity is not a problem for the PPF. We have £2.7billion in assets and are paying out £4.8 million a month in compensation," she said.

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