THE air services group BBA Aviation is in talks to sell its £460m pension scheme to Legal & General. It is understood that advanced discussions have taken place, with a formal contract expected to be signed within weeks.

The move would initially see L&G take control of £280m of the scheme’s assets, money which would then be used to fund payments to the scheme’s existing pensioners.

Discussions are continuing over the remainder of the scheme. One possibility under consideration would see the additional £180m of pension assets transferred to L&G over the next five years.

Aside from a full-scale buyout of the pension, L&G has also put forward proposals to remove any future risk to BBA.

Under this deal, the BBA pension would remain on the company’s balance sheet, but L&G would acquire assets from the fund in exchange for providing an annuity to BBA’s pensioners.

The move comes amid a flurry of pension buyout deals, which has seen household names such as P&O and Rank sell off all or part of their funds.

It is estimated that £2.5 billion of pension assets will change hands in the first quarter of this year – more than was transferred in all of 2007.

Morrison Bowmore, the Islay-based whisky distiller, is believed to have secured a sale of its £35m scheme to Mark Wood’s Paternoster recently.

It is understood that Powell Duffryn, an engineering group owned by Citigroup through its Nikko Principal Investments division, is also close to announcing a deal. According to sources, the sale of the £400m scheme would release about £50m to Citi’s battered balance sheet.

Rentokil, the pest control group, has apparently examined the sale of its £1 billion pension fund and it is rumoured that AB Ports is also considering a deal.

Legal & General is one of the biggest pension buyout operators in the UK, along with Prudential. They have been joined in recent years by Paternoster, Synesis Life and Pension Corporation, the vehicle run by the founder of Duke Street Capital, Eddie Truell.

Goldman Sachs completed its first deal in the market recently, when it took control of the £800m Rank scheme.

However, the risks inherent in taking over pension schemes were exposed by L&G’s own results. Actuaries recently increased the average life expectancy of British males aged 65 from 87 to 89. The firm took a charge of £269m to its balance sheet to adjust for this increased life expectancy.

Huge swings in share prices and bond values through the recent market turmoil have also made it increasingly difficult for companies to manage their pension exposure.

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