A new general insurance scheme could prove a lifesaver for the many UK companies hit by pension deficits.

The scheme is being offered by Pensionassist, which advises companies on pension deficit issues, and broker PMG Financial Services.

Many companies are under increasing pressure as a result of a the new FRS 17 accounting standard, to be introduced on 1 April, which requires any company with a pension deficit to place this on its balance sheet.

The scheme uses a surety bond which will act as a financial guarantee. This means the pension deficit need not appear on the company's balance sheet.

If the bond is in place, the company also need not pay the new Pension Protection Fund (PPF) levy. Pensionassist said the bond was the only product on the market which allowed this.

To prove effective, it will need to be in place by 31 March, when the PPF will assess companies' liabilities.

Broker Paul Philand of PMG Financial Services said: "The bond needs to be written by an insurer with a financial strength of AA-. There are around four insurers who can do this, although this criteria may be relaxed slightly once the market becomes established."

The CBI estimates one in five UK companies will become insolvent in the next 10 years as they struggle to manage the impact of FRS 17.

PricewaterhouseCoopers' research says more than 90% of the FTSE350's pension schemes are in deficit.