Pension trustees ask people to provide private medical information. The data is then given to an insurer which may take on the brunt of the liabilities of the pension scheme if it believes members will die shortly after retirement.

So-called enhanced buy-ins are gaining traction for defined-benefit pension plans which promise staff a pension based on salaries. A deal allows a pension plan to transfer the risk of people living longer than expected to an insurer.

We have found pension plans can save between 15-20 percent using an enhanced buy-in over a traditional insured approach, said Will Hale, director of corporate partnerships at pension provider Partnership, one of the few insurers quoting on enhanced buy-in transactions.

Insurers are targeting pension schemes heavy with expensive executive pensions or those with about 300 members and liabilities of 30-50 million pounds ($48-$80 million) - usually made up of blue-collar workers - to try to weed out the unhealthy and bring down the cost of an insurance transfer deal.

Pension plans ask members to answer a handful of questions requiring a 'Yes/No' response and to give permission for insurers to request a medical report from their doctor.

Insurers may then underwrite the scheme, based on the health information volunteered by the employees.

Hale said Partnership have quoted on more than 50 schemes.

We are hopeful we will complete the first deal in the next few months, he said.

Currently, around 3-5 billion pounds of business per year is completed via traditional pension transfer deals under which liabilities are transferred to an insurer. Pension consultants expect 10 percent of that market could become enhanced annuities in the near future.

Critics of enhanced buy-ins say the move will distort the marketplace and make it harder to insure healthy members of the scheme.

It creates a non-level playing field if one insurer has obtained far more information than other insurers, said Jay Shah, co-head of origination at Pension Insurance Corporation.