Around 80% of defined benefit pension schemes are currently in deficit and will not be able to pay benefits without taking remedial action, according to The Pensions Board.

Announcing new pension fund rules, the board's chief executive Brendan Kennedy said there are 993 such schemes in Ireland covering 200,000 employees, 200,000 former employees who have not retired, and 85,000 pensioners.

However, he said that four-fifths of those schemes do not currently have sufficient funds to meet the benefits promised and acknowledged that some will have to close or cut benefits.

Trustees have been given until 2023 to address their deficits, though that can be extended in exceptional circumstances.

From 2016, defined benefit schemes will also be required to hold a risk reserve fund of up to 15% to protect against poor performance on investments and provide insulation against market volatility.

However, the Pensions Board may be prepared to accept a legally binding undertaking from an employer as a substitute for the risk reserve.

In addition, trustees who choose to invest in new annuity products linked to sovereign bonds will be allowed to reduce the calculation of their liabilities by up to 20%. Sovereign annuities will be cheaper, but will be linked to Government bonds.

The Pensions Board acknowledged this meant that if there were a sovereign default by the relevant country, the pensioner could lose their pension - but noted that the decision on investment strategy was a matter for trustees of individual schemes.

The Pensions Board Rules will effectively address what amount of money the fund must hold to meet its promises to workers, and what it must do where there is a shortfall in its assets to deliver those promises.