Retirement consultant Mercer has suggested a series of initiatives designed to reduce pressure on occupational pension schemes.

A recent survey by Mercer of pension fund trustees and managers indicated that around 80 per cent of Irish pension funds fail to meet the minimum funding requirements.

About 232,000 Irish people are members of defined-benefit pension schemes, under which they receive a guaranteed income.

Mercer says the solvency test introduced under the last Pensions Act - which measures whether funds would have sufficient assets to meet scheme liabilities if they were wound up at that point - has become a "high hurdle", especially in the light of the three-year bear market for equities. The firm believes "a revised solvency test is urgently needed".

Mercer has published a discussion document, "Solvency, Some New Ideas", to examine ways "to strike a better balance between providing security to scheme members and facilitating employers to continue their defined-benefit schemes".

Ms Anne Kershaw, senior retirement consultant, said it covered a series of proposals. These include amending the solvency test so that people getting higher pensions receive less protection, a move she says would also give employees a higher priority than at present in the event of a scheme being wound up. A second proposal would see the link between the cost of annuities and the pension funds broken.