Staff from aircraft maintenance firm SR Technics stage a protest march in Dublin last March

Members of the SR Technics defined benefit pension scheme are facing the prospect of retiring on as little as one-third of their expected payout after trustees complete the wind up of the fund, according to pension sources.

Trustees are contacting members this week to inform them of plans to use the scheme's residual assets to buy annuities to pay for future benefits.

But because of underfunding, high transaction costs and obligations to existing pensioners who must receive full benefits, the eventual income produced by these annuities is estimated to be just a third of what was promised.

Trustee Noel Murray told the Sunday Tribune that distribution of assets was "imminent" but would have to be paid in several tranches due to some "illiquid assets".

The bulk of the fund is in cash, but a small element is believed to be invested in property, which will have to be sold.

The SR Technics scheme was funded to 72% of its liabilities when the company's owners, Abu Dhabi development company Mub­adala, abandoned Ireland last April, refusing to finance the scheme further or top up the deficit.

After trustees determined they could not pursue the company for the money under Irish law, they began the asset disposal process.

Despite being significantly underfunded, the scheme is not eligible for the govenment's new Pensions Insolvency Payment Scheme (PIPS), because the programme is limited to pensions in deficit where the employer has become insolvent.

An estimated 90% of Irish defined benefit pension schemes with more than €30bn in liabilities failed to meet the required funding standard set by pensions regulations.