The National Association of Pension Funds has called on Lord Hutton to introduce career average schemes as part of his review of public sector pensions.
The NAPF says the move would be the best way to keep schemes going in the wake of rising costs as well as protecting the interests of lower-paid workers.
Lord Hutton, who will publish his final report in time for the 2011 Budget, has already indicated that he would recommend this policy as part of his initial findings in October this year.
Most public servants are currently in final-salary pension schemes, which take into account the number of years a person makes contributions to their pension as well as their salary at retirement. The career average move would result in a build-up of assets through a workers salary during their employment. It is thought that the career average option would in most cases be lower than a final salary scheme.
NAPF chief executive Joanne Segars says: “Career average pensions are the most promising option for providing a sustainable, affordable and fairer public sector pensions system,”
“While it will reduce the costs of public sector pensions, it will also protect lower-paid workers who don’t usually have significant salary spikes late in their careers.”