It claims that the scheme will need to be “planned very carefully” and that it was a “seismic shift” going from defined benefit to defined contribution pensions.

Christine Farnish, chief executive of the NAPF, said: “Provided the new system is properly designed we can make a success of DC [defined contribution] pension. And it’s critical we do so.”

She went on to say that the country cannot risk “another pensions disaster”, adding that the system must be “trusted if it is to succeed in getting more people to save”.

Ms Farnish went on to discuss choice in the pensions sector, saying that the Financial Services Authority (FSA) had recently found that consumers make poor choices when presented with too many financial products.

“That indicates the need for new financial institutions, which can help manage the risks involved with DC pensions saving, and which act in the interests of consumers,” she concluded.

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