The head of the London Pensions Fund Authority has joined voices in warnings over the impact of plans to increase public sector pensions contributions.
Mike Taylor, chief executive of the LPFA, said Treasury plans to increase contributions by 3% over the next three years could lead to a "mass opt out" of the local government scheme and have a knock on effect with investors.
While those on middle incomes were most likely to be hit with a real rise of 4% "at a time when they've probably not had a pay increase for two years and there is a big threat on jobs," a top civil servant's pension contributions could rise from 1.5% of pay to 4.5%, and a social worker's could increase from 6.5% to 11%, he said.
The authority is the leading pension administrator for the local government pension scheme, which has 4.6m members and is one of the largest public sector pension schemes in the UK. The LPFA adminsters some £3bn.
Public sector pensions operate under a guaranteed final salary pension scheme but Taylor said this didn't mean workers all had "solid gold pensions."
"The average pension in local government sector is quite low so there aren't many gold plated, solid gold pensions out there," Taylor said on the BBC.
The average pension paid in the public sector is £7,800, with around half of pensioners on less than £5,600 a year.
"What I'm really concerned about is the unintended consequences of this which I'm not sure the government has thought through. The local government scheme ... has about £40bn in UK shares, and I'm worried that if people opt out, funds will change their investment strategy to reduce risks which could have a significant effect on markets."
Taylor said that while the GMB union had overestimated the potential opt out at 50%, the Treasury's estimate of 1% was also hugely underated.
Taylor criticised the Treasury for announcing the plans before the final results of a nine-month inquiry by Lord Hutton into the state of the pension system, although Hutton has said contributions should rise.
He said the move threatened to increase deficits in funds at a time when it could least afford it. "Employers could well end up having to put more money in than they do today resulting in a net loss to the public purse."