Most public-sector workers can retire at age 60, a retirement age that hasn't been changed in more than 50 years, London's Daily Telegraph reported.
The solution is to delay the retirement age and increase the rate working Britons are paying into the retirement fund, John Hutton, the former Labor pensions secretary and Cabinet member said in a report on retirement issues.
Hutton's report said the cost of public-sector pensions has climbed 32 percent in the past decade.
His suggestions could result in an overhaul of the retirement system next year, the newspaper said.
Labor unions didn't like Hutton's report and threatened a series of public-sector strikes. Hutton said pension contributions should be increased by more than 2 percent of a worker's salary and that the retirement age should be increased by up to five years.
A civil service union said Hutton's recommendations were "unfair and unwarranted" attacks on public-sector pension plans.
"This would amount to a savage pay cut when members are suffering a two-year pay freeze," said Paul Noon, a union official.
Chancellor George Osborne was studying Hutton's report.
"I think the report is very impressive and substantial," Osborne said. "John Hutton is bringing experience that he has as Labor's former work and pensions secretary to bear and he is addressing this whole issue of fairness."