* State workers on more than 10,000 stg per year should join

* National scheme too good an opportunity to miss

The British government should enrol public sector employees in the forthcoming national pension fund designed for low-earners to help reduce a looming 10 billion-pound annual shortfall, a report said on Friday.

The right-leaning Centre for Policy Studies think tank report calls the National Employment Savings Trust (NEST), the national pension fund to be launched next year, too good an opportunity to miss in weaning the public sector off final salary pensions.

The report proposes state employees with annual earnings of more than 10,000 pounds should be compelled to join the scheme, in order to tip-toe the public sector towards a partially funded pensions framework, thus reducing the burden on the state.

Most public employees, including teachers, soldiers, doctors and nurses, are part of unfunded pension schemes which while building up obligations set aside no assets.

Their liabilities are met by the public purse and by 2015-16 could cost taxpayers more than 10 billion pounds per year.

This study is the latest in a string of reports that criticised current public sector pensions as too costly and opaque [ID:nLDE64G2BC].

It compares the current public pension regime to a Madoff-style pyramid, now collapsing under the weight of insufficient contributions, rising longevity and an ageing workforce.

If public workers are brought into NEST, it will significantly boost assets run by the three fund managers appointed to run the money.

NEST recently named UBS Global Asset Management to run an equity mandate, State Street to run two bond funds while BlackRock will take charge of a cash and mixed asset funds.

Later this year ex cabinet minister John Hutton will issue a report on public retirement provisions, which is expected to trigger a review as the government takes steps to tackle the worst public pension deficit for generations.

Raising the pension age, increasing pension contributions and replacing final salary pensions with a less generous career average are seen as the most probable outcome of the Hutton report.

A switch to defined contributions -- which a NEST enrolment would effectively mean -- is seen as the most radical and politically difficult choice.

(Reporting by Cecilia Valente, Editing by Chris Vellacott and David Cowell)

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