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The knee-jerk reactions have begun. The stock market tumbles and employers, worried about potential costly rises in their pension contributions, are switching from final-salary to money-purchase schemes and reduced contribution rates for new employees.

I have a two-word response to that: hold on. We have been here before. In the 1970s, contributions increased and then, when the stock market reached dizzy heights in the 1980s, huge surpluses arose. Both members and employers benefited from contribution holidays. Today's circumstances are not unique. The cyclical nature of the industry is showing itself once more.

Short-term pressure on costs can be alleviated in various ways. One might be an increase in contribution level for employees so that it's not just the employer bearing the extra cost. Another could be to look at the benefit structure for future service and reduce some of the generous add-on benefits to the scheme.

Contrary to popular belief or information being promoted by financial advisers, final-salary schemes do not necessarily cost more than money-purchase plans – in fact, they can be cheaper. This is because trustees can adopt a long-term investment strategy, whereas an individual in a money-purchase plan is subject to short-term market conditions and annuity rates at retirement. Cash built up in money-purchase schemes has fallen, leading to smaller annuities, lower rates of return and, therefore, reduced pensions.

In the long term, buying £1 a year of pension under a final-salary arrangement could be up to 30% cheaper than a money-purchase scheme. But the industry does not seem to be able to get this message across.

I am glad to report that the social housing sector has not joined the short-termist rush to abandon final-salary schemes. At the Pensions Trust, only five organisations out of 700 in our Social Housing Pension Scheme have decided not to offer it to new staff. In fact, we have had a 12% increase in members over the past year and this trend continues.

Because this is a multi-employer scheme, it also means that housing associations do not have to abide by the difficult requirements of the new accounting standard, FRS 17. I have read quotes from senior staff at housing associations saying: "We have to show these deficits and costs on our balance sheets, which is very worrying."

Under a multi-employer scheme, assets and liabilities are mixed together and balance sheet disclosures are not necessary. Employers are obliged to show only the contributions paid, but some housing associations have failed to grasp this fact.

More enlightened employers will also see the need to avoid creating two classes of employee – ones already in final-salary schemes and new staff in defined-contribution plans, with a significant difference in benefits as time passes. The risk in introducing a poor scheme will become apparent when staff retire on dreadful pensions.

Under a multi-employer scheme, assets and liabilities are mixed together and balance sheet disclosures are not necessary. Employers are obliged to show only the contributions paid

There are two choices for employers keen to maintain final-salary schemes: increase contributions – and employees should expect to share in those costs – or change the benefit structure. But if a company is determined to reject final-salary, there are options available other than switching new staff to money-purchase arrangements.

At The Pensions Trust, we have just launched a scheme called Career Average Revalued Earnings. This bridges the two traditional concepts of final-salary and money-purchase.

Benefits are based not on finishing salary, but on the average earnings of an employee throughout his or her service with a company, increased annually in line with the retail price index. The employee benefits from a final-salary-style arrangement, while the employer benefits from a stable rate of contributions. The benefit structure is based on funding the core benefits, with a resultant surplus being generated.

The way we have structured CARE ensures that it will normally show a surplus unless the long-term real rate of return falls below 1.5% (RPI plus 1.5%). The surplus is used to top up the member pension via a money-purchase plan run by the trust. This shared ownership of responsibility for pension provision between the employer and the employee allows a balanced-risk strategy to be employed.

Employers and employees also pay lower National Insurance contributions because CARE is contracted out of the State Second Pension scheme. In addition, members receive tax relief, and housing associations can control their pension costs by having a stable contribution rate.

The CARE scheme, which is nominated for the new scheme award in this year's Professional Pensions Awards, is another multi-employer arrangement which operates outside the difficulties of FRS 17. Almost 40 organisations in the non-profit sector have joined it and the Pensions Trust has offered participation to our own employees.

Other companies have been slow to follow this idea, partly because there is no incentive for financial advisers and partly because it falls within the two poles represented by final-salary and money-purchase. An in-house scheme would be bound by the FRS 17 disclosure rules, a thought which seems to send shudders down the backs of financial directors. However, the expectation with this approach would be to record a surplus rather than a deficit in the balance sheet.

Organisations need not worry if they set up such schemes with realistic contribution and benefit rates. Even if there is no business in it for the Pensions Trust, I would invite those in the social housing sector to speak to me and learn how to set up their own CARE schemes.