The changes follow the recommendations of a government task force launched last September to review public sector pensions.
Unions would have the option of going to the new "shared risk" pension plan or stay with ones they have now, but Premier David Alward says many of the current plans in the public and private sectors are not sustainable.
"It's not fair or realistic to encourage New Brunswick workers to rely on a pension scheme that is not sustainable," Alward said.
"It is not fair or realistic to expect New Brunswick taxpayers to backstop huge swings in pension valuations because of the performance of pension plan investments."
The new plan would not cut existing benefits for retirees, but for future retirees pensions would be based on average earnings over an employee's career, rather than just their best years.
"Under this plan, New Brunswickers at all stages of their career can be assured that their pension will be there when it is their time to retire," Alward said.
Task force member Susan Rowland said the new pension scheme is based on the Dutch model now used in Holland and a number of other countries.
She said it would mean employees would pay between 1.2 and 2.8 per cent more in premiums, while employers would see an increase ranging from 1.2 to 3.9 per cent.
"These are modest increases," she said. "That's a pretty good trade-off for the kind of security this model will deliver."
Cost-of-living increases would be conditional on pension plan performance, and over the next 40 years, full pension eligibility would be moved to 65 years of age from 60.
Surpluses could be used to make up for any years where cost-of-living increases have been skipped, or could be used to reduce premiums.
The plans would be managed by an independent board of trustees.
The New Brunswick Nurses Union, New Brunswick Union of Public and Private Employees, and New Brunswick Council of Hospital Unions have agreed to adopt the new model for some of their public pension plans.
Nurses Union president Marilyn Quinn said the changes provide much needed security for her members.
"Their retirement security was in jeopardy," she said. "We're confident today that this new model will secure the retirement security for nurses and specialized health and paramedics in New Brunswick."
Norma Robinson, president of the New Brunswick Council of Hospital Unions, called it an "historic moment" for her group.
"For a number of years ... we've had an under-deficit plan," she said. "We've embarked on several occasions to get the plan fixed but the resolve never seemed to come."
The New Brunswick Pipe Trades union will become the first private sector union in the province to adopt the new model.
The four unions will adopt the new pension model as of July 1.
Alward is also encouraging members of the legislature to adopt the new model for their pensions.
The changes follow a number of pension problems in the province in recent years.
Employees at Fraser Papers were only able to collect two-thirds of their pension after the company went bankrupt in 2009.
Note to readers: This is a corrected version. A previous story said the changes would apply to the province's politicians.