Chancellor George Osborne has said the government will carry out a full public consultation on the discount rate of valuing public sector pensions.
Osborne told the Commons during the delivery of the Comprehensive Spending Review that the government had largely accepted Lord Hutton's findings from his review of public sector pensions that there must be an increase in employee contributions to public sector pensions.
He said public sector pensions should continue to provide defined benefit schemes and agreed with Hutton's sentiment that reform should not be a "race to the bottom".
"We want them to be gold standard, but they must be affordable", he added.
Osborne said the move would save £1.8bn on public sector pensions.
He said the introduction of changes to public sector schemes will need to be "staggered and progressive" to protect low paid workers and those in the armed forces.
Osborne also told Commons that the current final salary scheme for MPs is "not sustainable" and said the current scheme will have to end. The government will make an announcement after lord Hutton's findings
Hargreaves Lansdown head of pensions research Tom McPhail tweeted: "MPs pension scheme will lead the way in public sector pension reform."
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