Lord John Hutton is expected to set out plans to strip public sector employees of their final-salary benefits when he reveals his blueprint for pension reform this week.
The Independent Public Service Pensions Commission’s final report will be presented to Chancellor George Osborne on Thursday.
It is expected to recommend all public sector employees are switched from provision based on final salary to career average, and resist calls for a salary cap to limit pension contributions made by high-earners.
Former Labour minister Hutton is likely to recommend that pension rises should be linked to earnings rather than the consumer price index, Money Marketing understands.
He will also suggest linking retirement age for public sector workers to the state pension age, which is due to rise to 66 for men and women by 2020.
Accrued rights are likely to be fully protected while sources say Hutton will propose the Government implements a “fairly gentle” transition to the new regime for current members.