Industry groups have backed the changes to the UK's pensions system unveiled in today's Comprehensive Spending Review (CSR).
Chancellor George Osborne announced that the planned rise in state pension age for men and women to 66 by the year 2020 will be brought forward, with a gradual increase in the state pension age from 65 to 66 starting in 2018.
He also confirmed that the Government will increase the level of employee contributions in public sector defined-benefit pensions, as outlined in Lord Hutton's interim public sector pensions review.
Osborne, who promised that the "progressive changes" will deliver an additional £1.8 billion of savings per year by 2014/15, said that the Government will consult on the precise level of contributions after receiving Lord Hutton's final recommendations in spring 2011.
HR consultancy Mercer said that it supports the principle of raising the state pension age and welcomes the Government's plans to reform public sector pensions.
Deborah Cooper, partner at Mercer, said: "Increasing the state pension age is a sensible response to increasing longevity. Acceleration of the increase will affect women and those in low income groups the most, but it is a pragmatic decision given the difficult choices the Government is having to make."
In regard to the reform of public sector pensions, Cooper said: "The move to increase employee contributions in order to rein in the growth in public sector pensions costs is an easy win but it's still a commendable move. We support the assertion that the low paid should be protected, and that contribution increases be staged to minimise employees opting out of pension provision."
Joanne Segars, chief executive of the National Association of Pension Funds, agreed that there is a strong case for increasing staff contributions, but stressed that the lower paid must not be priced out of their pensions.
"We are glad that the Government recognises this, and that it agrees public sector pensions must remain good quality," she said. "This must not become a race to the bottom to offer the worst pension. Any hike in contributions must be gradually phased in, with low income workers protected to minimise opt-out rates from pensions."
Steve Radley, director of policy at manufacturers' body EEF, said: "We welcome the Government's positive response to Lord Hutton's report, which set out some important principles and initial steps to reforming public sector pensions and make them more affordable. It is important that public sector pensions do not get in the way of employees moving between the public and private sector."