Public sector workers should be stripped of their final salary pensions and instead have schemes linked to average earnings, according to a report commissioned by the UK Government.
Former Labour Cabinet minister Lord Hutton said workers such as NHS staff, teachers and police should no longer receive pensions that are based on their pay immediately before they give up work, but rather on their average salary throughout their career.
He also called for the normal age at which most public sector staff can start drawing their pension to be increased to be the same as the state pension age, while members of the armed forces, police and firefighters should not be able to retire before 60.
But he said pensions that had already been accrued by staff in final salary schemes would be honoured in full.
The proposals have drawn criticisms from union bosses, who have warned that millions of public sector workers are prepared to strike to protect their pensions.
Bob Crow, Rail Maritime and Transport union leader, said: "It is clear from all the signals that from nurses to transport staff, the Government intend to make staff work longer, pay more and get less.
"There is no question that this is the issue where coordinated strike action is on the cards as we fight to stop the ConDem pensions robbery."
Dave Prentis, general secretary of Unison, called on the Government to convene urgent talks to discuss the report, rather than "rushing" to make cuts and face industrial action.
He said: "This will be just one more attack on innocent public sector workers who are being expected to pay the price of the deficit, while the bankers who caused it continue to enjoy bumper pay and bonuses.
"On top of a pay freeze, and the threat of redundancy, they now face a pensions raid. This brings the threat of industrial action closer."
'Clear cost ceiling'
Lord Hutton said it should be possible to introduce new career-average schemes by the end of this Parliament in 2015, although some groups, such as the armed forces and police, could have a longer transition period if needed.
He also called for a "clear cost ceiling" to be introduced for the proportion of pay that taxpayers would contribute to public sector workers' pensions.
Lord Hutton was commissioned to carry out the review by Chancellor George Osborne, who warned that the "unsustainable" rise in the annual bill for public sector schemes must be tackled.
The cost of providing public sector pensions has soared by nearly a third in the past decade.
A total of £32 billion was paid to public sector workers drawing their pensions in 2008/09 - the equivalent of two-thirds of the cost of the basic state pension.
Lord Hutton said: "These proposals aim to strike a balanced deal between public service workers and the taxpayer.
"They will ensure that public service workers continue to have access to good pensions, while taxpayers benefit from greater control over their costs.
"Pensions based on career average earnings will be fairer to the majority of members that do not have the high salary growth rewarded in final salary schemes.
"The current model of public service pension provision is clearly not tenable in the long-term. There is a clear need for reform."
But he added that in order to get the right structure in place for the new schemes, it was important that there was "effective dialogue" between public sector employers, workers and unions.