Generous gold-plated pensions could be axed for future nurses, teachers and police officers under proposals welcomed by Reform deputy leader Richard Tice. He backed a study that found radical changes to public sector pensions would save taxpayers £37.4 billion every year. The current arrangement is unfair because workers in the private sector are footing the bill for pensions that are far higher than they will ever enjoy themselves, according to the paper from think tank Policy Exchange.

It called for existing “defined contribution” pensions to be closed to new public sector workers. Those joining a profession, or anyone who took a career break and returned, would instead be offered a defined benefit scheme in the same way as most employees working for private businesses. Reform have not yet set out their pension plans but Mr Tice said: “This is a major contribution by Policy Exchange to the pensions debate, which I welcome. The current situation with public sector pensions is unsustainable and needs reform. We are very focused on this issue.”

However, the proposals sparked an angry backlash from unions representing public sector workers. TSSA general secretary Maryam Eslamdoust said: “It’s outrageous that the multi-millionaire deputy leader of Reform UK wants to raid the pensions of rail and transport workers, as well as other public sector employees.

“This latest declaration of war on workers from Nigel Farage’s super rich henchman is Reform showing its true colours.”

Many public sector workers are currently enrolled in defined benefit schemes, which guarantee an annual income each year once they retire. With the exception of the scheme for local government workers, these are “unfunded”, which means that pension payments are provided by the Government through tax revenue or borrowing. Staff must contribute a portion of their salary each month in order to build up pension entitlement, but this simply goes to the Treasury.

It means that the Government is currently expected to spend £1.4 trillion on pension payments for former public sector staff in years to come.

Private sector workers are usually enrolled in defined contribution schemes, in which contributions from their salary are invested and returned to them once they start claiming their pension. This usually results in a less generous pension.

Baroness Noakes, former President of the Institute of Chartered Accountants in England and Wales, said: “It cannot be fair that taxpayers should be asked to pay for public sector pensions on terms that are increasingly not available outside the public sector.”

Writing a foreword to the Policy Exchange report, she said: “At a time when the national debt represents 95% of our GDP, annual debt interest payments are forecast to reach £114 billion, and pressures on the public purse are ever-increasing, we simply cannot afford to ignore the financial impact of the current public sector pension system.”

She added: “Pension reform should not be framed simply as a cost-saving exercise – there is also an issue of intergenerational fairness. Younger taxpayers will bear the cost of maintaining the current system, yet most will not themselves benefit from the generosity of defined benefit pensions. Ignoring this reality is neither progressive nor responsible.”