Saga, the Folkestone-based finance and holiday company serving over-50s, has hailed the Hutton report on public sector pensions as a "reality check."

Lord Hutton's report, published yesterday, called for bigger contributions from employees to better reflect the value of their pensions. He said the cost of public sector pensions had soared to £30m with the growth in public sector jobs and longer life expectancy.

He highlighted the widening gulf in pension provision between public and private sector workers which have seen their pension pots decimated in recent years.

He said final salary schemes should be scrapped and replaced by a career average scheme, with public sector workers contributing more and retiring later.

Changes to public sector pensions were supported by 83 per cent of the 14,178 respondents in a Saga poll.

Ros Altmann, Saga's new director-general, said the report provided a reality check, claiming that many public sector workers may not have understood the true value of their pension benefits.

"The public sector is now the last place where final salary schemes are held up as not just the Holy Grail, but also an absolute right.

"The value of public sector pensions is worth around 30 per cent of pay, but contributions by public sector workers do not reflect the value of benefits that they actually receive."

There was a "very real disparity between private and public sector pensions." Many public sector workers did a wonderful job, but "we can't go on like this," she said.