MPs could lose £15,000 a year from their generous pension plans under reforms unveiled by a government review board yesterday.

Retirement packages may be altered to mirror the current pension amount that workers in the private sector receive.

The Senior Salaries Review Board said that the taxpayer contribution to MP pensions should be reduced to 10.5 per cent of their total salaries – half of the current figure. If plans are put into effect an MP elected this year would see their annual pension drop from £37,240 to £22,579.

A senior government source said: “This is about trying to drag MPs back into the real world and getting them more in line with what happens in the private sector. MPs’ pensions have been seen as the most generous around and this will be a significant part of the debate”

An MP who has served 20 years on the job receives a £65,000 salary under current legislation and half of that figure forms their annual pension income.

Matthew Elliott, of the TaxPayers’ Alliance, said: “With the public finances in such a mess, these final-salary schemes are no longer sustainable, and are all but extinct in the private sector”.

The review board said that pension figures will be calculated using the average amount of the income received by an MP over the course of their employment rather than using their final salary sum.

It also concluded that the pension age should go up from 65 to 68.

Mr Elliot said: “Taxpayers deserve to see politicians show some humility with their pay and pensions”.