Millions of savers with defined benefit pensions face losing over £50,000 in retirement income due to a change in how their annual increases are calculated from 2030.
The rule change will significantly reduce pension payments for those with "gold-plated" private sector schemes.
Most defined benefit pensions currently increase each year in line with the retail price index (RPI). But from 2030, this will change to the consumer price index including housing costs (CPIH).
A 66-year-old with a £25,000 yearly pension would receive £53,187 less over a 25-year retirement under the new system, according to analysis by Royal London.
Those with typical private sector defined benefit pensions of £11,000 per year stand to lose £23,455 over their retirement due to the change.
The reduction stems from CPIH typically running about 0.5 percentage points lower than RPI when measuring inflation.
A 66-year-old with a £25,000 yearly pension would receive £53,187 less over a 25-year retirement under the new system
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Royal London's analysis assumes an average inflation rate of 2.5 per cent for RPI, compared to two per cent for CPIH.
A £25,000 annual pension would deliver total income of £853,944 over 25 years under the current RPI system. Under the new CPIH measure, this falls to £800,757 - resulting in the £53,187 reduction.
The ONS made the decision to change RPI calculations from 2030/31, replacing it with CPIH. While the annual difference appears small, the impact compounds significantly over a retirement spanning decades.
Steve Webb, partner at pension consultants LCP and former pensions minister, warns that most people are unaware of how their company pension increases each year.
He said: "Most people will have little idea of the exact rules about how their company pension increases each year. But the change to a new measure of inflation will clearly lead to lower increases in future for anyone whose pension is linked to the retail prices index.
“Although the change each year is small, for someone retiring this year the cumulative effect could be to reduce such pensions by around 10pc by the time they turn 80."
While almost all defined benefit pension schemes are now closed to new private sector entrants, millions of savers have built up rights in these schemes.
The RPI has long been considered a flawed measure of inflation, partly due to how it calculates overall inflation from individual price changes.
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Defined benefit pensions provide a guaranteed annual income for life based on a worker's final salary or career average earnings.
These "gold-plated" schemes offer inflation protection and security, with payments continuing partially to dependents after death. Pension holders cannot change their income or make lump sum withdrawals beyond their tax-free cash allowance.
In 2022, pension scheme trustees mounted an unsuccessful High Court challenge to protect members from the inflation calculation change.
The court ruling means millions of pensioners could see up to 20 per cent wiped off their retirement income.
If an employer collapses, pensions are protected by the Pension Protection Fund, though full amounts may not be guaranteed.
Early retirement is possible in some schemes, but this results in reduced income.
