More than three million people will learn on Thursday they are to lose their rebates from opting out of the state second pension to fund a low-cost national savings scheme when ministers unveil a far-reaching pensions shake-up.

In the first move in a generation to rebuild the state pension, John Hutton, work and pensions secretary, will confirm plans to scrap contracting-out rebates for millions of members of defined contribution, occupational and personal schemes.