Companies will be urged to link pension-scheme pay-outs to life expectancy in a report by the independent Pensions Commission, set up by the government to review long-term savings.

The commission's interim report, to be published on Tuesday, is also likely to float the idea of gradually raising the state pension age, increasing it as life expectancy rises. That would produce only a slow rise in state pension age but would help offset the cost to the taxpayer. The Pension Commission, chaired by Adair Turner, vice-chairman of Merrill Lynch Europe, has analysed risks in corporate pensions. It will conclude that companies are ill-equipped to carry the risk that investments perform worse than expected and that employees live longer than expected.