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A bill to make major changes to public sector pensions has passed its latest stage at the Northern Ireland Assembly.

The Public Service Pensions Bill was voted through following a lengthy debate on Tuesday night.

It aims to move pensions to a model based on average earnings with the public sector pension age linked to the state pension age.

The bill may affect teachers, civil servants and health, fire and police services employees.

The proposals come after the Independent Public Service Pension Commission reported that the UK public service pension structure had not responded flexibly to rising costs and people living longer.

The result of what the assembly has passed so far is that the pension age for public sector workers will be 65 or the state pension age, whichever is greater.

In his Autumn Statement, Chancellor George Osborne announced that retirement age would go up to 68 sometime in the mid-2030s.

Bumper Graham from NIPSA, Northern Ireland's largest public service trade union, said people may live longer and enjoy better health in other parts of the UK but that was not the case in Northern Ireland.

"It's something you find in the south of England," he said.

"People in Northern Ireland don't live as long as people there and their health is pretty poor in retirement and what happened yesterday was an absolute disgrace."

Failure

The final stages of the bill are due to be completed within the next few weeks.

If the bill does not go through, it will cost the Northern Ireland block grant £250m-300m a year.

Northern Ireland Finance Minister Simon Hamilton said his department had commissioned two studies into the recurring annual costs of a delay or failure to implement reforms to pensions.

He said the final study showed a cost of £300m.

He said the bill contained protection for those closest to retirement, adding that those within 10 years of their current, normal scheme pension age, as of April 2012, would see no change.

"It is undeniably a time of change for some, but the changes to the scheme pensions age are long-sighted, evidence-based and necessary to guarantee decent retirement incomes for a generation of public servants," he said.

Mr Graham said his members wanted to see pensions being improved for people in the private sector and for public servants to have their contracts honoured.

"When people joined the public service they were told they were going to be on final salary pensions, they were told they would have a retirement age of 60 or 65. Their contracts were shredded without any negotiation and more importantly, without any economic appraisal," he said.

"We hear Simon Hamilton lecturing the rest of the public services about costing everything out and doing economic appraisals, but there was no economic appraisal done on this policy he has proposed.

"In fact, we believe it will actually cost the taxpayer money in the long run because if you make someone work eight years longer from 60 to 68, they're effectively blocking employment opportunities for a young person or graduate or a woman seeking to return to work."

Daithi McKay said evidence given to the finance committee, of which he is chairman, had raised concerns about the pension age being linked to the state pension age for physically and emotionally demanding jobs such as prison officers or paramedics.

The SDLP's Dominic Bradley said trade unions had raised concerns over the "transparency and fairness" of some of the changes proposed as he said the scheme would be controlled by the department of finance and ultimately the Treasury.

He also said raising the pension age would have a "significant impact" on the Northern Ireland economy.

Judith Cochrane of Alliance said her party colleague, Naomi Long, had voted against the proposals at Westminster, but her party would take into account the financial impact of not implementing the reforms.