Ministers have been accused by business leaders of caving in "at the first sign of trouble" to union demands over public sector pensions.
The government and TUC hailed Tuesday's deal as a "sensible compromise" after they agreed not to force current public service staff to work until 65.
Instead new entrants to civil service pension schemes will face a raised retirement age.
Unions had repeatedly threatened strike action over the plans to save £13bn in spending over 50 years. Industry secretary Alan Johnson insisted that all the originally planned savings would still be made.
Stakeholder Response: IoD
Miles Templeman, director general of the IoD said: "The government have caved in to the trade unions at a time when strong leadership was required.
"New entrants will now retire at 65 but existing public sector workers will continue to retire at 60. Someone joining the civil service last week will still be able to retire at 60 in 40 years' time.
"Today's agreement is a backward step and will widen the gap between public and private sector pensions. In 40 years time it is almost certain that nobody in the private sector will be able to retire at 60 with a full final salary pension.
"We will certainly try to persuade the government to review this decision at the earliest opportunity."
Stakeholder Response: Amicus
Gail Cartmail, Amicus national officer for health, said: "Our members felt betrayed by the proposal for a compulsory increase to the pension age. They signed up to their schemes on the basis of an agreed retirement age which the earlier proposals would have snatched away.
"This agreement is fully funded by government. The framework represents a very welcome change of heart and it needs to be used as a starting point for discussions for proposed changes to the local authority and further and higher education schemes.
"This agreement recognises that promises should not be broken and that frontline public sector workers are entitled to good quality pensions as a part of their pay package and will help offset problems in retention and recruitment in key professions."
Stakeholder Reaction: GMB
Brian Strutton, GMB national secretary for the public services section, said: "The protection that this deal brings to two million public sector workers comes at a price which is to concede worse terms based on a retirement age of sixty five for new starters.
"This creates two tier pensions in public services, which GMB has campaigned vigorously against.
"We will continue to fight for the rights of all public service workers, past, present and future."
