Councillors are to be stripped of the right to generous taxpayer-funded retirement funds in a bid to save up to £7m a year, the Government said.
Since the local government pension scheme was opened to elected representatives in 2003, at least 4,548 have signed up for benefits based on their allowances, according to recent surveys.
Local government minister Brandon Lewis said it was “corrosive” to local democracy for them to be treated as employees rather than publicly-spirited volunteers.
The ban will apply from April 2014, with existing members able to retain any benefits accrued up to that time, he said, urging councillors to “do their bit” by choosing to exit earlier.
Directly-elected mayors will be allowed to continue using the scheme.
In a written statement to MPs, Mr Lewis said councillors’ allowances had “slowly become a form of salary, a situation worsened by the state-funded pensions”.
“This is a corrosive influence on local democracy and independent thought, blurring the distinction between council staff and councillors.
“We do not believe that an occupational pension scheme intended for employees, and paid for by taxpayers, is an appropriate vehicle for councillors. Civic duty should not be bought.”
A “rough estimate” put the potential savings to the public purse at £7m a year, he said, warning there was “absolutely no case for increasing councillor allowances to compensate”.
The extension of pension rights was part of the “bad news” a Labour spin doctor infamously sought to “bury” by releasing it on the day of the September 11 terror attacks.
The change, which is subject to consultation, was welcomed by the Taxpayers’ Alliance campaign group, which carried out the most recent survey of the number of councillors in the scheme.
Chief executive Matthew Sinclair said: “Not only will this deliver a significant saving for hard-pressed families, it will also restore people’s faith that councillors are there to represent the residents of a local ward rather than forge a career as a professional politician.”