Gillian Shephard, the Secretary of State for Education, said the changes would be postponed until September, despite earlier advice from the Treasury that a deferment would be too expensive.
The present scheme costs pounds 480m a year as four out of five teachers take early retirement. The proposals aim to reduce early retirements by 25 per cent by loading most of the costs on to local authorities.
Teachers have begun a stampede to retire, with 11,500 trying to leave this term.
Mrs Shephard denied the postponement would mean funding thousands more early retirements.
The effect, she argued, would be cost-neutral because the rush of teachers to retire would be halted and there would be no rush between April and September.
But she acknowledged the Government was relying on employers' assistance : "I expect employers to behave responsibly during the period up to September 1 and not to grant unnecessary premature retirements."
She emphasised her decision had been taken on common-sense grounds after employers and teachers asked for more time to plan the reforms and to avert the departure of thousands of teachers two-thirds of the way through the school year.
However, she said abuse of the scheme must end. "It is not acceptable that people retire on grounds of ill-health and then reappear very rapidly as supply teachers."
There will be a long-term review of the scheme. Ministers are also considering introducing an option for teachers to retire early on reduced pensions and for older teachers to step down to less senior jobs while retaining their pension rights.
Ultimately, if teachers wanted early retirement, they would have to help meet the cost, she said.
Graham Lane, education chairman of the Association of Metropolitan Authorities, said: "We have made it clear to Mrs Shephard that we will not be a soft touch. But we cannot guarantee that today's announcement will be cost- neutral."
Mrs Shephard's original decision brought one of the biggest protests from teachers, with head teachers threatening to disrupt teacher training unless the plans were deferred. Two teacher unions challenged her in the High Court.
Nigel de Gruchy, general secretary of the National Association of Schoolmasters Union of Women Teachers, welcomed the postponement but added: "There is no sign that the Government is inclined to tackle the fundamental problem: the scandalous mismanagement of the notorious notional pension fund and the state of the teaching profession driving thousands to flee into early retirement."
Head teachers said the immediate crisis had been averted but predicted severe recruitment problems from September rather than April.Reuse content