The company has shed thousands of jobs

But the aero engine-maker said it was looking at ways to close the funding shortfall.

The Sunday Times reported that the engineering group, which has plants in Derby, Nottinghamshire, Bristol and Scotland, was asking its staff to delay retirement until they were 65 rather than stop working at 60.

A spokesman for the company said: "We are not asking employees to increase their retirement age from 60 to 65."

Nothing finalised

"We are in the middle of discussions with the workforce on how we can plug the pension deficit. Discussions are ongoing and this story is totally inaccurate," he said.

A spokeswoman for Rolls-Royce also confirmed that the company was currently involved in a consultation process with staff, saying it expects to have a solution in place by the end of the year, according to the Sunday Times.

Among the proposals being put forward are basing the pension workers receive on their average salary during their time with the company, rather than the amount they were paid immediately before they retired, according to the newspaper.

It said the Amicus trade union has calculated that this could lead to staff receiving up to 30% less pension benefits.

Rolls-Royce was also considering changing the rate at which staff accrue their pension from one-sixtieth of their salary for every year they are a member of the scheme to one eightieth, the paper said.