The first mutualised company to be spun off from Whitehall will be launched today, with former Labour cabinet minister John Hutton its chairman.

Almost 500 workers will leave the civil service as MyCSP (My Civil Service Pension) becomes a mutual joint venture.

It will be 25 per cent owned by staff and 40 per cent by financial services firm Paymaster, part of the Equiniti Group.

The government will retain a 35 per cent stake.

MyCSP administers the pensions of 1.5 million civil servants but will now be able to grow and bid for new business.

Lord Hutton, who has already conducted a review of public sector pension provision for the coalition, will be officially unveiled as chairman today.

The government likens the new partnership to the John Lewis partnership model, saying it will increase productivity, contribute to the economy as a taxable business and save taxpayers 50 per cent on the cost of administering civil service pensions by 2022.

But members of the Public and Commercial Services union have opposed the mutualisation with strike action. It says the majority of staff want to remain in the civil service.

Lord Hutton was a work and pensions secretary in Tony Blair’s government, and went on to be business secretary and then defence secretary under Gordon Brown.

He said: “I am a firm believer in the power of engaging employees to drive innovation.

“MyCSP Ltd builds a powerful partnership that will drive up standards and reduce costs.

“Providing a high quality service to scheme members will be vital to ensuring they never lose sight of the true value of their pension. I am proud to accept a role in this ambitious project.”

Cabinet Office minister Francis Maude said mutuals would help Britain develop a more diverse economy.

“As a mutual, MyCSP will deliver better services for its pension scheme members, millions of pounds of savings for the taxpayer and a real sense of ownership for employees over what they do.

“We are transforming a neglected back-office operation into a new competitive and responsible business - the rest of the world is watching.

“Lord Hutton brings a real wealth of experience to his role as chairman and I’m delighted he has accepted this role.”