Millions of pension savers are set to benefit from a major change that would make it easier to keep track of your retirement pots.
The average worker has around 11 jobs over the course of their career, which would leave them with multiple small pension pots.
This creates a risk of people losing track of their savings - and leaving them out of pocket when it comes to retiring.
A consultation on small pension pots has now been launched by the Department for Work and Pensions (DWP).
The DWP is looking at two potential solutions that would bring small pension pots together.
The first would be to automatically transfer small pots together into a “default consolidator”.
The second would involve small pension pots following the owner when they move jobs and automatically being transferred to a new employer scheme.
The consultation on small pension pots will run until March 27, 2023.
It is estimated that some 2.8million pension pots are lost and worth an average of £9,470, according to the Pensions Policy Institute.
In total these lost pots contain £26billion in untapped savings.
Sir Steve Webb, former Liberal Democrat pensions minister and now partner at consultants LCP (Lane Clark & Peacock) said: "Whilst it is welcome that the Government is seeking to address the small pots issue, it is time for the DWP to get off the fence and take action.
"It has been obvious since the start of automatic enrolment that small pots would be an issue which is why the 2014 Pensions Act provided for a pot-follows-member solution.
"Unfortunately this was not seen through and, nearly a decade later, we are still at the stage of ‘calls for evidence’ followed by further consultation. What is needed is for someone to take a decision and move ahead with implementation."
The DWP has also launched a consultation on a new value for money (VFM) framework, developed in partnership with the Pensions Regulator and the Financial Conduct Authority.
This sets out how schemes will be expected to provide savers with better value from their investments and the quality level of service.
The VFM framework will improve competition between defined contribution (DC) pension schemes and require pension schemes to disclose key metrics and service standards, the Government said.
Minister for pensions Laura Trott said: "Since 2012, automatic enrolment has transformed the pensions landscape in the UK for the better, but we know there's more to be done to ensure a fairer future for savers.
"Being in an underperforming pension scheme can lead to someone missing out on thousands of pounds. The value for money framework and our new measures will improve security and create better returns for savers, so they can enjoy the retirement they've worked so hard for."
Tom Selby, head of retirement policy at AJ Bell said: "There are now millions of people in workplace pension schemes, including many with multiple pots from previous jobs.
"As things stand it can be difficult for people to compare the performance of those pensions, and often people are nervous or fearful of engaging with their retirement fund.
"Introducing a common approach to disclosing performance would at least make it a bit easier for people make comparisons and understand what they're really getting from their workplace pension."
Phil Brown, director of policy at People's Partnership, provider of the People's Pension, said: "Value for money is essential to ensure that people have a complete and clear picture when consolidating their savings, allowing them to make the right financial decision for their future."
He added: "To ensure savers can easily compare their provider's performance, making pension companies prominently display their value for money data on pension dashboards would be the most sensible future approach."
Nigel Peaple, director of policy and advocacy at the Pensions and Lifetime Savings Association (PLSA) said: "The PLSA supports all efforts to improve the pension incomes of everyone in the UK, and so we welcome this package of reforms, which aims to boost the prospects for the growing proportion saving into DC schemes.
"The reforms proposed today have the potential, over time, to enable savers to benefit from greater efficiency and value from the management of their pensions, including through the consolidation of small pots which people have accumulated through their careers."
