Martin Lewis’ Money Saving Expert has some potentially vital advice for people who have accumulated several small pension pots. Under the Government’s Pension Schemes Bill, set out during the King’s Speech in July 2024, new measures could be put before Parliament in July this year. 

According to the Department of Work and Pensions, there is a growing problem of people accumulating small pension pots forgotten as they move between employers over their working lives. The DWP said: “There are now 13 million of these small pots, holding £1,000 or less, with the number increasing by around one million a year. Under reforms introduced by this government as part of the Pension Schemes Bill, each individual’s small pots will be brought together into one pension scheme that is certified as delivering good value to savers. Individuals will retain the right to opt out.” Writing on Money Saving Expert (MSE), Emily White said the new Government reorganisation of the pension pots could work in a number of key ways.

She wrote pension pots could “hovered up” and consolidated into one larger pot, and that this could save the average worker “£1,000 in admin fee savings” and “make it easier to keep an eye on ongoing fees” or reduce them.

According to MSE, any consolidation could only be done by “authorised providers” regulated by “Financial Conduct Authority and The Pensions Regulator”.

The site added: “It’s likely to be an automatic process, with the option to opt-out. The Government says it is also likely to include a dispute and appeals process to protect savers from errors. Savers will also be able to choose their provider once their pots have been consolidated.”

Should the pension pots be automatically combined, it “could make it easier” for Brits “to stay on top of your pension savings and reduce costs”, the website also read.

It’s thought the first combined pots will be limited to £1,000.

Minister for Pensions Torsten Bell said: “It’s great news that more people are saving for their retirement. But I want to make pension saving as simple and rewarding as possible.

“There are now more small pension pots in the UK than pensioners – raising costs and hassle for workers trying to track their savings. It also costs the pensions industry hundreds of millions of pounds every year.

“We will automatically bring together people’s small pots into one high performing pension, reducing costs as well as hassle for savers. In time this could boost the pension of an average earner by around £1,000 as part of our Plan for Change to put more money in people’s pockets.”