To tackle this proliferation, the government plans to change the law to allow small pension pots to be combined into a single pension scheme to make it easier for people to track their pension savings and generate better returns.

There are now 13 million of these small pots, holding £1,000 or less, with the number increasing by around one million a year.

The move is set to increase retirement savings for the average worker by around £1,000 and save pension providers £225m a year in admin costs, but there is no date set for the scheme to go live.

The legislation will be part of the Pension Schemes Bill currently going through parliament. Under the proposals, 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.