Chancellor of the Exchequer Rachel Reeves (Image: Getty Images)

       Sweeping reforms to tidy up the fragmented pensions landscape are detailed in a new parliamentary Bill, promising to build "megafunds" and eradicate numerous "micro" retirement savings. The Pension Schemes Bill aims to craft "bigger and better pension funds" by amalgamating smaller pension pots, as per Government statements - but it has already drawn criticism for doing 'nothing to tackle the fundamental problem'.

       The common issue of workers accruing multiple modest pension amounts, which become cumbersome to manage with frequent job changes, is addressed in the Bill, which will consolidate micro pension pots valued at or below ￡1,000 into a single scheme.

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       As individuals near retirement age, the legislation will compel schemes to present unambiguous, default choices to convert savings into a steady retirement income.

       Furthermore, the Bill introduces stringent regulations ushering in vast multi-employer defined contribution (DC) scheme megafunds with a minimum value of ￡25 billion, exploiting scale to diversify investments.

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       According to Government officials, defined benefit (DB) pension systems will receive augmented leeway to "safely" allocate surplus assets collectively worth ￡160 billion, intended to bolster employer investment ventures and enhance member benefits.

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       Work and Pensions Secretary Liz Kendall said: "The Bill is about securing better value for savers' pensions and driving long-term investment in British businesses to boost economic growth in our country."

       Work and Pensions Secretary Liz Kendall (Image: Parliament TV)

       Chancellor Rachel Reeves called the plans "a game changer".

       Pensions minister Torsten Bell added: "Pension saving is a long game, but getting this right is urgent so that millions can look forward to a higher income in retirement."

       But former Liberal Democrat pensions minister and now partner at LCP, Sir Steve Webb has criticised the new Bill for its lack of significant action on boosting pension savings, saying: "Whilst there are many worthy measures in the Bill, the biggest omission is action to get more money flowing into pensions.

       "This issue is unfortunately on the back burner. Measures such as consolidating tiny pension pots are helpful tidying up measures, but do nothing to tackle the fundamental problem that millions of us simply do not have enough money set aside for our retirement.

       "With every passing year that this issue goes unaddressed, time is running out for people already well through their working life to have the chance for a decent retirement."

       Patrick Heath-Lay, chief executive of People's Partnership which provides the People's Pension, praised some aspects of the Bill: "The Bill contains many measures that will require providers to deliver better outcomes for savers and improve the workplace pension system.

       "We are encouraged by the introduction of default consolidator schemes, which will be the most effective way to solve the dormant small pots problem."

       Andy Briggs, the CEO of Phoenix Group, said: "The Bill sets a clear direction for the future of pensions with the emphasis on building scale and ensuring savers receive value for money."

       Ian Cornelius, CEO of Nest, said: "We believe that large, well-governed schemes can drive great outcomes for their members by using their scale and expertise to diversify where money is invested, and gain access to attractive investment opportunities not available to smaller investors at low cost."

       Nausicaa Delfas, chief executive of the Pensions Regulator, commented on the future-proofing efforts: "Making sure all schemes are focused on delivering value for money, helping to stop small, and often forgotten pension pots forming, and guiding savers towards the right retirement products for them, will mean savers benefit from a system fit for the future."

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       Michelle Ostermann, head of the Pension Protection Fund, said: "We will support the Government and policymakers as the Bill progresses."

       Rocio Concha, director of policy and advocacy at Which?, said: "Pensions have become far too complex and fragmented, so it's good to see the Government taking steps to simplify them and ensure schemes provide value for money.

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       "Which? has campaigned for years for the consolidation of small pots, so we are delighted that this Bill is seeking to do just that – a move that will provide greater value for savers and support them to keep track of their pensions."

       Yvonne Braun, director of policy, long-term savings, at the Association of British Insurers, commented: "This wide-ranging Bill is set to usher in the most large-scale pension reforms since auto-enrolment. The details will be crucial and we will scrutinise the Bill to ensure it puts the interests of savers first."

       She also highlighted the pressing issue of current pension contributions: "We also urgently need to tackle the level of pension contributions which are too low to create an adequate retirement income for many. We urge government to set out the details of its adequacy review as soon as possible."