New rules for pension pots worth under £1,000 – what you need to know

Pension pots worth less than £1,000 will be consolidated under new rules set to be in place by 2030.

By cutting duplicate charges, consolidation could help savers keep more of their money. The government says this could boost the average worker’s retirement savings by around £1,000.

The plans were announced in May 2025 by pensions minister Torsten Bell.

Here, we outline what the changes will mean for you and how you can best keep track of your pensions. 

The government has confirmed that it will proceed with proposals to automatically combine the smallest workplace pension pots – those worth £1,000 or less. This should mean that people are less likely to forget about or lose track of their less substantial pension funds.

The aim is to automatically consolidate individuals’ small pensions without them having to give permission. Pension savers will be able to opt out if they want to and consolidate their money in a plan that they choose themselves if they wish. 

A ‘multiple default consolidator’ system, now officially known as the Small Pots Data Platform, will mean dividing small pots among various nominated companies or ‘consolidators’. 

These consolidator schemes will need to meet certain standards to ensure they offer good value for money and can manage people’s savings effectively.

The proposed date for the small pot transfers to begin is 2030.

The average person will have around 11 different jobs over their lifetime, according to the Association of British Insurers (ABI). This will usually mean becoming a member of several pension schemes.

Automatic enrolment, which started in 2012, is one of the pension success stories of our time. Workers start a pension when they join an employer, but when they switch companies they often leave their old pension behind. 

This can mean having many small pension pots which can be difficult to manage. There are an estimated 13m pensions worth less than £1,000 in the system and this can cause problems for people’s retirement planning.

Some providers also charge flat fees, which can gradually reduce the value of smaller pots. Consolidation could reduce the number of fees and make pensions more cost-effective.

The government says the average worker could be £1,000 better off, though how much you benefit will depend on your existing pension arrangements and the charges applied.

Rocio Concha, Which? director of policy and advocacy, welcomed the announcement: ‘Which? called for the consolidation of small pots under £1,000 before the election, so we are delighted that the government is committing to doing this – a move that will provide greater value for savers and support them to keep track of their pensions. 

 

 

How to track down lost pensions 

Keeping track of all our pensions can be tricky. As we’ve outlined, a combination of people having more jobs and automatic enrolment into workplace pensions is behind the increasing number of ‘lost’ pensions.

The Pension Policy Institute estimates that 3.3m pension pots are lost in the UK, worth £31.1bn in total.

There are several services that you can use to try to reunite you with your lost funds.

The government's Pension Tracing Service searches a database of over 200,000 pension schemes to find contact details for your provider. 

You’ll need the name of an employer or pension provider to use it, but it won’t tell you how much your pension is worth.

Some pension providers also offer their own tracing services. These tools include:

• AJ Bell’s ‘how to find your old pensions’ available to its customers 
• Standard Life’s ‘track down your lost pensions’ for free
• Aviva’s ‘find, check and combine your pensions’