Millions of workers are set to see their pensions increase by thousands thanks to a new government bill that will consolidate small pension pots, create larger schemes and ensure they're good value for money. On average, working people could benefit by up to £29,000 due to the reforms.

The Bill will bring together small pension pots worth £1,000 or less into a single scheme that is certified as delivering good value to savers. It's estimated that the reforms will support 20 million pension savers to be better prepared for retirement.

It comes as the Pension Schemes Bill returns to Parliament for its second reading today, July 7.

The pensions industry and consumer groups have shown wide-spread support for the reforms as many people struggle to keep track of multiple small pensions due to moving jobs and paying high fees as a result.

Minister for Pensions Torsten Bell said: "We’re ramping up the pace of pension reform, to ensure that people’s pension savings works as hard for them as they worked to save.

"The measures in our Pension Schemes Bill will drive costs down and returns up on workers’ retirement savings – putting more money in people’s pockets to the tune of up to £29,000 for an average earner and delivering on our Plan for Change."

In the future, pension schemes will need to prove they are good value for money, helping savers to understand whether their scheme is giving them good returns and protecting them from getting stuck in underperforming schemes for years on end.

These measures will lay the foundation for the upcoming Pensions Review as part of the Government's plan to examine how to get to a fair and sustainable pensions system and supporting growth.

Other measures include:

Minister for Local Government and English Devolution Jim McMahon OBE said: "This Bill will ensure the Local Government Pension Scheme is fit for the future and harness its full potential, with assets due to reach £1 trillion by 2040, and will strengthen investment in local communities to accelerate growth as part of our Plan for Change."

According to the Government, the reforms will also unlock long-term investment in the UK economy by removing barriers to growth, strengthening the security and governance of pension schemes and ultimately delivering better returns for people saving for their retirement.

Zoe Alexander, Director of Policy and Advocacy for PLSA: "The introduction of the Pension Schemes Bill is a significant milestone, bringing forward necessary legislation to enact important reforms that have the full backing of the pensions industry.

"This includes small pots consolidation, the Value for Money regime, decumulation options and changes to give DB funds more options for securing member benefits over the long-term.

"Once fully implemented, these measures should reduce the cost of administering pensions, remove complexity for savers and help ensure schemes are maximising the value they provide members."