Are you eligible for a £29,000 pension increase? Government initiatives could improve the lives of millions of people

Retirement savings reforms will result in the creation of "megafunds" and the pooling of savers' modest sums

Government plans to reform Britain's retirement savings system could give average-paid workers who save into a pension 29,000 more by the time they retire.

According to the Pension Schemes Bill, which is back in Parliament today (7 July) for its second reading, the figure represents the estimated individual impact of a number of government reforms on the pension pots of 20 million savers.

An average man who begins his career earning slightly more than 37,000 could have up to 31,000 more in his retirement fund by the time he retires thanks to measures in the Bill.

Government calculations indicate that an average woman who works a full-time job and makes slightly less than £32,000 could have an additional £26,000 in her retirement fund.

Increased investment performance through addressing underperformance and increasing diversification in defined contribution pension funds, lowering retirement savings costs that could be passed on to savers, and investing for longer are expected to boost pension savings.

According to the Pension Schemes Bill, small pension pots of £1,000 or less will be combined into a single pension plan that has been approved as offering savers good value. As they change jobs, many people currently find it difficult to keep track of several small pensions, which can result in expensive fees.

Pension plans will also need to demonstrate that they are cost-effective in the future. This will help savers determine whether their plan is providing them with satisfactory returns and keep them from becoming mired in underperforming plans for years on end.

The Pensions Scheme Bill's provisions will also serve as a basis for the forthcoming Pensions Review. This will look at how to create "a fair and sustainable pensions system," according to the government, which will boost economic growth and put more money in people's pockets.

To ensure that underserved groups, such as lower-income workers, do not lose out on the benefits of the measures in the Pension Schemes Bill, the government said the upcoming Pensions Review will examine ways to ensure people are saving enough for retirement. The upcoming speech at Mansion House on July 15 is anticipated to include more information.

"To make sure that people's pension savings work as hard for them as they worked to save, we're ramping up the pace of pension reform," stated Torsten Bell, minister of pensions.

"Our Pension Schemes Bill's measures will deliver on our Plan for Change by lowering costs and increasing returns on workers' retirement savings, putting more money in people's pocketsup to £29,000 for an average earner.

During her first Mansion House speech last year, the government had previously stated that workers could benefit by up to 6,000 dollars from new regulations in the Bill that create "megafunds," or large pension schemes worth at least 25 billion. This is so that larger and better pension schemes can reduce costs and invest in a wider range of assets.

Simplifying retirement options is another step; all pension plans provide default pathways to retirement income. Additionally, enabling defined benefit (DB) pension plans to invest a total of 160 billion in their holdings for the benefit of pension savers.

"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," stated Zoe Alexander, director of policy and advocacy for the Pensions and Lifetime SAvings Association.

"This includes decumulation options, the Value for Money regime, small pots consolidation, and adjustments to provide DB funds with additional choices for ensuring long-term member benefits.

"Once these steps are fully implemented, they should lower the cost of pension administration, simplify things for savers, and help make sure that plans are giving members the most value possible.