The UK government has announced further details on the pot follows member automatic transfer scheme to offer better returns to people who move from job to job.
The scheme, announced in 2013, aims to consolidate small pension pots - that a worker might have accumulated from different jobs - within their current employer's pension scheme. The new system will be implemented in 2016.
Pensions minister Steve Webb said: "Auto-enrolment is helping people to save for retirement, but we must help them to keep their pots together so they know clearly that their pension is growing for their future. With the average person now having 11 jobs in their career, this further reform is essential."
A report, Automatic Transfers: A Framework for Consolidating Pension Saving, published by the Department for Work and Pensions (DWP), outlined details of the system such as the government's preferred implementation approach, a "federated model" - eligibility, key stages and timescales.
The DWP opted for the federated model - a network of registers holding information about pension pots eligible for transfer - because, unlike a centralised register, the federated model would reduce concerns over a "single point of failure" and a "single point of data storage".
But Morten Nilsson, CEO at provider NOW: Pensions, felt the report should have mentioned how to safeguard the quality of pension schemes. He said: "While the DWP's proposal addresses the issue of charges, with transfers only taking place where the member is saving into a charge-capped default arrangement, there is absolutely no mention of safeguarding quality anywhere in its 47-page document.
"It is still surprising that, despite so much talk about quality and new initiatives designed to improve scheme quality, there is little effort to actually drive provider behaviour."
Since only pots worth £10,000 or less (at the point of valuation) would be eligible for transfer, Nilsson believes the threshold should be raised.
"The £10,000 limit should also be re-considered," he said. "The reality is that a £10,000 pot is still relatively small and given the rule of thumb that engagement occurs when a pension pot is the size of an annual salary, the limit should probably be more like £25,000."
Tom McPhail, head of pensions research at investment firm Hargreaves Lansdown, said: "The development of this system has been a collaborative effort between the DWP and key industry participants. This means a lot of the heavy-lifting in terms of the practicality of the proposal has already been done. It makes sense to start on an opt-in basis to give the industry time to bed the system in."
