People in the UK have around 20 million small pension pots worth under £10,000 each.
These small deferred pension pots have been accumulated as people change employment during their working lives.
Many of the pension pots are very small and therefore expensive to run and that results in lower returns. Its is also hard for individuals to manage them.
Lower earners and women are particularly likely to accumulate several small pension pots.
The Institute for Fiscal Studies suggests that deferred small pension pots should be consolidated by default.
This would be achieved by creating a clearing house, with people being given the option to opt out if they wish.
Where pots are held by the same pension provider, these should automatically be consolidated into the one that represents the best value for money.
It is now up to the government to decide what action to take.