The government is to abolish short service refunds for defined contribution occupational schemes.
These refunds enable employees to get their money back if they have been saving into a pension scheme but leave it before completing two years of qualifying service, meaning they are not entitled to a short service benefit.
Pensions minister Steve Webb explained this is detrimental to staff members because it means they are left without a pension at a time when individuals are being encouraged to save for their retirement.
He believes this latest move is an important step in encouraging more people to start putting more money away in preparation for later life.
"Taking the money out goes against our overall goal of getting millions more people saving," the minister stated.
Mr Webb pointed out that if individuals move between several jobs, they are in danger of losing what little money they have built up if they have their cash refunded when they leave each position.
He stated: "I do not want to see people who are doing the right thing by saving ending up with very little for their retirement because the system is too complicated."
It is thought there will be around 4.7 million additional small pension pots in the UK's pension system by 2050 due to the introduction of the automatic enrolment scheme next year and the current mobile jobs market.
Indeed, individuals work for an average of 11 different employers during the course of their career, which presents barriers to building up what Mr Webb described as "big fat pension pots".
A new paper has just been published looking into the matter, detailing ways in which complexities in the current system could be removed to try and make it easier for people to transfer the money built up through various schemes throughout their career into one large savings scheme.
Some further changes being discussed include the introduction of an automatic transfer system or aggregator schemes for individuals moving between various jobs.
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