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A sweeping overhaul of the pension system will see millions of workers' savings bundled into giant "megafunds" - and smaller pots worth £1,000 or less automatically merged.

Ministers insist the Pension Schemes Bill, unveiled today, will deliver "bigger pots" and "better value" for retirement savers. But critics warn the reforms may not add up to more in your pocket.

The changes, fronted by Chancellor Rachel Reeves and Work & Pensions Secretary Liz Kendall, include:

* Merging small pension pots under £1,000 into larger schemes

* Creating multi-employer megafunds of at least £25 billion

* Requiring schemes to prove value for money to continue operating

* Offering default drawdown options for retirees

* Unlocking £160 billion in surpluses from defined benefit pensions

Ms Reeves hailed the reforms as a "game changer" that would deliver £50 billion in investment into the UK economy and boost savers' incomes.

"The Bill will transform the £2 trillion pensions landscape," she said, "ensuring savers get good returns for each pound they save."

But some financial experts have urged caution - and expressed scepticism over the Government's lofty claims.

Their warnings follow Government hints that it may set legal targets for the amount pension funds must invest in the UK, diverting money from global stocks to domestic projects - a move that critics fear risks lower returns.

Wealth firm Quilter conducted independent projections for which showed that a typical worker earning £40,000 could end up with £18,000 less in their pension pot under the new model - assuming some funds are directed into UK private investments like infrastructure and property.

Jon Greer, Quilter's head of retirement policy, said: "While the UK economy will undoubtedly benefit from greater investment and capital flows, the direct gains to individual pension pots are likely to be modest."

Despite the scepticism, the Government insists the shake-up will drive down costs, simplify pensions, and deliver "more bang for each buck saved", as Pensions Minister Torsten Bell put it.

The Work and Pensions Secretary, Liz Kendall, heralded the changes saying: "Hardworking people across the UK deserve their pensions to work as hard for them as they have worked to save, and our reforms will deliver a huge boost to future generations of pensioners.

"The Bill is about securing better value for savers' pensions and driving long-term investment in British businesses to boost economic growth in our country.

"As part of our Plan for Change we're helping people find work, stay in work, and ensuring that work pays them back to give them the secure income in retirement they deserve."

Industry figures largely welcomed the direction of travel - albeit with some caution about the pace and complexity.

Andy Briggs of Phoenix Group said: "Individually these initiatives would be significant, but in combination they have the potential to make a significant difference."

Patrick Heath-Lay of People's Partnership called it a "pivotal moment", while Nest CEO Ian Cornelius said the Bill would "drive great outcomes for members".

Rocio Concha of Which? added: "Pensions have become far too complex and fragmented... we are delighted that this Bill is seeking to consolidate small pots."