Younger workers have “significantly” more pension pots than older workers, according to analysis from Interactive Investor, which found that more than one fifth (21 per cent) of savers aged 18-34 years old already have five or more pension pots.

In addition to this, it found that more than a third (36 per cent) of 18–34-year-olds have three or more pension pots, while a further 9 per cent don’t know how many pension pots they have.

In contrast, the analysis showed that just under one tenth (9 per cent) of older savers aged 35-54 years old have five or more pension pots, falling to 5 per cent for over 55s.

On average, Interactive Investor found that 18–34-year-olds had three pension pots, compared to two for those aged over 55 years old.

However, the group warned that the proliferation of pension pots is storing up a potential admin headache for future generations when it comes to retirement planning.

It also highlighted the real-life consequences of multiple small pots for savers, warning that this can push pension savers to cash in their whole pension pot, rather than withdrawing a sustainable pension income.

Indeed, recent data from the Financial Conduct Authority (FCA) revealed that 85 per cent of pension pots worth less than £10,000 were completely withdrawn as cash, compared to 17 per cent of those worth £50,000 to £100,000 saved and 5 per cent of those worth between £100,000 to £250,000.

Whilst Interactive Investor said that it is “welcome news” that the government are considering a pot for life pension reforms to stem the flow of pension pots, it argued that pension savers don’t have to wait for “pot for life” pension reforms to take control of their pension wealth and start combining their pension wealth.

Interactive Investor head of pensions and savings, Alice Guy, said: “The changing nature of the workplace means that employees regularly switch jobs, and the messy current system means they are forced to start a new pension pot each time, collecting multiple pension pots as they move through their working life.

“With final salary pensions dwindling in the private sector, the issue of multiple pension pots seriously impacts on younger generations who often move jobs more and have less access to final salary pensions than older workers.

"The responsibility is increasingly on the individual to ensure they have a big enough pot to last them throughout retirement and having multiple pension pots makes that planning considerably harder.

“In the long run, the government is exploring plans to give workers one pension “pot for life” which they continue paying into when they switch employers. But these plans could take years to come to fruition, with many practical details to iron out.

“For individual pension savers, there’s no need to wait for pension reforms Instead, you can take action now by looking for and combining old workplace pensions.

“With the onus increasingly on individuals to provide for their own retirement, taking control of your pension and combining your pension pots helps you see if you’re on track for the retirement you want."

---