WORKERS who leave their employer after less than two years' service will no longer be pushed into withdrawing their pension contributions, Pensions Minister Steve Webb has said.

From next October, the practice of "short service refunds" will be abolished, as part of a radical shake-up taking place next year to help retirement savers build up their pension pots.

Under the current system, a member of an occupational pension scheme who leaves having completed more than three months but less than two years' qualifying service may be entitled to receive a short service refund. The Government intends that, from October 2015, schemes will be able to make refunds only within the first 30 days of membership.

Defined benefit occupational pension schemes and personal pension schemes are not affected.

Mr Webb said the typical worker now has 11 different jobs over their lifetime and "we need the rules to reflect this reality". He said: "If people change jobs regularly and 'cash out' their pension each time, they stand no chance of building up a decent pension pot."