Pensions minister Steve Webb has confirmed the “pot follows member” system will come into effect from October 2016.
Under the proposals, an employee’s workplace pension pot would follow them when they change jobs.
Initially workers will be able to opt into the scheme before it becomes an automatic system.
However a 47-page paper on the proposals, published by the Department for work and pensions, suggested a pot would have to lie dormant for 12 months before becoming eligible for transfer.
The department has admitted this could mean a period of two years could pass before a saver’s dormant pots are consolidated.
The paper also sets out a four-stage process of flagging up the dormant pot, matching it with a saver, contacting the member and transferring the money.
Mr Webb said the success of auto-enrolment - which has seen 5m employees enrolled into a workplace pension already - means action on this issue needs to be taken.
The Lib Dem MP said: “If we fail to take action there could be over 50m dormant pension pots drifting away from savers by the middle of this century - that’s billions of pounds floating around that should be funding better retirements for people.”
The DWP expects to consult on draft legislation later this year.
