The Financial Conduct Authority has recommended that that the Department for Work & Pensions remove barriers to pension scheme consolidation and pooling.
But it did not think it necessary to make asset pooling mandatory for either defined benefit or defined contribution schemes.
The FCA found smaller occupational pension schemes were less likely to be able to exert pressure on asset managers because they generally had fewer resources for governance and monitoring the performance of their asset managers and advisers.
Larger pension schemes were typically more attractive to asset managers, allowing trustees to negotiate lower fees per pound under administration.
Respondents to the FCA's consultation supported pooling in principle but highlighted significant barriers such as complex requirements about pensionable salaries and responsibilities of trustees and sponsors.
In December the DWP published a call for evidence on how processes for DC scheme bulk transfers without member consent might be simplified, to remove a key barrier to DC scheme consolidation, which the FCA recommended it continue with.
The regulator said: "Overall, we agree with some respondents who stated that there are existing opportunities for asset pooling and, while we recognise the potential benefits of asset pooling, we do not think it’s necessary to make asset pooling mandatory for DC or DB schemes, especially in light of the upcoming changes.
"We therefore recommend that the DWP continues to explore the possibility of removing some of the barriers to pension scheme consolidation and pooling. We will work with DWP to explore the feasibility of this further."
The FCA found that for DB schemes,some schemes might be able to benefit from pooling through lower fees and wider choice but there were barriers to DB pension scheme pooling in relation to complex rules concerning changes to existing benefit structures as well as the responsibilities on trustees and sponsors and certification requirements.
For DC schemes the FCA said "there remain some benefits from pooling through merging schemes, as bigger schemes can often negotiate lower management charges."
Despite members already buying units in contracts linked to pooled funds, the FCA have found that economies of scale from pooled funds are not passed on to investors in the same way that asset pooling might enable.
Tom Selby, a senior analyist with AJ Bell said: "There are thousands of sub-scale trust-based pension schemes which may struggle to get a good deal for their members.
"Where possible, pooling of assets could allow members to benefit from lower costs through greater economies of scale and increased negotiating power with asset managers."