The new state pension is set to improve incomes for groups who have traditionally had lower retirement incomes, including women, the Pensions Policy Institute has reported.

The PPI’s report The new pensions landscape, published today looked at the impact on individuals of reforms to the pension system between 2003 and 2016.

The report found that reforms over the last ten years have lessened inequalities, while people retiring in the near future are at risk of lower incomes than those who have recently retired. The PPI has suggested that in the long term, the impact of the triple lock and auto-enrolment should reverse this trend.

According to the PPI’s findings, average pensioner unit incomes between 2003 and 2016, after housing, grew by 33 per cent in real terms as a result of increases in incomes from private pensions and employment.

There was also an increase in the proportion of pensioners in employment above state pension age in the period, with the proportion of pension units with earnings increasing from seven per cent to 13 per cent for all pensioner units between 2002-3 and 2014-15.

Furthermore, there was a halving of the proportion of pensioners in relative poverty, although this was in part a consequence of lower earnings growth among the working age population.

Those who have seen the largest income increases in the period are pensioner couples in the middle three quintiles, while the lowest increases have been experienced by single pensioners in the lowest two income quintiles.

The report was sponsored by the Association of British Insurers, the Chartered Insurance Institute, the Department for Work and Pensions, the People’s Pension and the Pensions and Lifetime Savings Association.

Commenting on the report’s findings, PPI head of policy research Daniela Silcock said: “Both the ‘triple lock’ and automatic enrolment could significantly increase the level of people’s retirement incomes. For those nearest State Pension age the triple lock has the most immediate effect whereas younger individuals may gain most from automatic enrolment.”

“Despite these improvements, it is not certain that retirement incomes in the near future will be in line with those for recent retirees. There are clear prospects for average retirement incomes to fall, as people aged 50 and above reach State Pension age. However, automatic enrolment should contribute to reversing this trend over the long term, depending on contribution rates.”

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