The Pensions Policy Institute (PPI) has warned that no single automatic enrolment reform would improve retirement outcomes for all low earners, after new modelling revealed that different groups could benefit from 'opposite approaches'.

The research, part of the PPI’s From Payslip to Pension series, examined how different policy reforms could affect retirement adequacy for persistent low earners.

In its summary of findings, the PPI said the most significant conclusion was that removing the Lower Earnings Limit (LEL) improved retirement outcomes for some low earners, but could create financial vulnerability during working life for others.

The report also explored whether maintaining the LEL while significantly increasing contribution rates could provide an alternative route to improving retirement adequacy, although the PPI said this would not work equally well for all profiles.

Alongside reforms to contribution rates and automatic enrolment thresholds, the research also considered policies such as non-contingent employer contributions and sidecar savings.

The modelling assessed policies against the PPI’s adequacy, fairness and sustainability framework, which has also been adopted by the Pensions Commission.

According to the report, some persistent low earners may be unnecessarily excluded from pension saving under current automatic enrolment thresholds, despite being capable of building retirement savings at similar rates to higher earners.

However, lowering thresholds too far could expose other low earners to financial hardship during their working lives.

With this in mind, the PPI stressed that any reforms aimed at improving retirement adequacy would need to consider broader factors, including system simplicity, fairness between workers and the impact on employers.

The report concluded that whichever policy route policymakers pursue - whether lowering thresholds, increasing contribution rates or introducing new targeted interventions - some groups of low earners would benefit while others would face greater risks.

It added that policymakers would therefore need to ensure appropriate safeguards are put in place to protect any low earners negatively affected by reforms.

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