Auto-enrolment pensions are “more important than ever” and it is "imperative" that the policy is expanded in the wake of new pensioner income figures, according to Royal London.

Following the publication of the statistics by the Department for Work and Pensions (DWP), Royal London director of policy, Jamie Jenkins, said: “As fewer pensioners enter retirement with defined benefit pensions, it is more important than ever we ensure the amount they generate from auto-enrolment schemes leaves them with enough to draw a decent retirement income.

“It’s imperative that the government implements the findings of its auto-enrolment review, including lowering the age limit from 22 to 18, and removing the lower earnings limit as soon as possible.”

The government had previously been urged act on the advice of the 2017 auto-enrolment review in the recent Spring Budget.

The DWP figures showed that the average weekly income after housing costs for pensioners in financial year 2020 was £331, compared with £319 a decade earlier, and more than double 1995’s average weekly income of £168.

Jenkins said: “Today’s figures show that after big rises between 1995 and 2010, pensioner incomes have remained flat over the past ten years. While the state pension remains an important underpin for many pensioners’ income, we have also seen a steady decrease in the number of pensioners in receipt of income related benefits such as Pension Credit.”

Younger pensioners were observed to have significantly higher incomes than their older counterparts, with under-75s having an average weekly income of £370 after housing costs, compared to £302 for over-75s.

The percentage of pensioners in relative low income rose to 19 per cent before housing costs and 18 per cent after housing costs between the end of the 2019 and 2020 fiscal years, while absolute low income remained stable in both categories on the rounded data.

Compared to the overall UK population, pensioners have been less likely to be in relative or absolute low income after housing costs from around the end of the 2005 fiscal year, and similar levels before housing costs since around 2010, with this attributed to large reductions in rates of low income for pensioners until around that point.

When looking at specific pensioner income sources, the state pension were the largest portion as they contributed a median average of £181 per week and was received by 97 per cent of pensioners, while occupational pension scheme income contributed an average of £182 per week but was received by just 61 per cent of pensioners
The proportion of pensioners receiving income-related benefits was 23 per cent in 2020, down from 37 per cent in 1995 and 31 per cent in 2010.

Households containing pensioners and no children received around 90 per cent of their income from state support and occupational pensions, while earnings and investments made a larger contribution of approximately 20 per cent or more of income for those in the top half of the distribution.

The proportion of pensioners in receipt of income from investments was shown to have decreased from 70 per cent in 2010 to 62 per cent in 2020.

The percentage of pensioners in material deprivation remained stable between the 2019 and 2020 fiscal year ends at 6 per cent, having followed a broadly downward trend since 2014.

A gender imbalance was also observable, with single women remaining worse off in retirement than single men as they had an average weekly income of £221 after housing costs and the latter earned £22 more per week.

Benefit income also made up 61 per cent of single female pensioners’ incomes, compared to just 51 per cent for their male counterparts as a greater portion of their incomes stemmed from occupational pensions.

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