In contrast, 30 years ago pensioners were are at least three times as likely to be poor as working people. They are now less likely to be poor and a large proportion of those retiring now will actually be better off in retirement than they were on average during their working life.

Modelling by IFS researchers suggests that pensioners’ incomes will continue to rise for at least the next decade. However, after that pensioners face the challenges of less generous state pensions in future, the fall in rates of home ownership, and, in the private sector, a collapse in membership of defined benefit occupational pension schemes.

Paul Johnson, IFS director, said: ‘We have achieved an astonishing turnaround in the incomes of pensioners over the last three decades, without increasing public spending to levels seen in many other continental European countries.

‘But the longer term future looks very uncertain. Those now in their 20s, 30s and 40s may well end up with lower incomes in retirement than their parents. The focus for policy needs to be on getting private provision right, with more risk sharing, and a rational and stable tax policy.’

Among the options advocated by IFS are an end to the ‘triple lock’ policy, whereby the pension rises by the higher of inflation (as measured by the consumer prices index), earnings growth, and 2.5%, along with continuing increases in pension age and a system for taxing private pensions which retains tax relief on contributions rather than withdrawals, as is currently under consideration.

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