Average retirement incomes have hit a near three year high, a report said today.

They are now at their highest level since July 2014, with an increase of 5.2% in Q1 2017, according to Moneyfacts.

It reported retirement incomes have risen by almost 15% over the last year.

The figures come as HMRC statistics show that personal pension membership and contributions reached record highs.

The new research, contained in the Moneyfacts Personal Pension and Annuity Trends Treasury Report, found that for the second quarter running the average retirement income for an individual saving into a personal pension and then taking an income through an annuity has increased, rising by 5.2% during Q1 2017.

The report assessed the impact of the changing value of personal pension pots and annuity rates on retirement incomes. The figures were based on an individual contributing £100 gross per month into an average personal pension fund over a 20-year period and retiring at the age of 65 with a standard level without guarantee annuity.

The report found that a combination of strong recent pension fund returns and generally higher annuity rates has boosted retirement incomes.

The average annual income payable from a standard level without guarantee annuity for a 65-year-old increased by between 0.4% and 2.3% in Q1 2017 (depending on purchase price), while the average pension fund delivered a return of 4%.

Overall, 95% of all pension funds delivered positive growth in Q1 2017, with 6% of these posting double-digit growth.

Richard Eagling, head of pensions at Moneyfacts, said: “The record numbers saving into personal pensions and defined contribution pension schemes have placed even greater importance on the ability of funds to deliver strong performance if individuals are to generate an adequate retirement income.

“The fact that the average pension fund has now delivered positive returns in every calendar year since 2012 has arguably made it easier for individuals to accept the investment risks inherent in the defined contribution pension model than might otherwise have been the case. Whether the recent enthusiasm for personal pensions and the low opt-out rates for auto-enrolment will continue should we see a sustained period of falling investment returns remains to be seen.”