To provide skin benefits, retinoids (other than Tretinoin) must be converted into retinoic acid.

The conversion procedure is as follows:

Retinyl Palmitate > Retinol > Retinaldehyde > Retinoic Acid

Because of its conversion properties, this retinoid is thought to be a milder version of retinoic acid. It is thought to increase epidermal thickness, stimulate the development of more epidermal protein, and increase skin elasticity. Retinyl palmitate is used in cosmetics to minimise the depth of fine lines and wrinkles, as well as to improve skin smoothness. Retinyl palmitate does not cause secondary reactions such as erythema, dryness, or irritation. It is even more effective when combined with glycolic acid because it penetrates deeper.

When applied to the skin, it has been shown in studies to be an effective antioxidant. 

Retinyl palmitate is a safe ingredient, contrary to fear-mongering claims. There is no scientific proof that retinyl palmitate causes cancer in humans. Several certified organisations back up the safety of retinyl palmitate, and their reports are widely available online. We encourage you to research if these claims still concern you.

Ref:
Duell EA, Kang S, Voorhees JJ. Unoccluded retinol penetrates human skin in vivo more effectively than unoccluded retinyl palmitate or retinoic acid. J Invest Dermatol. 1997 Sep;109(3):301-5. doi: 10.1111/1523-1747.ep12335788. PMID: 9284094.