Phoenix Group is urging industry leaders to reconsider communication and engagement strategies with ethnic minority customers to bridge the retirement funding gap in communities.
New analysis by Phoenix Insights reveals ethnic minorities have lower pension participation and rely on non-pension sources for retirement funding. Ethnic minority groups expect a retirement income around 16 per cent higher than the average £25,000 expected by white British people.
While ethnic minorities have higher expectations for a “comfortable” retirement at 36-38 per cent, compared to 25 per cent among white British people, weekly retirement income for Asian and black families is only £391 and £412, respectively, significantly lower than the population average of £556.
Individuals from ethnic minority groups aiming to retire earlier by up to two years may face limitations on the size of their savings pot for retirement, according to the research.
Phoenix Insights’ research shows that people from Pakistani, Bangladeshi, and Indian ethnic backgrounds are more likely to rely on support networks and draw on property wealth in retirement.
While non-pension sources can contribute to overall retirement income, pension savings are the main contributor to a good standard of living in retirement, highlighting the need for the pensions industry to understand and respond to the different attitudes and expectations of different ethnic minority groups.
Phoenix Insights director Catherine Foot says: “Across the UK, we know that there are up to 18 million people who are under-saving for retirement. Tackling this problem should be an urgent priority for government, employers, and individuals alike, as the nation is living longer than ever before.
“However, by taking a big picture view, we can be at risk of missing the nuanced challenges faced by different groups within society, which is why Phoenix Insights has chosen to take a deeper dive into how different ethnic minority groups are preparing for retirement.
“Our findings are clear that ethnic minority groups do indeed have different expectations and levels of preparation for retirement, whilst at the same time demonstrating the need to better understand how providers and government can support these groups so they can enjoy a good quality retirement that meets their financial needs.”