People from Pakistani, Bangladeshi, Black and several other ethnic groups face poorer retirement outcomes than the white majority, according to research from The Pensions Policy Institute (PPI).
The research released by PPI titled ‘The Pensions Policy Impact of Poor Personal Finance Data on People from Ethnic Minority Groups’ explores what adjustments to data collection may be necessary to better target policy and improve the retirement outcomes for ethnic minorities.
It found that there are significant correlations between ethnicity, gender and self‐employment. The gender gap in self‐employment between men and women from Pakistani and Bangladeshi backgrounds is also higher than for people from other ethnic backgrounds.
Low levels of pension participation are strongly linked with self-employment. In 2020, 16 per cent of self-employed people were contributing to a private pension, compared to 78 per cent of all employees—both those who qualified for automatic enrolment and those who weren’t.
Additionally, part-time employment is linked to little or no pension savings since part-timers are less likely to be qualified for automatic enrolment and those who do save typically have lower incomes than those who are employed full-time.
The report also found that being excluded from or treated unfairly by conventional financial services, receiving a poor education, and living in poverty are among the difficulties that people with disadvantageous families are most likely to encounter.
PPI head of policy research Daniela Silcock says: “Data gathering on people from ethnic minority groups is inadequate, especially in light of the poor average pension outcomes experienced by Black African/Caribbean, Pakistani, Bangladeshi and Chinese people. These problems will affect more people in future as the proportion of ethnic minorities in the UK is expected to grow from around 15 per cent today to around 30 per cent by 2061.
“Strategic, tailored, policy-making and action by involved organisations (such as pension schemes), is required to reduce ethnic inequalities in retirement. However, there is insufficient data available on the experiences of all ethnic minority groups, to effectively inform policy and effect change.
“This Briefing Note is intended to start the discussion about how data gathering can be improved in order to provide evidence for future policy-making. If retirement outcomes are to be made more equal, it is critical that there is better evidence on the impact of discrimination, intergenerational disadvantage and the way that culture and religion shape the experiences and opportunities of people from ethnic minority groups.”