Ethnic Minorities Less Likely to Have Pension Plans and More Likely to Have Retirement Plans, SMF Survey Says

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UK-based think tank Social Market Foundation (SMF) in a recent publication found that ethnic minorities are less like to have pension plans but tend to have more retirement plans. This finding has led to a concern about if they are well informed about what to expect in retirement life. There is also a concern about whether they are aware of financial products and services that may help them post-employment.

For many, pension plans and insurance are not seen as valuable services to invest in. The findings of SMF showed that this is not an issue of affordability, but rather the doubt they have for these services is the main driving force. It is suspected that maybe the lack of awareness of financial services may be a contributing factor.

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SMF Survey Findings

The research has found that only 25% of individuals of ethnic minority backgrounds have workplace pensions, which is below the national number of 38%. Ethnic minorities are found to be more sceptical than other groups when it comes to private pension schemes. Additionally, they are more likely to rely on state pensions for their retirement than other groups.

This is what the SMF has called an “ethnic pension gap” which is believed to pose retirement hardship risks for millions in the UK. The reliance on state pensions and savings may not be sufficient to support their needs. Other organisations such as the People’s Pension have also discussed this issue.

Ethnic minority workers are more likely to be on low wages, which means they often opt out of workplace pensions. Data shows that only 16% of ethnic minority households earning under £30,000 a year have pension plans, compared to 26% of the public.

The gap is not always due to money and affordability. It was found that 25% of people who do not have private pensions admit that it is because they cannot afford it, the number is lower at 20% for ethnic minorities.

Despite lower enrolment in pension funds, ethnic minorities are found to be more confident than their white counterparts in funding their retirement. Based on the survey, 63% of the ethnic minority population were confident of having enough funds for retirement life, while only 56% of the white population said the same.

A lack of awareness of financial services can have a dire impact on retirement. In the future, this may pose issues in funding basic needs for retirement with millions at risk.

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To prevent more people from getting into retirement without proper funds, there are recommended actions that can be implemented by policymakers and employers. Here are the recommendations that the SMF have suggested:

  • Lowering the auto-enrolment pension threshold to £0 will allow every individual to have pension plans from first earnings
  • Creating a collaborative campaign between the government and industry leaders to raise awareness and improve trust in financial products and services
  • Develop peer-led support hubs in ethnic minority communities to accommodate financial services
  • Targeted support for migrants to support them to integrate with the financial system
  • Improve data collection and mapping to track the usage of financial services amongst ethnic minority groups


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