People from ethnic minorities are much less likely than white Britons to save into a pension scheme, putting millions at risk of financial hardship in later life, new research reveals today.
The Social Market Foundation think-tank found that just 25% of people from ethnic minorities have a workplace pension, well below the national rate of 38%.
In research supported by the consumer group Which?, the SMF found that ethnic minorities are more sceptical than others about the value of private pension savings.
At the same time, ethnic minorities are more likely than others to believe that the State pension will be enough to provide a decent retirement.
The SMF said this combination of scepticism about private pensions and faith in public provision may put many ethnic minorities in the UK at “greater risk of hardship in old age as the state pension and their savings may turn out to be insufficient for their needs.”
To address the problem, ministers should overhaul pensions auto-enrolment rules to bring more people – including many from ethnic minorities – into the workplace pension system, the SMF said. Because ethnic minority workers are more likely to be on low wages, they are often left out of workplace pensions.
The think-tank also challenged the financial services industry to do more to build ethnic minorities’ trust in pensions and savings products.
Niamh O Regan, Researcher at Social Market Foundation, said:
“Longer lives and rising costs mean that building a solid private pension is a necessity for just about anyone who wants a comfortable retirement. Too many people from ethnic minorities are at risk of hardship in later life because they’re not saving into a pension and putting too much faith in the state pension.”
