Measuring the ethnicity pensions gap

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Ethnic minority pensioners are losing out

The average pensioner from an ethnic minority is £3,350 a year worse off than other pensioners, representing a 24.4% gap in retirement income.

The divide is even bigger from a gender perspective. On average, our analysis – based on government surveys – shows that the gap in annual pension income between a female pensioner from an ethnic minority and a white male pensioner is 51.4%.

Our new report, Measuring the ethnicity pensions gap, found the causes of the ethnicity pensions gap lie in labour market factors and pension policy. These include:

  • eligibility for auto-enrolment
  • lower average earnings
  • variable employment rates
  • the greater likelihood of ethnic minority workers being self-employed.

Removing barriers to workplace pensions is key

Removing barriers to membership of occupational pension schemes is crucial to closing the gap because ethnic minority employees are more likely to be low earners excluded from auto-enrolment.

We’re calling for the government to reform the criteria for auto-enrolment to enable more people to join workplace pension schemes, and help reduce the ethnicity pensions gap over the long term, including:

  • Lowering the amount workers need to earn to be eligible for a workplace pension from £10,000 to the lower earnings limit for National Insurance (£6,136), bringing an extra 1.2 million workers into auto-enrolment – 15% of whom would be from ethnic minorities.
  • Making pension contributions count from the first pound someone earns rather than counting only on earnings above the current £6,136 threshold.
  • Establishing an independent pension commission to monitor and address ethnicity pension inequalities and advise on the best way to bring the self-employed into workplace pension saving.

Measuring the ethnicity pensions gap

Download our report
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