- Friday, April 26, 2024
By: Lauren Codling
by LAUREN CODLING
BRITISH ASIANS need to be made more aware of pension schemes, experts have said, as new research showed ethnic minority pensioners are 24 per cent “worse off” annually than their white counterparts.
The Measuring the Ethnicity Pension Gap report by The People’s Pension highlighted the average pensioner from an ethnic minority background is £3,350 a year worse off than other individuals at a similar age.
Analysis also revealed the gap from the gender perspective – the annual pension income between an ethnic minority female pensioner and a white male pensioner is 51.4 per cent. It was additionally noted that pension income inequality was a particular issue for Asian ethnic groups, where the gap was at 30 per cent.
The analysis claimed key factors behind the gap were down to lower average earnings,
variable employment rates, and the higher likelihood of ethnic minority workers being self-employed.
Gregg McClymont, director of policy at The People’s Pension, warned the gap would become “starker” as the growing ethnic minority population reaches retirement age. “Understanding the size of the problem and causes is a vital first step in devising appropriate policies for closing the gap,” he said.
The organisation has since called on the government to make reforms to the criteria for auto-enrolment to reduce the ethnicity pensions gap over the long term.
Craig Rimmer, policy lead Master Trusts at Pensions and Lifetime Savings Association (PLSA), told Eastern Eye that there needed to be more awareness of pensions in ethnic communities.
“(We) should be pushing out a simple message to get people started,” he said. “We need to be a bit pushier with pensions and think how we can reach out to groups that haven’t been (reached out to) before.”
Previous research by Manchester Metropolitan University on ethnic minorities and their pension decisions found that Bangladeshi and Pakistani respondents had little understanding of how different types of pension provision operated. The white respondents were either very
well informed or possessed sufficient grasp of the subject to make appropriate decisions.
In response to this, Rimmer said it was not the fault of the individual for not understanding
“an extremely complicated regime.” “It is our business to make it simple and give permission to people not to have a full understanding of it,” he said. “In terms of the general public, the understanding is usually behind by about 10 or 20 years. They remember what the situation used to be, rather than what it is now.”
Rimmer emphasised the importance of staying opted-in a pension scheme if an individual
is in a workplace environment. If a person is self-employed, Rimmer advised looking into tax relief if they wanted to start saving. “You could be saving yourself tax and for yourself in later life,” he explained.
An individual who is not aware of how pensions work may consequently be largely relying
on state pensions in later life, Rimmer explained. This could mean a person has to live on a lesser amount of money, meaning they are unable to have the lifestyle they have either
become accustomed to or would prefer. “They may prefer to have a higher level of money each year to have the lifestyle they have worked for,” he said. “We are talking about a very hard-working community here and it is enabling them to have the retirement they deserve.”
In response to the report, Carolyn Jones, head of pensions policy and strategy at the Money and Pensions Service, said the organisation had just launched a 10-year UK-wide strategy to help everyone improve their financial well being.
“As part of our strategy we want to see five million more people understanding enough to plan for and during later life,” Jones told Eastern Eye. “We and many organisations across sectors will be collecting and considering evidence such as this to help understand how we can achieve better outcomes for different groups across the UK population.”
The department for work and pensions did not respond to a request for comment from Eastern Eye.
