Tackling pension poverty

Previous research highlighted that some older individuals from minority ethnic communities face a higher risk of poverty compared to their white British counterparts. There are also significant gaps in existing data. 

The UK Department for Work and Pensions (DWP) statistics group different ethnicities, such as Pakistani or Bangladeshi, or Black Caribbean and Black African, together under headings such as ‘Asian’ or ‘Black’, obscuring any differences in culture or experience. 

Meanwhile, the UK government’s pension projection model, used to understand future pension provision, does not include ethnicity.

“We wanted to give policymakers a real flavour of how people plan for later life,” says Athina Vlachantoni, Professor of Gerontology and Social Policy. “Working with these stakeholders has ensured that our research directly addresses questions which policymakers and others are interested in.”

By combining statistical expertise with public engagement research methodologies, the project is enriching existing knowledge around pension inequalities, filling gaps in the data, and informing policymakers.

Research participants are invited to take photos to describe what late-life financial planning means to them, followed by an interview. As finances can be a sensitive topic, the ‘photo-voice’ technique is designed to give people time to reflect on the issues before having a face-to-face interview.

Invisible citizens

Earlier Southampton research highlighted that people from Bangladeshi and Pakistani communities faced the highest risk of not having pension protection across their life-course.

Working-age people from these communities were less likely to be members of an occupational pension scheme than people from other minority or white British communities. Interviews, led by Research Fellow Dr Spela Mocnik and Professor Yuanyuan Yin, are helping the team to understand more about the factors that contribute to this. These interviews highlight that financial education earlier in life matters, and that financial planning for later life is shaped by multiple factors including personal circumstances, priorities and wider social, economic and institutional factors.

The statistical analysis, led by Research Fellow Dr Saddaf Naaz Akhtar, shows that some ethnic minority communities are less likely to expect women to have a job. If they do, they are more likely to work part-time and be poorly paid. They are often self-employed or working in a family business, sometimes unpaid, and therefore invisible to the formal pension system.

Achieving pension equality

The government’s Automatic Enrolment system, which sees employees automatically enrolled in a pension scheme at the age of 22 if they earn over £10,000, was an attempt to encourage more people to save for retirement. However, people from some minority ethnic communities, particularly women, may not reach that earnings threshold.

Reducing the Automatic Enrolment minimum earnings threshold would be one way that the government could open up workplace pensions to more people. Increasing the value of the state pension, educating people about their pension entitlements, and continuing to push employers to provide workplace pensions could also help to address pensions inequality.

This research is showing that there are complex reasons for pension inequality. It is also clear that there can be no ‘one size fits all pension policy.’ However, regular interaction with the project stakeholders is providing feedback into the design of future pension policies and products that could provide people with greater options.

Project partners include the Department of Work and Pensions (DWP), Age UK Southampton, Southampton City Council, The People’s Pension, Citizens Advice Southampton, and the Pensions Policy Institute.