Background
The existence of a gender pension gap has long been documented.
The former state pension system was created at a time when men were expected to be the main breadwinners in a couple, and married women were largely assumed to be financially dependent upon their husbands.
At the same time, in the workplace, membership of high quality occupational pensions was dominated by men, with some women even prevented from joining such schemes until the 1990s. The latest estimates from the Department for Work and Pensions (DWP) suggest that in the early 2020s, the average man in his late 50s had private pension wealth of £156,000 compared with just £81,000 for the average woman – a ‘gender pension gap’ in private pensions of 48%, compounding historic inequalities in state pensions.
But there is also growing evidence of an ‘ethnicity pension gap’.
Robust data on the scale of the problem, especially for particular ethnic groups, can be difficult to assemble because of the relatively small number of people from ethnic minorities included in the sample surveys often used to construct statistics.
But research published in 2020 suggested that in 2017-18 the average pensioner from an ethnic minority group had an income 24.4% lower than their white counterpart, an annual gap of over £3,000 in that year. Unfortunately, the data source used (the DWP’s ‘Family Resources Survey’) does not provide samples large enough to allow for an understanding of the position of specific ethnic minority groups.
Further research undertaken in 2022 was based on a specially conducted survey of employees aged 30-50, with a boosted sample of people from ethnic minorities. This found that “…at £52,333, the average minority ethnic person’s pension pot is less than half the size of the average white British person’s £114,941” and that “nearly seven in 10 of minority respondents have no pension pot at all”. The published report does not provide any more detailed estimates for specific ethnic groups.
How many women are there in Britain in different ethnic groups?
Although we refer throughout this report to ‘ethnic minorities’, the proportion of the female population of England and Wales whose ethnicity is other than White British is rising steadily - from around 1 in 5 in the 2011 census to around 1 in 4 in the 2021 census. This is shown in the table below, which is based on the entire female population (and therefore includes both those under and over working age).
Our report is primarily concerned with Black and Asian women, though many of the issues that we raise will be of wider relevance. The table shows that this group has risen from 10.7% of the population in 2011 (7.3% Asian and 3.4% Black) to 13.4% in 2021 (9.2% Asian and 4.2% Black). The fastest growth has been seen amongst Indian, Pakistani and Black African women.
In total, there were roughly 3 million Black or Asian women (and girls) in 2011, and this number stood at just over 4 million in 2021.
This table suggests that a rising proportion of pension scheme members are likely to come from these groups. Pension scheme providers, trustees and advisers will increasingly need to understand the diverse needs of these groups if they are to meet their needs effectively.
Source: Authors’ calculations based on: https://www.ethnicity-facts-figures.service.gov.uk/uk-population-by-ethnicity/demographics/male-and-female-populations/latest/ On average, both women and members of ethnic minority groups are likely to be at a disadvantage when it comes to later life finances. And it seems reasonable to conclude that at the intersection of these two groups – women from ethnic minorities – disadvantage is likely to be particularly acute.
If we are to tackle this issue, we cannot treat people from ethnic minorities as a single, homogeneous group. People from different ethnic groups will have different economic situations, different family structures, different cultures and different outlooks. And the experiences of these groups are likely to vary for generations born and raised in the UK compared with those who migrated to the UK later in life.
Understanding the reasons why women (in particular) from ethnic minority groups suffer pension disadvantage means listening to their voices and hearing first-hand the challenges which they face in building up the same pensions as their white counterparts or what drives them to save differently. Only then can we design policies and processes which will help to overcome these barriers. Giving a voice to these women is the purpose of this report.