Research from the Social Market Foundation (SMF) think tank has found that just 25% of people from ethnic minorities have a workplace pension and among black people, only 23% have a pension. This is well below the national rate of 38%. 

The research found that ethnic minorities were putting themselves at risk of financial hardship in later life by not saving into a private pension, as they are more likely to think the state pension will be enough to provide for a decent retirement. They are also more sceptical than others about the value of private pension savings.

The SMF believes this puts 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.”

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.”

Despite the lack of provision of a private pension, 63% of ethnic minorities describe themselves as being confident of having enough money to live on in retirement, compared to 56% of the white population and 16% of the ethnic minorities believe the state pension will be sufficient, compared to 12% of the general population.

To address the problem, SMF have made several recommendations, including an overhaul of the pensions auto-enrolment rules to bring workers on lower incomes into the workplace pension system. Currently ethnic minority workers are often left out because they do not meet the qualifying threshold of earning £10,000 a year.

Additionally, the think tank asked the financial services industry to do more to build ethnic minorities’ trust in pensions and savings products.