The retirement crisis looms large for older Britons as they face the risk of being “under-pensioned” due to slashed savings. Recent research has exposed severe pension inequalities impacting disabled individuals, women, and ethnic minority communities throughout Britain. The fifth edition of the Underpensioned series reveals how labour market disparities during working years translate into reduced living standards in retirement for these groups.
Employment rates have fallen overall, with specific demographics experiencing significantly lower employment levels and higher rates of part-time work compared to national averages. These workplace inequalities directly impact pension provision and entitlement, resulting in substantial gaps in retirement security for millions of workers nationwide. Disabled people face particularly severe employment disadvantages, with only 54 percent in work compared to 82 percent of non-disabled people—a gap of 28 percentage points.
This dramatic disparity in labour market participation directly impacts their pension accumulation throughout their working lives. Women’s average earnings remain 18 percent below the population average, significantly reducing their capacity to build adequate retirement savings.
Pension disparities affect older Britons
Lower homeownership rates amongst underpensioned groups mean many face ongoing rental costs throughout retirement, eroding their already diminished pension incomes. Automatic enrolment eligibility varies dramatically across ethnic minority communities, despite overall rates matching the general population when all groups are combined. Indian employees achieve 96 percent eligibility for automatic enrolment, while Bangladeshi workers face the lowest rate at just 65 percent.
These disparities in pension scheme access create vastly different retirement outcomes within ethnic minority communities. John Adams, Senior Policy Analyst at the PPI, said: “This year’s Underpensioned report builds upon the foundation of previous years, allowing us to start to view ongoing trends as well as monitor recent levels of access to pension savings for different groups. People with disabilities continue to be some of the most likely to be under-pensioned.
People from ethnic minority backgrounds experience a wide range of outcomes. Some ethnic minorities are significantly under-pensioned compared to the general population. In contrast, others are much less likely to be employees or have income levels that enable them to be automatically enrolled into pension savings.”
The Government is reportedly in the process of carrying out dramatic reforms to the pension system, aiming to address these glaring inequalities and ensure a more secure retirement for all Britons.
