Pramod ThomasBy: Pramod Thomas
People from Pakistani, Bangladeshi and Indian ethnic backgrounds were more likely to rely financially on support networks, such as friends and family, upon retirement, than white British people, a research has revealed.
Pension participation among ethnic minorities in UK is lower than average, and non-pension sources are expected to play an important role in funding the retirement of this group, a new research by Phoenix Group’s longevity think tank, Phoenix Insights, has stated.
The research said that as many as 37 per cent of people from Indian or Pakistani and 36 per cent of people from Bangladeshi ethnic backgrounds expect a ‘comfortable’ retirement, compared to 25 per cent among white British people. Around 38 per cent of people from black African also expect a ‘smooth’ retirement life.
However, these expectations do not reflect the current reality in which weekly income for retired Asian and black families are £391 and £412 respectively, compared to the population average of £556.
Most ethnic minority groups expect an income between £3,000 – £7,000 a year higher than the UK average and aim to retire up to two years earlier, the research said.
According to the study, awareness of how much money is needed to afford a good standard of living after retirement is vital for ethnic minorities in the country.
It also urged industry leaders to think about how they communicate and engage with this group as customers so they can understand and provide solutions for an apparent retirement funding gap in many communities better.
When compared to the average retirement income of £25,000 expected by white British people, most ethnic minority groups expect to have a retirement income around 16 per cent higher if they were of a similar age and had similar salaries.
Phoenix Insights use ‘ethnic minorities’ to refer to all ethnic groups except the white British, but including white minorities.
With retirement income typically determined by the number of years a person has saved for and how many years of retirement need to be financed, the finding that individuals from ethnic minority groups also aim to retire up to two years earlier suggests additional limitations on the size of the savings pot these groups will be entering retirement with.
“Across the UK, we know that there are up to 18 million people who are under-saving for retirement. Tackling this problem should be an urgent priority for government, employers, and individuals alike, as the nation is living longer than ever before,” said Catherine Foot, director of Phoenix Insights.
“Our findings are clear that ethnic minority groups do indeed have different expectations and levels of preparation for retirement, whilst at the same time demonstrating the need to better understand how providers and government can support these groups so they can enjoy a good quality retirement that meets their financial needs.”
The study further said that property wealth is also more likely expected to be drawn upon by most ethnic minority groups than for white British people, reflecting differences in cultural norms and family structures.
