A quarter of the Black population in the UK say they do not have a personal or employment pension, and 59 per cent of them are worried about running out of money in retirement, according to Scottish Widows.
According to the data, which were taken from Scottish Widows’ most recent Retirement Report, there are notable differences between the Black community and other groups in terms of how they are responding to present financial stressors and their pension contributions.
It was found that the black community in the UK relies on cash assets and non-pension savings, which are more likely to be negatively impacted by greater inflation, leading to a crisis in long-term savings for the Black community.
In comparison, only 49 per cent of Indian people and 53 per cent of White Britons expressed fear about running out of money in retirement.
In contrast to only 11 per cent of White Brits and 14 per cent of Asian groups, one in five Black adults have stated they will reduce their retirement contributions. Additionally, compared to their White British counterparts (58 per cent), Black ethnic groups—whether African, Caribbean, or other—are less likely to obtain state pensions (36 per cent).
Significant differences between how different ethnic groups typically expect to support their retirement were also revealed by the Scottish Widows report, with White British people being much more likely than minority ethnic groups to mention state pensions (58 per cent) as sources of income to support retirement. In contrast, only 36 per cent of Black and 25 per cent of Pakistani communities checked the box for state pensions.
Black communities are also more likely to mention cash savings (30 per cent), as well as assistance from children and relatives (11 per cent), as sources of retirement income. Nearly 2 per cent of White British respondents, in contrast, name family and friends as sources of retirement income.
Nearly one in five or 16 per cent of the Black respondents said they had cut back on their retirement contributions, and 12 per cent said they had recently cut back on necessities in an effort to enhance savings.
Pennies to Pounds founder Kia Commodore says: “The stats in the report about Black communities are shocking but sadly, unsurprising. The rise in the cost of living has undoubtedly affected the choices that many people are making regarding their finances.
“In my experience, there are a few reasons why the Black community may not be as inclined to save for a pension. One is that Black employees typically earn less than their White British counterparts and do not always have the additional disposable income to save into a pension. There is also a feeling of distrust towards financial institutions which, in-turn, can impact the financial decisions made by some members of the Black community.”
Scottish Widows head of policy Pete Glancy says: “Our research highlights inequalities in terms of pension provision across Black communities, and the increased challenge of making ends meet today and saving for the future.
“Those with the best pension provision have spent much of their careers in well-paid, full-time jobs. Those with the poorest pension provision tend to have intermittent, low-paid employment or earn their wages from multiple jobs, which means they can lose out on being automatically enrolled in an employer-led pension scheme. Black communities appear to be over-represented in the latter category, which can impact on the accumulation of private pension provisions and state pension entitlement.
“There is also some evidence that people from Black communities are more likely to use means other than a traditional pension to save for retirement, such as cash savings. This can be a risky strategy, particularly during times of higher inflation.”
Commodore says: “Money is often a taboo subject among Black communities which is reflected in the statistics shown. Financial education is also not something that is taught in schools, so many people leave having to try to navigate their finances in the best way possible. However, this has meant that Black communities are choosing to forego part of their retirement contributions to be able to survive in the current climate that we’re in.
“There needs to be a real push for an increase in understandable and accessible education from the financial services sector, particularly for different communities. This education will help to highlight the challenges that may occur from over-reliance on non-pension savings and highlight the benefits of both personal and company pension funds.”
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