Differentials in pension prospects for minority ethnic groups in the U.K.

Athina Vlachantoni, University of Southampton
Maria Evandrou, University of Southampton
Jane C. Falkingham, University of Southampton
Zhixin Feng, University of Bristol

Occupational pensions have historically been a key aspect of pension protection within the British pension system, as a result of a relatively low-value basic pension. However existing research indicates that minority ethnic groups are less likely to benefit from such pensions and more likely to face a poverty risk in later life, as a result of the interaction of their patterns of labour market participation and pension membership. Using data from the UK Household Longitudinal Study, this paper explores patterns of employment and the determinants of membership in an employer’s pension scheme among working-age individuals from minority ethnic groups and the White British population. The findings show that, after controlling for key demographic, health and socio-economic characteristics, ethnicity remains a strong determinant of one’s chances of improving their pension protection prospects through being in paid work, being an employee and working for an employer who offers a pension scheme. However, once an individual is working for an employer who offers a pension scheme, the effect of ethnicity on their odds of being a member of that scheme is lower. In order to maximise the impact of the current government initiative of auto-enrolment, UK government policy needs to facilitate not only the labour market participation of working-age men and women from ethnic minorities, but also their participation as employees.