Who are the under-pensioned and what should policymakers know?

Individuals from particular minority ethnic groups in the UK, such as those from a Pakistani and Bangladeshi communities, are among those considered to be ‘under-pensioned’, that is they are less likely to have adequate pension protection in later life. Today researchers at the ESRC Research Methods Festival at the University of Oxford will hear about new research by Dr Athina Vlachantoni and colleagues, which seeks to gain a better understanding of the evidence. Writing for Society Central, she explains the key issues and why her findings have important implications for the design of policy.

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This new research project, funded by the Economic and Social Research Council, aims to understand the differences between and within ethnic groups in terms of occupational pension membership, as this type of pension protection is particularly important in the British context.

This is an important policy challenge for at least three reasons:

  1. pension protection is part of a cumulative disadvantage faced by certain ethnic groups including health status and financial wellbeing
  2. the UK is becoming more ethnically diverse
  3. the minority ethnic population is ageing alongside the White British population and therefore pension protection will become an increasingly pressing policy concern

Policy reforms in the area of occupational pensions are well underway in the UK, with the employees of larger companies becoming automatically enrolled in occupational pension schemes, followed by medium and smaller companies by 2018.

Although such reforms can make a significant difference in the number of employees covered by occupational pensions, it remains to be seen whether the employment patterns of men and women from particular minority ethnic groups will continue to pose a concern in terms of their adequate pension protection.

Longitudinal data

The project uses data on working-age individuals from the UK’s largest longitudinal survey called ‘Understanding Society’, which also includes sample boosts for five prominent minority ethnic groups: African, Black, Pakistani, Bangladeshi and Indian.

In addition, the dataset allows researchers to distinguish individuals from Polish descent in the population, in order to compare and contrast ‘traditional’ and ‘new’ groups of migrants to the UK.

The research found that coming from a minority ethnic group compared to the White British majority can adversely affect one’s chances of being in paid work in the first place; their chances of being an employee (as opposed to self-employed), and working for an employer who offers a pension scheme.

These results confirmed existing evidence which tells us that the Pakistani and Bangladeshi groups, and especially women within these groups, are the least likely to fare well across these three dimensions.

The only minority group more likely than the White British to be in paid work was the Polish group, reflecting the largely economic nature of migration among Poles settling in the UK.

Interestingly, the research found that although Poles are most likely to be in paid work, nevertheless they are still less likely to work as employees or for an employer who offers a pension scheme. Such complex employment patterns translate into pension insecurity during working age, which can contribute to income insecurity in later life.

However, once an individual works for an employer who offers a pension scheme, their ethnicity does not appear to have an effect on their chances of being a member of that scheme.

Dr Athina Vlachantoni reports that “The findings of the research have important implications for the design of policy aimed at improving pension protection for minority ethnic groups.

Firstly, they confirm important differentials between the White British majority and the minority ethnic population in terms of employment patterns and pension protection, as well as between different ethnic groups.

Secondly, our research suggests that participation in the labour market and better occupational pension protection for a diverse workforce are as important, or even more important, for such groups than access to an employer’s pension scheme.”

Dr Athina Vlachantoni is Senior Lecturer in the Centre for Research on Ageing and the ESRC Centre for Population Change at Southampton University

Further information

This research is conducted by Dr Athina Vlachantoni, Dr Frank Feng, Professor Maria Evandrou and Professor Jane Falkingham at the Centre for Research on Ageing and the Centre for Population Change, at the University of Southampton. The research is funded by the Secondary Data Analysis Initiative by the UK’s Economic and Social Research Council.

 

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