Skip to main content

Pensions: Ethnic Groups

Question for Department for Work and Pensions

UIN HL9198, tabled on 14 October 2020

To ask Her Majesty's Government what assessment they have made of the ethnicity pension gap; and what steps, if any, they are taking to reduce it.

Answered on

22 October 2020

Automatic enrolment has reversed the decline in workplace pension saving. Latest figures show that over 10 million workers have been automatically enrolled into a workplace pension by more than 1.7 million employers to date. By 2019/20 an estimated extra £18.8 billion a year was estimated to go into workplace pensions as a result of this policy.

The level of earnings at which workers are automatically enrolled (the earnings trigger) is subject to an annual statutory review. An analysis of the equalities impact always forms part of the review, as does an assessment of reducing the trigger to the National Insurance threshold. Analysis for the 2020/21 thresholds showed that 14 per cent of those made eligible by freezing the trigger were from Black, Asian and Minority Ethnic (BAME) groups.

Eligible employee participation continues to increase across all ethnic groups but gaps persist.

The White ethnic group has had the highest participation rate since the introduction of automatic enrolment in 2012 and had an average participation rate of 81 per cent over the period 2016/17-2018/19. This compares to the lowest, Pakistani and Bangladeshi group at 61 per cent. However, between the 2011/12-2013/14 period and 2016/17-2018/19 there were large increases among all ethnic groups. The Pakistani and Bangladeshi ethnic group shows the largest increase from 36 per cent to 61 per cent.

Our aim remains to help BAME workers and others achieve greater financial resilience for the long term. Our ambition, set out in the 2017 Automatic Enrolment Review: Maintaining the Momentum, is to remove the lower earnings limit and lower the age threshold for workplace pensions, in the mid-2020s, to increase the amount of savings people can build up for their retirement.