Over Half Of UK Black Community Fear Running Out Of Money In Retirement

Over half (59%) of the Black community in the UK is concerned about running out of money during retirement, with a quarter (25%) saying that they do not have a personal or workplace pension. Instead, they rely on non-pension savings and cash assets which are more likely to be impacted by higher inflation, creating a long-term savings crisis for the Black community.

In contrast, just under half (49%) of the Indian community and 53% of White Brits were concerned about running out of money in retirement. 

The figures, drawn from Scottish Widows’ latest Retirement Report, reveal significant contrasts between the Black community and other groups in response to current financial pressures and their pension contributions. 

One in five (16%) of Black adults have said they will cut back on their retirement contributions, compared with only 11% of White Brits and 14% of Asian groups. In addition, Black African, Black Caribbean or other Black ethnic groups are less likely to have a state pension (36%), compared to their White British counterparts (58%).

Kia Commodore, founder of Pennies to Pounds, commented on these alarming findings: 

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.

Mounting financial pressure

As concern around the rising cost-of-living grows, some ethnic groups are cutting back in ways that indicate deteriorating financial resilience. The Financial Conduct Authority’s Financial Lives Survey found that more than a third of Black Brits have low financial resilience, compared to only 19% of those from a White background.

According to Scottish Widows’ Retirement Report, the Black community also reported a larger strain from rising living costs, with nearly half (48%) reporting a greater level of concern over the cost of living, compared to just over a third of their White counterparts (36%).

This is a particularly concerning picture given that most people from Black, Asian and minority ethnic communities polled are also more likely to be worried about not having enough money to fund their retirement – 59% of those from a Black community compared to only 53% who are White British.

Pete Glancy, Head of Policy at Scottish Widows, said: 

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 provision 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.

Funding retirement

The Scottish Widows report also revealed significant variations in how different ethnic groups typically expect to support their retirement, with those in the White British group much more likely than minority ethnic groups to note state pensions (58%) as sources of income to fund retirement. This is compared to only 36% of the Black community and 25% of Pakistani groups who ticked state pensions.

Savings outside of a pension, and in cash, are also more likely to be cited as sources of retirement income for Black communities (30%), as well as support from children and family (11%). In comparison, only 2% of White British respondents mention family and friends as sources of retirement income.

Long-term savings

When it comes to saving for the future, nearly one in five (16%) of Black respondents stated they had reduced their retirement contributions and 12% revealed they had recently cut back on essentials to try and increase savings. Worryingly, this means that most Black groups surveyed are less likely to be contributing to a retirement pot, and those that do are more likely to say they are cutting back in response to the rising cost-of-living.

Kia Commodore added: 

Money is often a taboo subject among Black communities which is reflective 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.”

For more information, please see the full Retirement Report here.

Written by: Antonia Fagbohun 

One thought on “Over Half Of UK Black Community Fear Running Out Of Money In Retirement

  • 19th October 2022 at 10:31 am
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    Great article and very true, ‘money talk’ is a taboo subject in the black community…

    Reply

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