A sixth of Black women have opted out of their pension pot, compared to just 5% of white women, as part of "ongoing disparities in retirement planning", a report reveals.
Before they retire, half of Black women (52%) expect to reduce their working hours instead of retiring, with a fifth (22%) of Asian women doing the same. This compares to just a fifth of white women who will do so, according to Scottish Widows’ survey of 5,000 respondents.
Reasons for opting against fully retiring included a lack of trust in pension schemes and having concerns about being financially comfortable once retired.
Further worries included not being able to contribute to a pension pot and choosing to save money by other means. Other issues included the gap in earnings between men and women, plus challenges they’ve faced with job opportunities.
This is evident in that one in six (16%) Black women and a fifth (20%) of Asian women have more than one job to make ends meet. However, less than a tenth (9%) of white British women juggle multiple jobs.
Concerns about running out of money prevalent
The situation has caused half (52%) of Black women and two-thirds (66%) of Asian women to share concerns about running out of money once they’ve reached retirement age – which is set to rise from 66 to 67 between 2026 and 2028.
Meanwhile, a wider pension awareness gap is prevalent among all women, with a third aged between 22 and 29 also unaware of how much in their pension pot will be suitable upon retirement. A separate Scottish Widows study found that, due to this, two-thirds of women are worried they will run out of cash before they retire.
Meanwhile, with an average disparity of £10,000 between genders’ earnings, it will take almost 20 years for women to match the savings potential of men.
This can also hit even harder for those who qualify for the lower earnings band of £6,240.
Auto-enrolment a problem for many
Selina Flavius from Black Girl Finance is a speaker who aims to shine a light on ethnicity pay gaps and address the challenges Black and ethnic minorities face with their money and savings.
One issue she highlights is that of auto-enrolment, which, when you have multiple jobs, can mean the earning amount is believed to have been met when your earnings are not over the £10,000 marker.
Flavius said: “Black Women are opting out of workplace pension schemes due to a lack of trust, low awareness of auto-enrolment, and a lack of education and empowerment in financial decision-making.
“Ethnic minority women are disproportionately affected by the pension auto-enrolment threshold. With a higher proportion of Black and Asian women working multiple jobs, auto-enrolment doesn’t take into account total income from more than one job.”
Financial services have a ‘crucial responsibility’
Rose St Louis, Scottish Widows’ protection director, said: “As we dig deeper into our research, it’s clear women from underrepresented communities face disproportionate challenges when it comes to financial future planning.
“There are lots of factors contributing to this, including confusion around pension auto-enrolment thresholds, the economic climate and shared concern about running out of money in retirement.
“Recognising these issues, pension providers and the wider financial services industry have a crucial responsibility to drive trust with ethnically diverse communities to ensure they have the tools and information they need to plan for retirement.”
