Blog: Bringing down barriers

We’ve been here before in recent years. 1981, 1995, 2011 and now 2020 sees protests line our streets, shouting out against the implicit and explicit racism facing black people.

Progress against racial discrimination has been made between the times of each protest, but arguably too small and slowly do these incremental achievements occur.

This time of mass disruption takes us out of our comfort zones, forcing us to consider the simplistic, not overtly discriminatory views we (I sincerely hope) all hold and makes us all look for injustices and imbalances that are insidious within systems and society.

Closer inspection may make for some uncomfortable viewing for the pensions industry.

Research at the beginning of the year from The People’s Pension (TPP) found that ethnic minority pensioners are an average £3,350 a year worse off in retirement than others their age.

Its report, Measuring the Ethnicity Pension Gap, found that the average ethnic minority pensioner’s retirement income is 24.4 per cent less than the average white pensioner.

Furthermore, the gap is even larger when gender is accounted for, with TPP finding that a female ethnic minority pensioner is on average 51.4 per cent worse off in retirement than a white male pensioner.

These findings echo that of the Centre for Research on Ageing’s 2014 report, entitled Ethnicity and occupational pension membership in the UK, which found that ethnicity remains a strong determinant of a working-age person’s chances of being a member of an occupational pension scheme, controlling for other key demographic and socio-economic characteristics.

There are six years between the reports. Not enough has changed between them.

This is not to simply conclude from the above statistics that the industry is overtly racist, or deliberately placing barriers to hinder the opportunities for black people to save for retirement. Yet without meaning to, this can sometimes be the result.

For instance, last year, firefighters and a group of 230 judges won their legal case against the 2015 government pension changes requiring newer scheme members to be part of a career average scheme, instead of final salary.

The judges argued that this was discriminatory on the grounds of age. Because of recent drives to increase diversity in the judiciary, many more of those in the younger group of judges are female and/or from a BAME background, and so claims were also pursued for indirect race discrimination and a breach of the principle of equal pay.

Meanwhile, TPP’s research stated that the ethnicity pensions gap was driven by lower average earnings, variable employment rates and ethnic minority workers being more likely to be self-employed. So, we as an industry must go beyond looking at race as a separate issue and instead consider how we can assist in these societal factors that disproportionately affect ethnic minorities.

To understand the scale of these underlying issues – and to understand the disproportion generally – more research into the saving levels of ethnic minorities desperately needs to occur. There have been several great pieces of research and some serious effort made to address the pensions gender gap, but nowhere near enough work on tackling this ethnicity pensions gap. More needs to be done.

Within the pensions industry itself, while still mainly focused – and I feel successfully – on increasing female voices, we are however starting to see steps to improve ethnic representation.

For instance, in 2017 the PLSA launched a campaign called Breaking the Mirror Image, to lead and encourage a more diverse workplace within the pensions industry, and in February this year, The Pensions Regulator confirmed the creation of an industry working group focused on diversity.

It stated that the first initiative for the new working group would be to decide on “an agreed definition of what exactly we mean by diversity and inclusion, and especially in a pensions context", and then to establish “good and best practice” in this area, with a specific focus on trustee board composition.

Last month, the Pension Protection Fund (PPF) launched a five-year diversity and inclusion strategy, as the organisation admitted that it does not currently have a workforce that reflects the diversity of its local area.

Almost a quarter (24.1 per cent) of PPF employees and 15.4 per cent of PPF senior managers are from black, Asian and minority ethnic (BAME) backgrounds, yet 50.7 per cent of Croydon – where the PPF is based - is BAME.

These efforts are a great start. But they are exactly that, a start. Despite this work, no one can reasonably say that we are close to solving the under-representation of ethnic minorities within the pensions industry and within retirement saving generally. The consequences of this, from the loss of potential talent within the pensions industry to the increased risk of poverty at retirement for ethnic minorities, needs to be addressed urgently.

Now, more than ever, is the time to examine and take efforts to remove the overt and implicit barriers to retirement saving, and to career progression within the pensions industry itself, facing ethnic minorities. As the protests currently occurring remind us, this is no time for complacency.

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