The Society of Pension Professionals (SPP) and the Race Equality Foundation have called for mandatory ethnicity pay gap (EPG) reporting for a broader range of employers, warning that current voluntary measures have reached their limits.

In a new paper published this month, Diversity, Equity & Inclusion: Ethnicity, the organisations argue that extending EPG reporting beyond the largest firms would help uncover structural inequalities, improve representation and progression for racially minoritised employees, and ultimately help address the ethnicity pension savings gap.

Race Equality Foundation chief executive, Jabeer Butt OBE, said that while several major employers, including Tesco, HSBC and Royal Mail, have begun publishing ethnicity pay data, the overall picture remains “patchy, inconsistent and lacking in context or follow-up”.

“Our findings provide compelling evidence that the government’s proposals to make EPG reporting mandatory must go further than covering only the largest firms,” Butt stated.

“Mid-sized employers - those with 50 to 249 staff - collectively account for more than 4.1 million jobs across the private sector and play a major role in shaping local and regional economies," she added.

Consequently, the paper recommends a phased implementation of mandatory reporting, beginning with organisations of more than 250 employees in year one, followed by firms with 100 or more employees in year two, and all employers with 50 or more staff by year three.

It also calls for intersectional reporting, which analyses how ethnicity interacts with gender and other factors such as disability and job role, to provide a fuller picture of inequality.

“Without this, organisations cannot understand the full extent of workplace inequality or design effective responses,” Butt warned.

Alongside the policy recommendations, the paper featured a personal perspective from LCP partner and SPP Legislation Committee chair, Shayala McRae, who reflected on her experiences as a woman of Sri Lankan heritage in the pensions industry.

McRae said her gender and ethnicity had provided her with “insight that has helped secure numerous opportunities” and that she was encouraged to see the industry increasingly recognising the benefits of diversity.

However, she noted that “creating a truly inclusive environment is still not easy”.

“My main hope for the future is that inclusion and diversity become second nature in recruitment and promotion, so we no longer have to consciously make equality, diversity and inclusion (EDI) a priority, and can just harness the richness of thought and lived experience that diversity brings,” she said.

The paper follows research from Barnett Waddingham, which revealed that black individuals in the UK expect to enjoy nearly five more years in retirement and receive £8,000 more in annual pension income than the UK average, despite facing a 14.8 per cent ethnicity pay gap.

However, further research from the Institute for Fiscal Studies (IFS) found that Pakistani (16 per cent) and Bangladeshi (24 per cent) employees are twice as likely to opt out of workplace pensions compared to other ethnic groups (which average around 10 per cent).

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