In the UK, the average pensioner from an ethnic minority is GBP3,350 a year worse off than other people their age, according to new analysis from The People’s Pension.

The pension provider’s new report, Measuring the Ethnicity Pension Gap, highlights that the average ethnic minority pensioner’s income is 24.4 per cent less than their white counterpart. The divide is even greater from a gender perspective; on average, the gap in annual pension income between a female pensioner from an ethnic minority3 and a white male pensioner is 51.4 per cent.

The causes of the ethnicity pension gap lie in labour market factors, including lower average earnings, variable employment rates, and the greater likelihood of ethnic minority workers being self-employed. Removing barriers to membership of occupational pension schemes is crucial to closing the gap because ethnic minority employees are more likely to be low earners excluded from auto-enrolment.

The People’s Pension is calling for the government to make reforms to the criteria for auto-enrolment to reduce the ethnicity pensions gap over the long term, including: • Lowering the amount workers need to earn to be eligible for a workplace pension from GBP10,000 to the lower earnings limit for National Insurance to GBP6,136, bringing an extra 1.2 million workers into auto-enrolment – 15 per cent of whom would be from ethnic minorities

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