Understanding the gender and ethnicity pensions gap – why we can’t look at pensions in isolation
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In the UK, the gender pension gap has long been documented. By the time a typical woman reaches retirement, she has around half the private pension wealth of a man. Evidence also suggests that outcomes are even worse for people from ethnic minority backgrounds.
Yet the available data rarely captures the full picture.
Women from ethnic minority groups have many influences shaping their financial decisions, including culture, faith and socioeconomic circumstances. Understanding how these factors affect how these women feel about money and their future will help trustees and sponsors see where pensions sit within members’ wider financial circumstances, and how they can better support them.
We spoke to ethnic minority women about their financial future
Earlier this year, we launched a report titled ‘A glimmer of light on the horizon’ with IGG and Smart Pension, exploring how Black and Asian women, who make up nearly one in seven of the female population of England and Wales, think about their financial futures.
The research was based on focus groups and follow up interviews with more than 50 Black and Asian women from a wide range of ethnic backgrounds and age groups across the UK. These discussions covered a broad range of issues relating to later life financial planning, starting with a fundamental question - how do these women actually think and feel about money?
Five clear themes emerged from these discussions.
Below, we reflect on three of them, with the remaining themes explored in the full report.
A generational shift
Many of the older women who participated, some first-generation migrants, described lives shaped by early marriage, strong cultural expectations, and financial dependence on husbands or family members. By contrast, younger women across all groups signalled changing attitudes - typically having higher formal qualifications, being more likely to be in paid work, and aspiring more to financial independence than previous generations. These changed attitudes offer a ‘glimmer of light’ for their future pension prospects.
While expectations around paid work have changed over time, differences in employment levels between ethnic groups remain. These differences are likely to feed through into unequal pension outcomes later in life. This was particularly striking in the groups involving Pakistani and Bangladeshi women, where women have historically had much lower levels of engagement with paid work than in other groups.
A desire for accessible information about pensions and savings
Many women had limited knowledge of pensions and, in some cases, low levels of trust, but this did not reflect a lack of interest. Instead, what emerged was a strong desire for independent guidance from trusted experts who felt relatable and understood women’s values and constraints. This was especially clear when discussions turned to faith and culture.
Among Pakistani and Bangladeshi women in particular, the concepts of halal and haram were central to financial decision‑making. However, the term ‘Sharia‑compliant,’ commonly referred to by the industry, was rarely used. What the women expressed was the need for simple, transparent advice on what is genuinely halal, who they can trust, and where to find reliable information.
Diverse ways of providing for later‑life finances
Across the focus groups, workplace pensions were rarely seen as the sole way of providing for later life. Instead, women described a wide range of strategies, in some cases replacing pension saving or supplementing it.
Trust came up as a strong theme influencing these choices. One approach discussed was community-based saving, particularly within Afro-Caribbean communities, through schemes known as ‘pardners.’ In these arrangements, members contribute a fixed amount weekly or monthly, with each participant periodically receiving the full savings pot in turn.
Within the Asian focus groups, investment in property, businesses or gold was far more popular than saving into a pension, as these options were seen as more tangible and within their own control.
What these women need from the pensions industry
This research doesn’t offer a quick fix. However, it does provide a clearer understanding of why this intersectional gap exists, and offers valuable insight into what we, as an industry, can do to support these women in achieving better retirement outcomes – especially because they make up an increasing share of the workforce.
Here are some of our recommendations:
- Understand that your membership is diverse and that what works for one member may not work for another.
- Exploring the potential for community‑based engagement in settings such as faith‑based centres (Mosques, Temples, Churches, etc.) or other community settings (such as schools, community centres, social clubs).
- Trustees should collaborate with employers to establish the most effective ways of delivering key information and encourage employers to see the value in educating and informing their workforce about pensions.
