Abstract
Ethnic minorities are concentrated in particular geographical areas in England and Wales. Neighbourhood effects, such as the concentration of individuals from particular ethnic groups and levels of local deprivation, can impact upon the labour market performance of ethnic minorities and thus may affect individuals’ pension protection. This paper examines the neighbourhood effect on pension protection for ethnic minorities in England and Wales using the wave 1 (January 2009 - March 2011) dataset of the Understanding Society linked with a range of neighbourhood characteristics from the 2011 UK Census. Results from multilevel logistic models highlight that in addition to the effect of individual characteristics on patterns of pension protection, the level of concentration of own-ethnic-group individuals is significantly negatively correlated with a range of key indicators associated with pension protection such as being in paid employment, being an employee, and working for an employer who offers a pension scheme. However, the concentration of one’s own ethnic group has no significant effect on the likelihood of being a member of an employer’s pension scheme after controlling for other factors. Living in a deprived neighbourhood is negatively correlated with one’s likelihood to be in paid employment or being self-employed. Furthermore, individuals are less likely to be members of an employer’s pension scheme if they live in highly deprived neighbourhoods
Highlights
The proportion of individuals from Black and minority ethnic heritage (BME) living in England and Wales has grown significantly over the last 10 years
Addressing the two research questions identified in the Introduction, (a) the inclusion of neighbourhood characteristics does not appear to make a substantial difference to the patterning of the effects of individual variables on labour market performances and pension protection; (b) neighbourhood effects do have an independent effect on individuals’ labour market performance and pension protection, taking a range of demographic and socio-economic factors into account
The results show that individuals from ethnic minorities living in areas with a high concentration of their own ethnic group experience a lower likelihood to work for an employer who offers a pension scheme
Summary
The proportion of individuals from Black and minority ethnic heritage (BME) living in England and Wales has grown significantly over the last 10 years. Occupational pension membership could offer financial advantages over reliance on the basic state pension and is a crucial indicator of whether or not an individual will experience poverty risks in later life. This is because the UK state pension system offers a retirement income just above the poverty line, and there are increasing incentives for employees to take up opportunities for ‘topping up’ their income in later life with occupational and/or personal private pension contributions
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