Lifetime inequalities are leaving many workers facing inadequate retirement incomes due to disrupted work patterns, new research has revealed.
The research was conducted by Daniela Silcock Pensions Research (DSPR) and Ignition House, and suggests that current policies and industry practices fail to reflect the realities of modern working lives, particularly for those in disadvantaged groups.
The 35-page document published today (Thursday) revealed that unstable employment, inconsistent earnings and limited capacity to save are key factors undermining retirement outcomes.
It found that employment disparities further illustrate the problem. For example, in 2021, unemployment rates stood at 11.7% for people from Bangladeshi backgrounds and 9.8% for those from Pakistani backgrounds, compared with 4.9% for white British individuals. This is one of several areas of inequality highlighted by the government when relaunching the Pensions Commission last year.
“Our working lives and patterns are changing, we need pension and savings systems that reflect this and that provide a better safety net for when we’re hit by unforeseeable shocks in mid-life.”
Elaine Smith, Centre for Ageing Better
Elaine Smith, head of age-friendly employment at the Centre for Ageing Better, said: “This detailed report makes clear how disadvantage and inequality compound throughout people’s lives, culminating with people left in extremely perilous financial positions upon retirement and feeling worried about their futures.
“Our working lives and patterns are changing, we need pension and savings systems that reflect this and that provide a better safety net for when we’re hit by unforeseeable shocks in mid-life. We cannot continue to tolerate what are currently unacceptable levels of pensioner poverty, particularly among certain groups.”
How to solve inequality issues
The report also argued that the government and the pensions industry must adapt to these realities. For policymakers, this means stress-testing pension rules against disrupted career patterns and ensuring eligibility criteria work for people with fluctuating incomes or periods out of work.
For providers, it requires creating systems that accommodate changing jobs, variable hours and inconsistent earnings, while making it easier for individuals to remain enrolled or rejoin pension schemes.
Daniela Silcock, director at DSPR, said: “Stress-testing profiles with higher exposure to structural barriers can help identify where systems exclude those most in need. Embedding this approach in policy design would help ensure the system works for a wider range of lives, not just those with stable work patterns.”
The analysis also revealed that disadvantage often accumulates over time and found that groups already at higher risk are more likely to experience low pay, insecure work and poor health, all of which limit their ability to save.
Yet it found that the pension system remains geared toward stable, full-time employment with predictable earnings. When individuals’ lives fall outside this model, gaps in saving can emerge early and persist. By later life, these gaps translate into significantly lower pension savings.
The data found that among those aged 60 to 65, 58% of people from minority ethnic backgrounds, 50% of disabled individuals and 47% of unpaid carers had no private pension savings, compared with 35% of the overall population.
