Context

Socio-financial risks that were previously managed collectively in the UK, such as an income shortfall in retirement, have increasingly become the responsibility of individuals.

Models of rationality expect individuals to prepare for retirement by investing and building a diversified asset portfolio actively and consistently through their working lives. Any behaviour which diverges from this model is seen as irresponsible.

However, these models fail to take into account the role played by constraints, including socio-structural constraints. These constraints are integrated into people’s everyday uncertainties, relationships and moral perspectives, uniquely shaping their financial behaviour and producing “variegated financial subjects”.

The study

This study was undertaken by UK academics to identify how individuals’ varied approaches to retirement savings were shaped by socio-structural constraints, and how people’s responses to these constraints also affected their disadvantage.

The study involved secondary analysis of qualitative interviews from 42 women and people from minority ethnic backgrounds in the UK. Semi-structured interviews covering socioeconomic background, asset ownership, risk perception, savings, and investments and liabilities were originally carried out in 2016-17 as part of a larger project. Sampling for that project was undertaken purposively to achieve a diverse mix of people who all had low incomes on average.

Analysis of the data highlighted particular themes relevant to women and people from minority ethnic backgrounds who are represented through case studies in this paper.

Key findings

• Uncertainty and occupational constraints: Ineligibility for automatic enrolment into workplace pensions prevented people from saving in pensions and can lead to them using other asset types without the same tax benefits. Experiences of inconsistent employment led people to question the suitability of pension saving and the pensions they were offered.
• Intimacies and unpaid care: Motherhood limited pension saving. To achieve and protect savings, carers allocated budgets based on important social relationships (such as with children). They sought ways to invest for the future, with a focus on pensions and non-financial assets rather than financial assets. However, differential allocation of income within a household linked to deeply held familial roles (in which husbands put money into pensions while the money women earned was assigned to savings accounts) meant differential pension outcomes.
• Moralities and income constraints: Experiencing life trajectories different from those assumed by the UK pension can result in greater emphasis on the moral obligation of caring for one’s family, consistent with a norm of self-governance rather than reliance on the welfare state. However this risked poverty and exploitative financial relationships.
• Conclusions: The findings underlinedthat, although different strategies offered people practical financial solutions, they did not overcome the inequalities in the financial landscape and welfare state. Instead, they intensified self-governance and the pressure to save without conferring adequate retirement provision.

Points to consider

Methodological strengths or limitations

• The analysis on which the case studies presented here was based used a inductive approach to generate the relevant insights, which is a robust methodology.
• The results presented here were nonetheless only illustrations of the thesis set out by the authors and might not generalise well to other individuals.
• The age range of the sample is not stated, only that more than half were older than 50.

Applicability

• The findings should be of interest to policymakers and organisations who wish to support the financial wellbeing of women and minority ethnic groups.
• The theoretical perspectives used by the authors to interpret the findings should be of interest to academics.

Relevance

• The findings of the study are important for:
  • understanding individuals as heterogeneous financial subjects and
  • the implications of this for policies which emphasise the changes individuals should make over tackling underlying inequalities resulting from the UK welfare state and pension system.

Generalisability/transferability

• The study conclusions are likely to transfer to other groups who experience low incomes or unstable employment histories which impact their potential to save into workplace pensions.