Close to half of LGBTQ+ individuals in the UK face the risk of financial struggles in retirement, as they may not be able to afford basic necessities like food and heating. This sobering insight comes from recent data.
Researchers analyzed various factors such as savings and pension scheme membership and found that LGBTQ+ community members were significantly more likely to face challenges in their retirement. According to Scottish Widows, an insurer and pension provider, their latest retirement report revealed that 44% of LGBTQ+ individuals are not on track to achieve even a minimum retirement lifestyle, as defined by leading pension bodies. In other words, they are at risk of not meeting their financial needs when they grow older. This is higher than the national average of 35% who face the same struggle.
The research also highlights that 36% of LGBTQ+ individuals do not belong to any pension schemes, compared to 30% in the wider population. Additionally, 18% have reduced contributions to their pension plans due to increasing living costs, while the same is true for only 12% of the general population.
Unsurprisingly, the report from Scottish Widows reveals that 68% of LGBTQ+ individuals are concerned about running out of money during their retirement, surpassing the national average of 57%.
The median projected retirement income for LGBTQ+ individuals is £13,000. To provide a better idea of retirement living standards, the Pensions and Lifetime Savings Association has introduced different levels – minimum, moderate, and comfortable. For a single person, the minimum threshold requires approximately £12,800 per year. The thresholds for moderate and comfortable living are £23,300 and £37,300 per year, respectively.
Under the minimum scenario, a pensioner is left with a mere £54 a week for food (including eating out), no car, and a clothing and footwear budget of up to £580 per year. These figures assume that the individual has paid off their mortgage.
Emma Watkins, a managing director at Scottish Widows, emphasizes the need for employers and the pensions industry to do more in reaching out to the LGBTQ+ community in order to help them secure a comfortable retirement.
She expresses concern over the fact that almost 20% of LGBTQ+ individuals feel compelled to reduce their pension contributions. This highlights a significant issue that needs to be addressed.
Furthermore, Scottish Widows reveals that LGBTQ+ individuals earn less on average and experience a higher prevalence of mental health conditions. These factors contribute to a greater likelihood of needing time off work, thus reducing opportunities to save for retirement.
Stephanie Fuller, CEO of Switchboard, an LGBTQ+ helpline, is not surprised by these findings. She acknowledges the significant and multifaceted financial challenges faced by the community. LGBTQIA+ individuals often encounter alienation from family networks and may change jobs frequently due to discrimination related to their sexuality or gender identity.
Moreover, transgender individuals often have to personally fund the costly gender-affirming procedures they require. These factors lead to the expenditure of financial resources today and limited means to address this issue in the future.
In conclusion, the data paints a troubling picture of the financial vulnerability that LGBTQ+ individuals may face in their retirement. It is essential for society, employers, and the pensions industry to take proactive steps in supporting and empowering this community to ensure they have a secure and fulfilling retirement.
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