Inclusive DC investing: seeing the saver behind the data

One of the clearest pressures facing UK workplace pensions today is adequacy. The picture set out by recent data is difficult to ignore. Private pension wealth is more concentrated than total net wealth, with the top 10% holding 64% of all private pension wealth and the bottom half holding less than 1%[1].

For workplace pension schemes, this inequality is not an abstract point. It shapes member experience, engagement and expectations. It also raises a practical question for those involved in scheme design. How do we ensure investment strategies work for the breadth of savers a modern workforce represents?

The reality behind the numbers

Previous research undertaken by L&G and Humankind highlighted disparities that often remain hidden beneath the aggregate data. Some cohorts, such as low earners, the self‑employed or those with long-term health challenges, face structural constraints on saving. Then there are people who work multiple lower‑paid roles but fall below the automatic enrolment threshold in each one, leaving them unintentionally excluded from workplace pensions altogether. These structural patterns are more common among certain demographic groups, reinforcing inequality over time.

Ethnicity emerged as one of the strongest predictors of pension engagement, sitting just behind employment status and age. People earning less than £25,000, for example, are significantly more represented in some ethnic groups, with 20% of ethnic minority respondents in that income bracket versus 11% of White British respondents. In several minority ethnic groups, median pension wealth is only a small fraction of that of White British peers.

Muslim savers are disproportionally affected. As one of the UK’s largest and fastest‑growing faith communities, Muslims represent a meaningful share of the working‑age population. Yet they remain among the most underserved when it comes to workplace pensions. Many express a strong desire to save for later life but feel excluded because mainstream pension structures have not historically reflected their ethical or financial preferences. This has contributed to lower pension participation despite high levels of saving elsewhere.

Inclusive thinking as part of smarter design

Much of the innovation now emerging in the DC market has been shaped by a clearer understanding of under‑represented groups and the role that tailored investment pathways can play. Rather than a one size approach to long-term saving, schemes are increasingly exploring solutions that broaden participation by removing barriers, reflecting diverse values and making saving feel more relevant to everyday life.

These developments align with wider efforts across the sector to integrate behavioural science, improved communication design and richer insights into how people make financial decisions.  This multidimensional approach recognises that investment design is not just about asset allocation. It is also about enabling more people to feel the system is built for them.

Where adequacy meets inclusivity

The adequacy conversation is often framed around contributions, but member psychology and lived experience also influence outcomes. Structural change may take time, but investment design can adapt now to create routes that feel more accessible.

Approaches that recognise diverse risk tolerances, reflect different cultural expectations, or provide clearer and more tailored information can help close gaps created by low engagement or mistrust.

For employers and trustees, this offers a practical way to strengthen their scheme’s alignment with their workforce and demonstrate a commitment to fairness and long- term security.

Design by data

While pension providers cannot fix issues like wage volatility or housing pressures, they can influence the way investment journeys are designed and communicated. At L&G, we use our insight and expertise to partner with clients in helping to deliver solutions that support the person behind the pension, like our Islamic investment proposition.

Smarter investment strategies are those that pair strong long-term thinking with an understanding of the people behind the data. As the industry continues to focus on adequacy, this combination will be essential in helping more savers to build the confidence and security they need for retirement.

If you found this article interesting, you can find our latest content on DC pensions and investments on our designated DC blog page.

 

[1] Source: Office for National Statistics – Wealth and Assets survey. Great Britain, April 2018 to March 2020