Amid the nation's soul searching over racial, economic and social justice, some plan sponsors are turning greater attention to racial disparities in savings and participation rates in the retirement plans they offer employees.
"It certainly has gained a lot more interest recently," said Neil Lloyd, partner and head of U.S. defined contribution and financial wellness research at Mercer in Vancouver, British Columbia.
The statistics plan sponsors are seeing indeed are sobering. More than two-thirds of white non-Hispanic families (68%) have retirement account savings, compared with 41% for Blacks and 35% for Hispanics, according to the Economic Policy Institute, an independent non-profit think tank. Black and Hispanic families also lag their white peers in terms of how much they've been able to save, with Hispanic families saving a median of $23,000 and Black families saving a median of $29,200, compared with $79,500 for white non-Hispanic families.
The gap not surprisingly is showing up in the retirement readiness of minority groups as measured by the National Retirement Risk Index published by the Center for Retirement Research at Boston College. More than 3 in 5 Hispanic households (61%) and more than half of Black households (54%) are at risk of inadequate income in retirement compared with 48% for whites.
Plan sponsors are not deliberately doing anything wrong, said Jeffrey Brown, professor of business and dean of the University of Illinois' Gies College of Business in Urbana-Champaign. The racial wealth gap in retirement savings is not due to racist behavior on the part of plan sponsors but rather a complicated set of factors, including the makeup of the workforce itself, Mr. Brown said.
"It's not that any given employer is saying, 'I'm not going to cover somebody or I am going to cover somebody because of race,'" he said. "They're playing by the rules. They're following the plan qualification requirements."