Industry experts have called for greater support to close the ethnicity pensions gap after the latest figures from the Office for National Statistics (ONS) revealed a "stark difference" in private pension wealth levels.

In particular, the data showed that median private pension wealth for Bangladeshi, Chinese, Black African and 'Any other ethnic group' households was less than £5,000, compared to £80,000 for White British headed households.

It also revealed evidence of differing degrees of private pension participation by ethnicity, with the ONS noting that the private pension wealth data correlates with the percentage of households that hold this type of wealth.

Indeed, participation was lowest in Bangladeshi households, at 48 per cent, increasing to just 57 per cent in Chinese, 58 per cent in Any other ethnic group, and 59 per cent Black African headed households.

This compared to participation for Indian and White British headed households of 83 and 82 per cent respectively.

The ONS also found that, proportionally, private pension wealth is highest for Black Caribbean and White British headed households, representing 35 per cent and 33 per cent of their total household wealth respectively.

It clarified that whilst household heads in these groups are older on average than other ethnic groups, this is unlikely to fully explain differences in private pension wealth.

Commenting on the findings, Royal London pension specialist, Helen Morrissey, stated: “While the gender pension gap is much discussed relatively little is said about the differences in pension accumulation among different ethnic groups.

"This data shows disparities in private pension wealth with the gap between homes with a White British head of household with those with a Bangladeshi or Black African one particularly stark."

“While this may partly be explained by differing demographics with some groups younger on average than others we do need to take a closer look.

"Why are some ethnic groups more likely to have private pension wealth than others? Are policies such as auto-enrolment serving these groups as well as they should? If not, we need to ask why.”

Indeed, industry experts have previously called on the government to scrap the auto-enrolment minimum earnings threshold, after research showed that 18 per cent of people from an ethnic minority background were working multiple jobs and therefore missing out on pension contributions due to the threshold.

However, the ONS also highlighted disparities in employment rates and earnings as contributing to the ethnicity pensions gap, both in relation to participation and the amounts held, together with variation in rates of self-employment.

Furthermore, it also stated that knowledge of pensions and the likelihood of participating in available pension schemes are also known to be lower among some ethnic minority groups, referring to a 2014 Centre for Research on Ageing paper

Interactive Investor head of pensions and savings, Becky O’Connor, added: “The median private pension value is £80,000 for White British groups but less than a meagre £5,000 for Bangladeshi, Black African, Chinese and Any other ethnic groups.

“This stark difference in retirement outlook reflects what happens earlier in working life, including differences in employment rates and pay.

"But the ONS also points to a pensions knowledge gap and the likelihood of participating in available schemes being lower among some ethnic minority groups.

“This suggests that targeted education and guidance could be effective.

"Although given that pension pots are built up over many decades, it’s likely to take a couple of generations at least before the impact of such efforts to close the ethnicity pension gaps are seen.”

She added: “The term ‘household head’ is used repeatedly by the ONS which feels plain wrong – especially when talking about equality.

"It would be better to talk about combined earnings rather than household heads from now on.”

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