A UK individual from a minority ethnic background typically has a pension pot less than half the size of that belonging to the average white British saver, data reveal. The research from Legal & General’s investment arm claimed there was a sizeable “ethnicity pensions gap” in the UK that was being fuelled by “misconceptions” around pensions and a “significant distrust of employers”, as well as a lack of spare income. The average saver from a minority ethnic background has a pension pot of £52,333, compared with the average white British saver, who has a pot of £114,941, the researchers found. More than 4,000 UK adults were surveyed, and there were also interviews with six focus groups to explore the key areas, making this one of the biggest pieces of research done on the topic, according to Legal & General Investment Management (LGIM), which manages £1.2tn of investment and pension cash. The company said the ethnicity pensions gap was being fuelled by “multiple structural and interrelated economic, social and educational factors”. A lack of disposable cash was the key factor identified: those from a minority ethnic background were more likely to be on a lower income. About 20% of the respondents from a minority ethnic background said the cost of living crisis was preventing them from paying into a pension. For white British respondents, the figure was 13%. The report also found there appeared to be “a lack of trust and even fear about workplace pensions,” with more than a quarter of those from minority ethnic backgrounds (26%) “not wanting to take a risk with their money”, versus just 7% for their white British counterparts. “The perception of pension instability appears [to be] due to an underlying concern that the very structure of pensions is corruptible,” said LGIM. Pensions were frequently associated with risk, with some survey respondents expressing fears that their employer would “keep their money”. For some minority ethnic individuals, cash and property were seen as safer options. By contrast, pension savers among minority ethnicities were, on the whole, more likely than white British respondents to trust the government and community and religious centres for financial advice. The LGIM findings come months after research from the Social Market Foundation thinktank found that people from minority ethnic backgrounds were “much less likely” than white Britons to save into a pension. In February it said only 25% of people from minority ethnic backgrounds had a workplace pension, well below the national rate of 38%, and that people in this group were “more sceptical than others about the value of private pension savings”. LGIM has recommended a number of steps to close the ethnicity pensions gap, including going further on extending the UK’s workplace pensions “auto-enrolment” regime so that it better caters for those on lower incomes or with multiple jobs. Rita Butler-Jones, head of DC (defined contribution) at LGIM, said the uncertainty of the past few years had exacerbated financial, social and health inequalities across British society. She added: “While we are beginning to understand the drivers of the ethnicity pensions gap, it is clear the factors affecting the gap – including pay levels, lack of familiarity and knowledge, pensions’ perceived lack of relevance, and expectations of the duties and activities of the state – have been compounded by instabilities caused by Covid, the cost of living crisis and the continuing challenges for all women associated with the gender pensions gap.”