There are early signs that the pension disparity faced by women from ethnic minority backgrounds may be narrowing, joint research from the Independent Governance Group (IGG), LCP, and Smart Pension has suggested, although "significant gaps" remain.

The report, A glimmer of light on the horizon: what women from Britain’s ethnic minority communities have to say about retirement finances, found that progress was being driven by generational change and a strong appetite for better pensions education.

Based on more than 12 hours of focus groups conducted in summer 2025, along with follow-up interviews, the study gathered views from 53 Black and Asian women across the UK, spanning Indian, Sri Lankan, Pakistani, Bangladeshi, Black African, and Afro-Caribbean backgrounds.

Separate groups were held for women aged 30-44 and 45-59, allowing for in-depth exploration of generational differences.

Younger women were far more likely to expect to be financially independent, to combine paid work with family responsibilities, and to rely less on partners or children in later life.

The report also highlighted sharp rises in employment rates among women from ethnic minority groups over the past 25 years, with the gap between white and non-white women halving over that period.

Alongside this, while the research found low baseline levels of pensions knowledge and some mistrust of pensions and long-term investing, it also revealed a strong desire to learn.

Many participants stressed that they would engage more with pensions if information was easier to find, explained in plain English, and delivered by trusted sources.

The findings came amid well-documented inequalities in retirement outcomes.

Department for Work and Pensions (DWP) data showed the average man in his late 50s had private pension wealth of £156,000, compared with £81,000 for the average woman.

Separate studies have also pointed to an ‘ethnicity pension gap’, with people from ethnic minority backgrounds typically holding significantly lower pension savings than their White British counterparts.

Taken together, this suggested women from ethnic minority communities were at particular risk of pension disparity.

Census data found that Black and Asian women now accounted for more than 13 per cent of the female population in England and Wales, up from just over 10 per cent in 2011.

Critically, focus group discussions revealed widespread confusion about how workplace pensions work, particularly when changing jobs, how pensions were taxed, what happened on death, and how much income pensions might provide in retirement.

Meanwhile, some participants viewed investment risk as akin to gambling, while others were put off by constant policy changes, such as increases in the state pension age, which eroded trust in the system.

As a result, many women reported using a wide range of alternative strategies to prepare for later life, including property investment, ISAs, Lifetime ISAs, gold, community-based savings schemes, and business ownership.

Public sector defined benefit (DB) pensions were a notable exception, where confidence and understanding tended to be higher.

Despite these challenges, most participants expressed strong aspirations for later life, including financial independence, maintaining their standard of living and, in some cases, retiring early.

However, many also described anxiety, fear or panic about whether they were on track to achieve those goals, particularly in the context of the cost-of-living crisis and ongoing family financial responsibilities.

LCP partner, Steve Webb, said the findings challenged the assumption that the outlook was uniformly bleak.

“We have become all too used to depressing reports about the pension gap faced by women and by people from ethnic minority communities,” Webb argued.

“But our research offers a glimmer of hope. Younger Black and Asian women are more likely to be in paid work, more highly qualified and more focused on financial independence, all of which should lead to better pension outcomes over time.

“However, there is also a clear message that pensions communication is not working well enough. These women want clear, jargon-free information, from trusted sources, in places they already look. The industry needs to respond to that challenge.”

Echoing this, Smart Pension chief product officer, Bahea Izmeqna, warned that engagement needed to better reflect the diversity of today’s workforce.

“Black and Asian women are making up a growing share of the UK economy. Ensuring these communities are fully supported and rewarded through workplace pensions is essential, and that means meeting people where they are with communication that resonates,” she stated.

IGG head of defined contribution, Priti Ruparelia, added that progress would depend on more tailored approaches.

“Despite the positive signs, significant gaps in knowledge and trust remain,” she noted.

“Our industry needs to recognise cultural, social and generational differences, and design communication and engagement strategies that build confidence and support real behavioural change.

"The appetite to learn is there - we must not waste it.”

The report concluded that, while barriers remained, the combination of rising employment, changing attitudes and strong demand for better information presented a real opportunity for the pensions industry to help reduce both the gender and ethnicity pension gaps over time.

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