I have received a letter from one regular reader of this blog. It talks about the participation rates in UK private pensions among differing ethnicities and it poses some important questions.

The slides are accompanied by this comment from someone who has been trustee chair of one of our largest pension schemes.

A topic we tend not to see among the usual pensions blogging, whether there are differences in the UK among minorities in their take up of auto enrolment and other pensions or savings options.

This slide deck suggests Pakistani and Bangladeshi tend to have higher AE opt out rates.

I’m a Christian and I don’t know much about Sharia law. I would like to and I’d like to know how pension schemes can be established for Muslims. There is clearly a link between religious beliefs and saving practice and while I do not follow everything in this presentation, it is helpful to think about a hidden issue for pension policy.

This survey was sponsored by a wide group of financial service providers. Details can be found by downloading your own copy. You should.

This is well known to people who live in areas of high ethnic diversity, I live in the City of London and next door is Hackney, I am also aware that diverse we may be but integrated , we are not.

Initially, an Islamic pension was available. It invested in Sharia assets, it is no longer promoted. When NOW became the provider for Uber, the issue of Sharia investments as a default .became an issue for Islamic groups. Lately we have heard nothing about the availability of Sharia investment options or services offered to those with Muslim and other religious beliefs

IFS have looked at data and have found nothing less than six years old.

But it is clear that opt-out rates (overall) are much higher than originally posted (12%). Those with higher rates are Pakistan and Bangladeshi and “other. This is particularly a feature of Bangladeshi people who go on to express religious beliefs as controlling their behaviour.

What IFS has found is startling. Their work suggests that Bangladeshis are openly declaring they are controlled by their religious beliefs. People with Pakistani heritage are not citing religion, . It would be interesting to understand more about the differing responses.

There is an interesting thought here. I have been considering a DC type of scheme which delivers a pension based on a promise made against the contribution. I need to understand how this might work and whether it would be considered AE compliant.

Religious beliefs clearly make a much larger difference to lives and behaviours for Muslims than for others. We need to better understand what motivates and respect behaviour arising out of strong and positive belief.

This widens the discussion away from retirement saving but suggests that understanding Muslim faith-based behaviour is required for other areas of finance.

This suggests that religious belief is more important than financial theory that comes out of the City of London (and elsewhere). Theory is secondary to compliance to a way of life and thinking.

At this point I find the IFS getting as confused as the finance industry by what people do at retirement. I do not see annuity purchasing as common amongst those with small “pots”

But its clear, and this is an easier for a Christian and Muslim to understand, that AE is fuelling a higher percentage increase in financial opportunity at retirement than “opting out”.

Herein is a useful starting point for one or two of the sponsors. This is not a subject that can be left on the library shelf, let’s start thinking of a pension product to integrate (financially) those from any culture where Muslim faith and thinking are important.

I suggest, however stark the difference between Hackney and the City, Britain is integrating faiths and it should recognise both the same needs and the different behaviors needed to satisfy differing groups.

Thanks to IFS and the sponsors for bringing this to the attention of Derek Scott and so to me.