Local Government Pension Scheme (LGPS) funds should disclose more diversity data to better understand pension inequalities, according to new research examining the intersection of ethnicity and gender.
A report from Investors for Purpose, Making pensions exciting: closing the diversity pension gap in the LGPS, argues that pension inequality cannot be understood through gender alone.
Commissioned by the LGPS Scheme Advisory Board (SAB), City of Westminster Pension Fund and Hymans Robertson, the report uses Westminster City Council as a case study.
Investors for Purpose analysed pension and workforce data as of March 2025 and conducted 30 one-to-one interviews with scheme members.
“Only through greater data disclosure can we fully understand their scale, identify their drivers and develop meaningful solutions,” Investors for Purpose said.
The research found that ethnicity, particularly when combined with gender, created some of the largest differences in pension outcomes among Westminster’s workforce.
The report measured gender and ethnicity pension gaps among active LGPS members, examined how the two interact and identified potential underlying causes, including pay, scheme tenure, caring responsibilities, working patterns and financial confidence.
It also examined why members opt out or disengage from the scheme and what practical interventions funds, employers and policymakers could take.
Westminster case study
Men from ethnically diverse backgrounds had accrued 46% less pension than white men, while ethnically diverse women had accrued 30.2% less than white women, according to the case study.
Ethnically diverse women had the lowest accrued pension benefits overall.
However, the report said differences in LGPS membership length could explain a substantial part of these gaps. White men had, on average, 4.1 more years of LGPS membership than ethnically diverse men.
Westminster’s gender pension gap was narrower than that across the wider LGPS, but remained substantial. Women had accrued 81p in career average revalued earnings (CARE) pension benefits for every £1 accrued by men, compared with 65p across the wider scheme.
Younger and ethnically diverse employees were also less likely to participate in the pension fund. Generation Z men had the lowest generational participation rate in the case study, at 74%, while Asian men had the lowest participation rate when gender and ethnicity were considered together, at 76.4%.
The report warned that lower participation among these groups could become a future pension adequacy problem.
It called on LGPS funds to disclose member-outcome data, treat pension equality as a governance issue and develop targeted interventions.
“Nearly seven million people participate in the LGPS. These are the people delivering vital public services in every locality throughout England and Wales, and they represent the rich diversity of those nations,” SAB said.
“The mission of the scheme is to ensure that our members have some dignity and financial security in later life,” added SAB.
The report stressed that addressing pension inequalities would require coordinated action across the wider LGPS ecosystem.
