According to research from the Institute for Fiscal Studies, employees of Bangladeshi or Pakistani ethnic background are twice as likely as other employees to choose not to participate in workplace pensions.

According to the study, 10% of white workers who qualify for automatic enrolment do not save for a workplace pension; this percentage increases to 16% for workers of Pakistani and 24% for workers of Bangladeshi ancestry.

Other ethnic groups, meanwhile, have opt-out percentages that are nearly 10%.

IFS research economist and author of the report, Laurence O’Brien, said: “A significant minority of Pakistani and Bangladeshi employees are opting out of their workplace pension, with potentially substantial harmful consequences for their future retirement incomes.

“These opt-out rates are higher than for other employees and seem to be driven by religious beliefs and norms among some Muslims.”

The IFS report also found that the higher opt-out rates for employees of Pakistani or Bangladeshi origin cannot be explained by differences in earnings, age, education levels, or the characteristics of the job or of their employer.

Compared with white employees with similar individual and job characteristics and working for the same employer, Pakistani employees are 5 percentage points more likely to opt out of workplace pension savings.

Similarly, Bangladeshi employees are 13 percentage points more likely to opt out.

The report attributed this disparity to the importance of religious beliefs and norms in Islam as Muslims who report that their religion makes a greater difference to their life are particularly likely to opt out of workplace pensions.

In addition, around half of Muslims directly report that their religious beliefs affect their saving decisions, and they also hold significantly fewer interest-bearing financial assets than other groups.

The report warned that the disparity in pension participation risks “substantial harmful consequences” for future retirement incomes.

“This is because opting out of a workplace pension means missing out on an employer pension contribution and generous tax reliefs for pension saving,” the report explained.

It estimated that, together, these would be worth around £16,500 per year in retirement for a Pakistani or Bangladeshi employee on average earnings who opts out of their pension throughout their working life.

O’Brien added: “Most employees are actually able to save in workplace pensions consistent with Islamic teachings.

“Employees offered defined contribution plans typically have the option of choosing a sharia-compliant fund, while defined benefit pensions prevalent in the public sector are typically considered sharia-compliant.

“The government, employers and the pensions industry should therefore look for effective ways to increase awareness of sharia-compliant pension saving among Muslim employees and to make it easier for them to switch to sharia-compliant investment strategies.”