One in three single mothers ‘locked out’ of pension saving

According to research by Now Pensions and the Pensions Policy Institute, working single mothers have missed out on more than £852mn in pension savings since the introduction of auto-enrolment in 2012.  

The research found that there are 1.59mn single mothers in the UK, but only a fraction are saving into a workplace pension.

It’s not right that such a large section of our society will continue to experience hardship well into retirement simply because they parent alone

Victoria Benson, Gingerbread

Of those single mothers who are eligible for a workplace pension, they will be saving an average of £885 a year into their pension compared with the UK average of £1,573.

The number of single mothers working part-time stands at 54 per cent compared with the UK average of 21 per cent. 

The high proportion of single mothers working part-time means they might not meet the eligibility criteria as pension saving is only triggered once earning £10,000 in a single role. Therefore, single mothers are not only missing out on a workplace pension, but vital employer contributions too. 

In comparison with single fathers, the statistics revealed that a single mother may have to work an additional 28 years (until age 93) to retire with the same amount of money as a single father, whereas the latter may only need to work an additional three years to age 68.

Victoria Benson, chief executive of Gingerbread, the charity that supports single parents, said: “We already know that too many single parents are locked out of quality work and it’s devastating to see they are also likely to be locked into pension poverty. 

“More needs to be done to better support single parents throughout their working lives and beyond. It’s not right that such a large section of our society will continue to experience hardship well into retirement simply because they parent alone.” 

The data also revealed that over a 40-year career – assuming no career breaks – single mothers will reach retirement with a private pension income total of £48,000. Yet, the Pensions and Lifetime Savings Association’s retirement living standards suggest an income of £12,800 a year is needed for a “minimum lifestyle”. 

A woman retiring at age 65 can expect to live for another 22 years, meaning they face significant pension poverty.

Childcare and the juggle struggle  

Elsewhere, statistics published by the Trades Union Congress revealed that the average full-time nursery place is now almost £15,000 a year, with one in four parents saying the cost of childcare is more than 75 per cent of their take-home pay.

Research published by charity Gingerbread found that while there has been an increase in jobs advertised with flexible working, seven out of 10 jobs are still not suitable. As a result, there is a growing trend for single mothers to seek “fully flexible” working and zero-hours contracts.   

Now Pensions head of campaigns Samantha Gould said: “As a working single mother myself, I know all too well that the cost of childcare is a huge obstacle for single-parent households. 

“Working single parents must juggle work and caring responsibilities, meaning that they are more likely to reduce their working hours or stop working altogether.”

Gould said that through no fault of their own, too many single mothers are locked out of the auto-enrolment system, unable to earn enough to put money aside for later so find themselves on the wrong side of a growing pension savings gap. 

“We must ensure that everyone has an equal opportunity to save for their futures and build an adequate savings pot for later in life,” she said.

Now Pensions said it is supportive of the private members’ bill to increase pension saving for single mothers. 

The Department for Work and Pensions has backed MP Jonathan Gullis’s bill on plans to expand auto-enrolment. The bill seeks two extensions to auto-enrolment: abolishing the lower earnings limit for contributions and reducing the age for being automatically enrolled to 18.  

However, last week, MP for Glasgow East David Linden saidauto-enrolment should be extended to everyone over the age of 16.

This article originally appeared on FTAdviser.com