There are currently just under one million working single mothers in the UK, but today’s policies mean that more single mothers than ever are ineligible for a workplace pension. Research conducted by NOW: Pensions and Pensions Policy Institue (PPI) showed that the average pension wealth for working mothers has dropped by as much as 40 percent since the start of the pandemic.
The number of single mothers missing out on a workplace pension is rising, which means they are also missing out on vital employer contributions.
At present, the figure of single working mothers ineligible for automatic pension enrolment sits at 58 percent, increasing from 45 percent in 2020.
This data – extracted from a number of surveys including the Family Resources Survey, the Labour Force Survey, and the Wealth and Assets Survey – showed single mothers are now reaching retirement age with the lowest pension wealth on record.
Currently, single mothers reach retirement with a private pension income of just £11,000.
However, the Pensions and Lifetime Savings Association’s (PLSA) retirement living standards suggested an income of £20,200 a year is needed for a ‘moderate lifestyle’, which means single mothers faced the risk of significant pension poverty.
READ MORE: Pension warning: Britons ‘dragged’ into paying tax on pensions
Victoria Benson, chief executive of Gingerbread, a charity that supports single parents said: “Single parents face near-insurmountable barriers to securing work that pays the bills and allows for a decent standard of living.
“This new research shows that for many single mothers, chronic low income will persist well into retirement.
She continued: “Single parents are unable to ‘shift parent’ like couples can, meaning they require external childcare support for every hour of work they do.
“High childcare costs mean many will only be able to work part-time or in insecure roles – two key determinants of low pay. Low pay matched with the costs of raising children makes poverty and debt the norm, while savings and pension pots become a pipedream.”
The pandemic has only exacerbated the situation. Over the past two years, single mothers have had to juggle work and caring responsibilities, meaning they are likely to have had to reduce their working hours – or stop working altogether.
Self-employed single mother Charlotte Carter, 26, said: “As a single parent and someone who is self-employed, I know first-hand the financial barriers that are faced by both these groups.
“As much as these new figures are dreadful, they don’t surprise me. As a single mother, it’s hard to plan for the future, as planning for the next month or year can often be a challenge.
“With the current living costs on the increase, these barriers are only going to get worse, but we’re a resilient group and we will keep fighting for equality in society.
She continued: “I have never even considered my long-term finances as my focus has always been zoned in on what actions I can take to improve my immediate future.
“Single parents’ finances are being squeezed, and more needs to be done to support single parents in saving for their future.
Old state pension pays £45 a week LESS than new one – ‘robbed’ [INSIGHT]
State pension warning as you may need £727,830 above DWP sum [ANALYSIS]
Frozen allowances and ‘unfair decisions’: What Spring Statement means [EXPLAINED]
“Raising awareness of this issue and the solutions that could resolve it is something that I believe can help make that change.”
In response, NOW: Pensions is urging the Government to revamp its pension policies, including the removal of the £10,000 auto-enrolment trigger, which could bring up to 200,000 single mothers in workplace pension savings.
It’s calling for auto-enrolment contributions on every pound earned, helping to increase pension wealth by as much as 140 percent, and to introduce a family carer’s top-up.
This would see the Government pay the equivalent of the employers’ contribution at National Living Wage level into women’s pensions taking time out to care.
NOW: Pensions is also asking for more action to make external childcare more accessible and affordable.
Samantha Gould, head of campaigns at NOW: Pensions, said: “It’s really troubling that the majority of single mothers are being locked out of workplace pension savings, with single mothers reaching retirement age with the lowest pension wealth on record.
“The costs of childcare are unsustainable and as a single mother myself, there is already so much pressure as both the sole earner and carer in a household.
“Single mothers will be feeling the pinch, with many forced to stop working altogether to care for their children. This perpetuates the current pensions gaps experienced by some groups in the UK, which need to be addressed.
“We are calling on the Government to make policy changes and remove the auto-enrolment trigger of £10,000, starting contributions from the first £1 of earnings.
“This would bring an additional 200,000 single mothers into workplace pensions and increase women’s pension financial security in retirement.
“We must ensure that everyone has an equal opportunity to save for their futures and build an adequate savings pot for later in life.”