Single mothers have missed out on more than £852 million in pension contributions since 2012 because they are “locked out” of auto-enrolment (AE).
Research carried out by NOW: Pensions and the Pensions Policy Institute (PPI) and released ahead of National Single Parent Day tomorrow (21 March) revealed that although nearly three in five (59%) single mums are employed, one in three of those who work are ineligible for a workplace pension under existing AE rules.
The study further found that these mums make £885 of pension contributions annually and will have a retirement pot of £48,033 – £37,329 less than the UK average of £85,362. Additionally, they would need to work 28 years longer to retire with the same pension pot as a man.
Victoria Benson, chief executive of single parents’ charity Gingerbread, 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 research showed 54% of single mums work part-time, while the UK average is 21%. Since a large proportion are working fewer hours, they may not meet the £10,000 trigger for AE and will consequently miss out on vital employer contributions as well as a workplace pension itself.
The statistics show that single mums may have to work until the age of 93, compared to the age of 68 for single dads, to retire with the same pension pot as a man.
Samantha Gould, head of campaigns at NOW: Pension commented: “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.
“Through no fault of their own, too many single mothers are locked out of the AE 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.”
The workplace pensions provider is supporting a Private Member’s Bill backed by the Department for Work and Pensions (DWP) on plans to expand AE. It calls for two extensions, including the abolishment of the lower earnings limit for contributions and a reduction in the age for AE to 18 years.
