Over half of single working mums 'locked out' of AE pensions

The government has been urged to remove the £10,000 auto-enrolment earnings trigger after research from Now: Pensions revealed that over half (58 per cent) of single mothers are ineligible for automatic enrolment into a workplace pension, up from 45 per cent in 2020.

Furthermore, the research revealed that the average pension wealth for single mothers had dropped by 40 per cent since the start of the pandemic, with single mothers reaching retirement with a private pension income of around £11,000, down from £18,300.

In light of this, the provider warned that single mothers face "significant pension poverty", with the Pensions and Lifetime Savings Association (PLSA) estimating that an income of £20,200 a year is needed for a ‘moderate lifestyle’.

Further research from single parent charity Gingerbread also revealed that the number of single mothers working part time was 54 per cent, compared to the UK average of 21 per cent.

Now Pensions explained that these savers might not meet the eligibility criteria as pension saving is only triggered once earning £10,000 in a single role, also missing out on opportunities such as employer contributions and tax relief from the government.

The cost of childcare was also highlighted as a hindrance to many single-income households, with Gingerbread's research showing that childcare payments now top the average cost of a mortgage.

In light of this, Now Pensions suggested that policies aimed at alleviating childcare responsibilities could help to improve labour market inequalities experienced by single mothers, and reduce the levels of part-time working.

Now Pensions has called on the government to remove the auto-enrolment trigger of £10,000, estimating that this could help bring an additional 200,000 single mothers into workplace pensions.

Commenting on the findings, Now Pensions head of campaigns, Samantha Gould, stated: "It is 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.

“With the majority of single mothers now locked out of workplace pensions, we are calling on the government to make policy changes and remove the auto-enrolment trigger of £10,000 and 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.”

Gingerbread chief executive, Victoria Benson, added: “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.

"High childcare costs mean many will only be able to work part-time and/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 exacerbated this situation. Urgent support is needed to tackle the barriers single parents face securing quality, flexible and sustainable jobs that work around their caring commitments - without this, single parents are at risk of being locked out of work altogether.

"It’s not right that such a large section of our society will continue to experience hardship well into retirement simply because they are single parents. Single parents are amazing and more must be done to ensure they are not left behind.”

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