One third of single working mothers 'locked out' of AE

One in three working single mothers are ineligible for a workplace pension under current auto-enrolment rules, despite over half (59 per cent) being employed, research from Now: Pensions and the Pensions Policy Institute (PPI) has revealed.

The research suggested that working single mothers have missed out on over £852m in pension savings since the introduction of auto enrolment in 2012, revealing that "only a fraction" of the 1.59 million single mothers in the UK are saving into a workplace pension.

The "startling statistics" revealed that single mothers may have to work an additional 28 years, until age 93, to retire with the same amount of money as a man, whereas single fathers would only need to work an additional three years to age 68.

It also warned that single mothers are not only missing out on a workplace pension, but "vital employer contributions", noting that a higher proportion of single mothers are part-time workers, at 54 per cent compared to the UK average of 21 per cent

Furthermore, those single mothers who are eligible for workplace pensions are saving an average of £885 per year into their pension, compared to the UK average of £1,573.

The report also suggested that single mothers could face "significant pension poverty", estimating 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 per year is needed for a ‘minimum lifestyle’, while a woman retiring at age 65 can expect to live for another 22 years, meaning that they could face a shortfall.

In light of the findings, Now Pensions emphasised the need to ensure that people are giving an equal opportunity to save for their futures, backing the recent Private Member's Bill looking to increase pension saving to lower earners and younger workers.

Indeed, analysis by Now revealed that, if single mothers could pay into their pension on the very first £1 of earnings, they would increase their annual pension contributions to £1,385, a 56 per cent increase, which means over a 40-year career they could have a pension pot of £75,125.

Now Pensions head of campaigns, Samantha Gould, stated: “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 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.”

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