Single mothers' private pension pots 88% lower than men's at retirement

The average private pension pot for single mothers at retirement is just £18,200, approximately one third (36 per cent) of the average woman’s pot of £51,000, research commissioned by Now Pensions has revealed.

This represents less than an eighth (12 per cent) of the average male private pension pot (£156,000), and is lower than the £20,200 estimated to be needed for a 'moderate lifestyle' under the PLSA's Retirement Living Standards.

The research, which will be published in a report by the Pensions Policy Institute (PPI) in the Autumn, revealed that although single mothers are more likely to be in employment that the UK baseline, they are around twice as likely to work part-time, with this proportion increasing amid lockdown.

Whilst around 22 per cent of the working population are part-time, this increases to almost half (43 per cent) for single mothers.

The provider argued that the recent lockdown has made it “even harder” for single mothers to work as well as juggling schoolwork, chores and their own work, without any help from family and friends, which previous research showed 73 per cent of single mothers rely on.

Gingerbread Charity research and policy officer, Joe Richardson, emphasised that single parents are unable to ‘shift parent’ like a couple, meaning that external childcare is required for every hour of work they do.

Richardson emphasised that low pay combined with the cost of raising children makes “poverty and debt the norm”, with saving into a pension pot left as a “pipedream”.

As such, he warned that the pandemic could threaten to lock single parents out of work “altogether”, arguing that with not childcare available, single parents will be forced to choose between going into work and leaving young children without supervision.

"Urgent support is needed for the UK’s 1.8 million single parent families facing this dilemma. Without this, these families will face a generation of mass unemployment, poverty and debt,” he warned.

However, the number of single mothers in part-time work has already had a knock-on effect for average income, with single mothers in part-time work earning, on average, just £6,922 annually.

Whilst this increases to £9,976 for women more generally, many women from both subsets remain excluded from auto-enrolment as they do not reach the £10,000 earnings trigger.

Now Pensions emphasised that of the 13.4 million employed women in the UK, 23 per cent, representing around 3 million women, do not meet the qualifying criteria for auto-enrolment, compared to just 12 per cent of men.

This increases to 31 per cent, or around 341,000, for single mothers, with Now Pensions arguing that these workers are “are essentially locked-out of auto enrolment” and therefore missing out on “vital” employer contributions.

The provider argued that if auto-enrolment was to start form the first £1 of earnings, this could see an additional 300,000 single mothers bought into workplace pensions, increasing the number of employed single mothers who are eligible by 9.3 per cent.

Now Pensions senior comms manager, Samantha Gould, also emphasised the importance of policies aimed at alleviating childcare responsibilities, arguing that this could help improve labour market inequalities experienced by single mothers in terms of both time and stress.

She stated: “These kinds of policies could reduce levels of part-time working and help single mothers to overcome issues of vertical segregation and low pay in the workplace.

“In order to close this pension gap, it’s crucial that single mothers have greater access to affordable childcare and flexible working options in order to support career progression and ensure they can save adequately for later life.”

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