Pensions warning for single mothers

More than two in five single mothers in the UK are now below the £10,000 minimum earnings threshold for automatic enrolment into a workplace pension, new research has found.

According to Now: Pensions, the pension provider for 1.8 million people, and Pensions Policy Institute, 43% of this group – around 400,000 women – are currently locked out of automatic enrolment.

This is an increase of around 100,000 since the start of the Covid-19 outbreak.

The average income for a single mother has fallen by £1,400 since the start of the pandemic, to £16,890, which is 39% lower than the UK average of £27,376.

Private pension savings for single mothers are £18,300, on average, compared to £57,500 for all women and £203,200 for men.

But single mothers in part-time work typically earn just £6,922, so do not meet the eligibility criteria for auto-enrolment.

Rising childcare costs, lower levels of employment and reductions in earnings caused by Covid-19 are creating significant barriers to pension saving.

The research highlights how the coronavirus has exacerbated the challenge single mothers face when it comes to pension saving.

Around a quarter have seen a reduction in earnings within the past year, and those who were furloughed saw autoenrolment contributions reduce by an average of 25%.

Recent lockdowns have made it harder for single mothers to work as they juggle children’s schoolwork, household chores and employment responsibilities.

According to the Office for National Statistics, 67% of women took on additional home-schooling responsibilities between January and February this year, with 99% saying they spent more time looking after their children than men did.

Another survey, conducted by the TUC, found that 18% of mothers have been forced to reduce their working hours, and around 7% were taking unpaid leave from work and receiving no income – two situations which will exacerbate the pensions savings gap as a result of the pandemic.

Now: Pensions said a combination of higher levels of part-time work, lower levels of pay and greater demands on their income were leaving many single mothers unable to save for retirement.

Samantha Gould, head of campaigns, Now: Pensions, said: “It is worrying to see that single mothers’ ability to save for their futures has been hugely affected by the Covid-19 pandemic, with almost half now ineligible for automatic enrolment.

“After what has been a difficult year, with women bearing the brunt when it comes to being furloughed and taking on the bulk of childcare responsibilities, it is really troubling that even more single mothers have been locked out of pension saving.

“With research from Coram Family (a charity focused on policy, research and advocacy on childcare and family issues) revealing that childcare costs have increased by 4% in this same period, single mothers will be feeling the pinch the most, with many choosing to stop work altogether in order to care for their children.”

Now: Pensions has called on the UK Government to make key policy changes that would see another three million women, including a further 400,000 single mothers, saving.

Ms Gould said: “We must ensure that everyone has an equal opportunity to... build an adequate savings pot for later in life.”

Meanwhile, single parents charity Gingerbread has reported that 49% of its target group have taken on more debt since Covid-19 struck – putting later life saving even further down the agenda and intensifying pensions inequality.

Average debt among single parents has increased by around 15% during the pandemic, with 51% having fallen behind on making rent or mortgage payments, Gingerbread said.

Farah Baldock, head of communications for the charity, said: “Urgent support is needed to reduce the barriers single parents face in securing quality, flexible and sustainable jobs that work around their caring commitments.

“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 and more must be done to ensure they are not left behind.”

SURVEY: Recent lockdowns have made it harder for single mothers to work.