One in three of all working single mothers are ineligible for a workplace pension under current auto enrolment rules despite more than half (59 per cent) being employed.
According to research by Now Pensions and the Pensions Policy Institute, working single mothers have missed out on more than £852mn in pension savings since the introduction of auto enrolment in 2012.
The research found there are currently 1.59mn single mothers in the UK, but only a fraction are saving into a workplace pension.
Of those single mothers who are eligible for workplace pensions, they will be saving an average of £885 per year into their pension, compared to the UK average of £1,573.
The number of single mothers working part-time is at 54 per cent compared to the UK average of 21 per cent.
The high proportion of part-time workers means they might not meet the eligibility criteria as pension saving is only triggered once earning £10,000 in a single role. Therefore, single mothers are not only missing out on a workplace pension, but vital employer contributions too.
In comparison to single fathers, the 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 may only need to work an additional three years to age 68.
Victoria Benson, chief executive of Gingerbread, the charity that supports single parents, 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 data also revealed 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’.
A woman retiring at age 65 can expect to live for another 22 years, meaning that they face significant pension poverty.
Childcare and the juggle struggle
Elsewhere, statistics published by the Trades Union Congress revealed that the average full-time nursery place is now almost £15,000 per year, with one in four parents saying the cost of childcare is now more than 75 per cent of their take-home pay.
Research published by charity Gingerbread, found that while there has been an increase in jobs advertised with flexible working, seven out of 10 jobs are still not suitable.
As a result, there is a growing trend for single mothers to seek ‘fully flexible’ working and zero-hours contracts.
Samantha Gould, head of campaigns at Now Pensions, said: “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.”
Gould said 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,” she said.
Now Pensions said it is supportive of the Private Member’s Bill to increase pension saving for single mothers.
The Department for Work and Pensions (DWP) has backed MP Jonathan Gullis’ Private Member’s Bill on plans to expand auto-enrolment.
The bill, seeks two extensions to auto enrolment, abolishing the lower earnings limit for contributions and reducing the age for being automatically enrolled to 18.
However, last week, MP for Glasgow East, David Linden, said automatic enrolment should be extended to everyone over the age of 16.
sonia.rach@ft.com
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