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400,000 single mothers ‘locked out of workplace pension saving’

Vicky Shaw, PA Personal Finance Correspondent
·4-min read

More single mothers could be at risk of later life poverty as the coronavirus crisis has left thousands of additional female employees locked out of workplace pension saving, research suggests.

Around 400,000 employed single mothers are locked out of workplace pension saving, according to calculations from pensions provider Now: Pensions and the Pensions Policy Institute (PPI).

Within the total, it is estimated that 100,000 more women across the UK are missing out on employer contributions compared with a year ago, as the coronavirus crisis has hit incomes.

The annual earnings trigger at which someone is automatically enrolled is £10,000 and Now: Pensions argued this threshold should be removed.

Higher levels of part-time work among single mothers, lower levels of pay and greater demands on their income are leaving many unable to save for retirement, researchers said.

They found single mothers in part-time work earn £6,922 on average.

Those behind the findings said they highlight how coronavirus has further exacerbated the inequality that single mothers face around pension saving, ahead of National Single Parents Day on Sunday March 21.

They said that while nearly a third (31%) of employed single mothers were not reaching the £10,000 auto-enrolment threshold before the pandemic, the figure is now more than two-fifths (43%), leading around an additional 100,000 women to miss out on employer contributions.

Around a quarter of single mothers have seen a reduction in earnings within the past year, the report said.

The research also highlighted a recent report from Coram Family and Childcare, showing that childcare costs have increased recently, putting further financial pressures on parents.

Samantha Gould, head of campaigns at 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.”

She added: “With research from Coram Family revealing that childcare costs have in fact 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.

“This perpetuates the current savings gaps experienced by some groups in the UK which needs to be addressed.”

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

According to The Office of National Statistics (ONS), around two-thirds (67%) of women have recently taken on additional home schooling responsibilities.

Researchers also pointed to a TUC survey which found 18% of mothers had been forced to reduce their working hours and around 7% were taking unpaid leave from work and receiving no income – two situations which will also exacerbate the pensions savings gap.

Gingerbread, a charity for single parents, has reported that 49% of single parents have taken on more debt since Covid-19 struck, pushing later life saving further down people’s priorities.

Now: Pensions and the PPI quoted a 35-year-old single mother from Nottingham who works full-time and has a 15-year-old daughter.

The mother, who had to pause her pension contributions when she split from her partner five years ago, said: “Since the pandemic started I’ve had to think differently about how I budget and manage my finances.

“Where costs like school bus fares have stopped, I’m now having to manage increases in rent and bills, as well as the additional expense that comes with cooking three meals a day for myself and my daughter.

“I’m lucky that I’ve still been able to work full-time, but the pressures of being a full-time mum, doing a five-day working week and helping my daughter with her GCSEs all from the same building has definitely taken an emotional and financial toll.

“Being able to think about pension saving hasn’t really been an option.”

Farah Baldock, head of communications at Gingerbread said: “Unable to ‘shift parent’ in the same way as couple parents can, single parents are far more reliant on external childcare support in order to work.

“The high costs of childcare mean many will only be able to work in part-time or insecure roles, limiting their earning potential.

“Coupled with greater demands on their income as the sole earner in the household, single parents are often at greater risk of falling into debt just to make ends meet meaning savings and pensions are simply out of reach.”

A Department for Work and Pensions spokesman said: “Our ground breaking pension reforms, including automatic enrolment, have helped millions more women save into a pension, many for the first time, and current contribution rates have been phased in to balance bringing people into saving in a way that’s affordable for both savers and employers.”