Typical single mother’s pension ‘one-third the size of average woman’s savings’

Single mothers reach retirement with a typical private pension pot of £18,300 – just over a third (36%) of the size of the average woman’s retirement savings – research has found.

The average woman has £51,000 privately saved by retirement, while a male retirement saver typically has around three times this amount, at £156,000, according to pension provider Now: Pensions.

The average single mother’s private retirement pot equates to just 12% of the average male pension savings by the time retirement is reached.

This is also nearly a third (30%) less than the average divorced woman, who has £26,100.

Barriers to full-time work mean that single mothers have fewer savings opportunities, made worse by the economic downturn due to Covid-19, the report said.

The findings will be published in a report this autumn by the Pensions Policy Institute (PPI).

Now: Pensions said many women are locked out of automatic enrolment into workplace pensions because they do not meet the minimum earnings criteria. This means they miss out on vital employer contributions into their pension pots.

It estimates that if auto-enrolment contributions were to start from £1 of earnings, this could bring an additional 300,000 single mothers into workplace pensions.

Samantha Gould, a manager at Now: Pensions, said: “Policies aimed at alleviating childcare responsibilities in terms of both time and stress could help to improve labour market inequalities experienced by single mothers.

“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.

“As a single parent myself, I relied on grandparents to help with childcare and reduce my career 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.”

Helen Morrissey, a pension specialist at Royal London, said: “This research shows the enormous impact motherhood has on many women’s retirement prospects, with single mothers being particularly affected.

“While young women engage with pensions just as much as men, this declines once they leave the workforce to take on caring responsibilities. While many of them will return to the workforce, a mix of part-time work and childcare costs deals their retirement plans a blow from which they can’t recover.”