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Single mums need to work to age 93 to retire with the same pension as men

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25% of parents spend 75% of net salary on childcare

New research, released just ahead of Single Parents Day on March 21st, reveals that one in three working single mothers are unable to access a workplace pension under current auto-enrolment rules, despite 59% being employed.

NOW: Pensions and the Pensions Policy Institute (PPI) conducted the study, which also showed that single mothers have missed out on over £852m in pension savings since auto-enrolment was introduced in 2012.

The research highlights the fact that of the 1.59 million single mothers in the UK, only a fraction are saving into a workplace pension, with those who are eligible saving an average of £885 annually compared to the UK average of £1,573.

The report also reveals that single mothers working part-time are at 54%, compared to the UK average of 21%. This may result in not meeting the eligibility criteria for pension saving, as contributions are triggered only after earning £10,000 in a single role. Consequently, single mothers are not only missing out on a workplace pension but also vital employer contributions.

Furthermore, the research shows that single mothers may have to work an additional 28 years, in order to retire with the same amount of money as a man, compared to single fathers, who may only need to work an additional three years until age 68.

The data indicates that, over a 40-year career, single mothers can expect to have a private pension income total of £48,000, whereas the PLSA’s retirement living standards suggest an income of £12,800 per year is needed for a ‘minimum lifestyle.’

In addition, the study reveals the high cost of childcare as a significant obstacle for single parents. According to stats published by the TUC on March 10th, the average full-time nursery place is now nearly £15,000 per year. One in four parents said the cost of childcare is now over 75% of their take-home pay.

Gingerbread, a single-parent charity, pointed out that while there has been an increase in flexible working jobs, seven out of ten jobs are still unsuitable for single mothers. This has resulted in a growing trend for ‘fully flexible’ working and zero-hours contracts.

NOW: Pension support the Private Member’s Bill, backed by the Department for Work and Pensions (DWP), to increase pension savings for single mothers. The bill proposes two extensions to auto-enrolment, which will abolish the lower earnings limit for contributions and reduce the age for being automatically enrolled to 18.

If single mothers could pay into their pension from the very first £1 that they earn, their annual pension contributions could increase by 56% to £1,385. The result would be a potential pension pot of £75,125 over a 40-year career.

Victoria Benson, Chief Executive of Gingerbread, 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.”

Samantha Gould, Head of Campaigns at NOW: Pension commented: “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”.

“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.”


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