Single-mother pensions dropping rapidly post pandemic

The average value of a pension fund for a single mother in the UK has dropped by 40% since the start of the pandemic.

According to research by UK pension provider Now: Pensions, over half (58%) of single mothers are now ineligible for automatic enrolment into a workplace pension, up from 45% in 2020.

The research showed that single mothers are currently reaching retirement with a private pension income of just £11,000.

How HR can help alleviate pension poverty:

How can employers champion single mothers?

Auto-enrolment of pensions benefits millions but it’s not enough for retirement

Single parents earn significantly less

Guidance from the Pensions and Lifetime Savings Association says that an income of £20,200 a year is needed to live a 'moderate lifestyle’, meaning single mothers are facing severe pension poverty.

Samantha Gould, head of campaigns at Now: Pensions, believes that current pension policy in the UK is set up to exclude single mothers due to the £10,000 earnings threshold needed to qualify for automatic enrolment in workplace schemes.

She told HR magazine: “We’re lobbying the government to remove the £10,000 earnings trigger and to start pension contributions from the very first pound of earnings. This would bring an additional 200,000 single mothers into workplace pension saving and improve their income in retirement by as much as 140%.

“Current pension policy in the UK means that there are around three million people locked out of workplace pension saving, with single mothers being one of the eight worse-hit groups.

Gould added that the heightened childcare demands for single parents, compared with couples and families, drives single mothers in particular into part-time work. 

"Single mothers are more than twice as likely than the average person to work part-time," she added. "The downside of this is that part-time work means part-time pay, causing many single parents, and single mothers in particular to miss out on that crucial £10,000 earnings threshold to be automatically enrolled into a workplace pension."

The pandemic has only worsened the situation, as research from single-parent charity Gingerbread found that long-term unemployment has increased for single parents since 2020.

Gingerbread chief executive Victoria Benson called for more support for single parents to ensure they can stay in the working world. 

She said: "Urgent support is needed to tackle the barriers single parents face securing quality, flexible and sustainable jobs that work around their caring commitments – without this, single parents are at risk of being locked out of work altogether.

"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. Single parents are amazing and more must be done to ensure they are not left behind.”