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Single mothers missing £852 million in pension contributions

Working single mothers have missed out on an estimated £852 million in pensions savings because they are not covered by the auto-enrolment scheme introduced in 2012.

According to the research from NOW: Pensions and the Pensions Policy Institute, current eligibility criteria for auto-enrolment in a workplace pension is short-changing one in three single mothers.

The prevalence of part-time working among single mothers is one of main reasons for being locked out of auto-enrolment.

On average, 21% of the UK workforce work part-time but in single mothers, part-time work accounts for over double (54%) the amount of contracts.

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Speaking to HR magazine Samantha Gould, head of PR and campaigns at NOW: Pensions, said: “Single parents face a unique set of challenges when balancing work with caring responsibilities.

“As a single parent myself, I know all too well the pressure that comes with being the sole earner and sole carer in a household.”

Employers, she added, have a vital role in ensuring single mothers are not penalised for the roles they have to take in order to care for their children.

She said: “If we consider financial wellbeing, as the biggest proportion of single parents work on a part-time basis, enhanced pension contributions from employers can be instrumental in helping them to plan their future.

“Other HR benefits which would be of huge help to single parents would be private healthcare and childcare schemes, anything which helps to lighten the burden in terms of finances and stress.”

Single mothers eligible for a workplace pension are still saving less than they need to achieve a ‘minimum lifestyle’ in retirement, according to the Pensions and Lifetime Savings Association's retirement living standards.

A minimum lifestyle requires an annual retirement income of £12,800 according to the standards, yet single mothers with a private pension are only putting away enough to have £48,000 in their total pension pot.

Gould added: “It is great to see more focus and support from internal HR and wellbeing teams on working families, but we must also recognise the additional strains and responsibilities placed on single parents.

“Flexible and hybrid working are instrumental for single parents in helping them to juggle work and caring commitments.”

There have been several campaigns to expand auto-enrolment criteria including a Private Member’s Bill introduced by MP Jonathan Gullis which is due a third reading on 24 May.

If Gullis’ bill is backed, government could abolish the lower earnings limit for auto-enrolment into a workplace pension meaning many more workers on part time and low paid work will be able to save more retirement.

It also seeks to extend auto-enrolment to those under the age of 18.