More than half of single mothers ‘locked out of automatic pensions enrolment’

Some 58% of single mothers are ineligible to be automatically placed into a workplace pension, researchers said.

21 March 2022

More than half of single mothers do not automatically qualify to be enrolled in a workplace pension, a study has found.

Some 58% of single mothers are ineligible to be automatically placed into a workplace pension, up from 45% in 2020, according to the findings released on Single Parents Day.

The coronavirus pandemic has meant some single mothers are likely to have reduced their working hours or stopped working altogether, researchers said.

The findings were released by pension provider NOW: Pensions and the Pensions Policy Institute (PPI).

The earnings “trigger” when an employee is automatically placed in a workplace pension is £10,000.

A high proportion of single mothers working part-time also means some may not meet the eligibility criteria as pension saving is only triggered once someone is earning £10,000 in a single role.

NOW: Pensions suggested that removing the trigger could bring an additional 200,000 single mothers into workplace pension saving.

It also said pension sharing in the event of a divorce should be the default and a “carer’s top up” should be paid into women’s pensions when they take time out of work to undertake caring responsibilities.

The findings followed analysis of several surveys, including the Family Resources Survey, the Labour Force Survey and the Wealth and Assets Survey.

Victoria Benson, chief executive of charity Gingerbread, said: “Single parents face near-insurmountable barriers to securing work that pays the bills and allows for a decent standard of living.

“This new research shows that for many single mothers chronic low income will persist well into retirement. Single parents are unable to ‘shift parent’ like couples can, meaning they require external childcare support for every hour of work they do.

“High childcare costs mean many will only be able to work part-time and/or in insecure roles – two key determinants of low pay. Low pay matched with the costs of raising children makes poverty and debt the norm, while savings and pension pots become a pipe dream.

“The pandemic has exacerbated this situation. 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.”

Self-employed single mother Charlotte Carter, 26, said: “Single parents’ finances are being squeezed, more needs to be done to support single parents (to) save for their future, and raising awareness of this issue and the solutions that could resolve it is something that I believe can help make that change.”

Samantha Gould, head of campaigns at NOW: Pensions, said: “The costs of childcare are unsustainable, and as a single mother myself there is already so much pressure as both the sole earner and carer in a household.

“Single mothers will be feeling the pinch, with many forced to stop working altogether to care for their children. This perpetuates the current pensions gaps experienced by some groups in the UK which need to be addressed.”

She added: “With the majority of single mothers now locked out of workplace pensions, we are calling on the Government to make policy changes and remove the auto-enrolment trigger of £10,000 and starting contributions from the first £1 of earnings.

“This would bring an additional 200,000 single mothers into workplace pensions and increase women’s pension financial security in retirement.

“We must ensure that everyone has an equal opportunity to save for their futures and build an adequate savings pot for later in life.”

A Department for Work and Pensions spokesperson said: “Automatic enrolment has helped millions more women save into a pension, with participation among eligible women in the private sector rising from 40% in 2012 to 86% in 2020 – equal to that of men.

“Our plans to remove the lower earnings limit for contributions and to reduce the eligible age of being automatically enrolled to 18 in the mid-2020s will enable even more women to save more and start saving earlier.”

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