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100,000 single mums locked out of a workplace pension during pandemic

Written by: Emma Lunn
Almost half of single mothers are now not reaching the minimum earnings threshold for automatic enrolment into a workplace pension, according to NOW: Pensions.

Research by NOW: Pensions and the Pensions Policy Institute (PPI) found that almost half of single mothers are now ineligible for automatic enrolment into a workplace pension.

Due to the Covid-19 crisis, about 400,000 single mothers are currently locked out of workplace pension saving, up by a third on last March’s figures.

The research highlights how coronavirus has further exacerbated the inequality that single mothers face when it comes to pension saving, ahead of National Single Parents Day on Sunday 21 March.

Whilst 31% of single mothers were not reaching the £10,000 auto-enrolment threshold before the pandemic, this has now risen to almost half (43%), meaning about an additional 100,000 women miss out on employer contributions.

The pandemic has also led to an estimated 4% rise in childcare costs, according to Coram Family and Childcare’s 21st annual Childcare Survey, creating additional financial pressures and substantial barriers to later life saving for many.

The average annual income for single mothers has also shrunk from £18,290 to £16,890, dropping by £1,400. About a quarter of single mothers have seen a reduction in earnings within the past year, and those who were furloughed saw auto-enrolment contributions reduce by an average of 25%.

Covid-19 and childcare

Recent lockdowns have made it harder for single mothers to work as they juggle children’s schoolwork, household chores and employment responsibilities.

According to The Office of National Statistics (ONS), 67% of women took on additional home-schooling responsibilities between January and February this year, with 99% of women reporting to have spent more time looking after their children than men.

A survey conducted by Trade Union Congress found that 18% of mothers had been forced to reduce their working hours and about 7% were taking unpaid leave from work and receiving no income – two situations which will exacerbate the pensions savings gap as a result of the pandemic.

Single parents face more debt

Gingerbread, the charity for single parents has reported that 49% of single parents have taken on more debt since Covid-19 struck, putting later life saving even further down the agenda and intensifying pensions inequality.

Average debt levels amongst single parents have increased by about 15% during the pandemic, with 51% having fallen behind on making rent or mortgage payments.

Farah Baldock, head of communications at Gingerbread, said: “Single parents face significant barriers to entering and progressing in work that offers long term financial security. Unable to ‘shift parent’ in the same way as couple parents can, single parents are far more reliant on external childcare support in order to work.

“The high costs of childcare mean many will only be able to work in part-time or insecure roles, limiting their earning potential. Coupled with greater demands on their income as the sole earner in the household, single parents are often at greater risk of falling into debt just to make ends meet meaning savings and pensions are simply out of reach.

“Covid-19 has only exacerbated the situation. The pressures of juggling work, caring for children and home-schooling with no external support has forced many to reduce their hours of work or leave work altogether.”

Samantha Gould, head of campaigns at NOW: Pensions said: “It is worrying to see that single mothers’ ability to save for their futures has been hugely affected by the Covid-19 pandemic with almost half now ineligible for automatic enrolment.

“After what has been a difficult year with women bearing the brunt when it comes to being furloughed and taking on the bulk of childcare responsibilities it is really troubling that even more single mothers have been locked out of pension saving during a time when finances have already been hit.”

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