Pension: This group of women could be at serious risk when reaching their retirement

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Pension pots are built up over time, but can be an important source of income for those who choose to save in this way. While the State Pension is available, many choose to develop their own form of savings to provide them with extra support during their later years. However, in the pension sector, the disparity between the savings of men and women – known as the gender savings gap – has been a consistent issue. 

On average, women have been consistently found to have less in pension savings than their male counterparts, often leaving them less prepared for retirement.

This is down to a variety of factors, such as sectors of work, the pay gap and time taken off to care for children.

New research, however, has found one particular group of women is at significant risk in retirement.

Research commissioned by NOW: Pensions, revealed single mothers are currently facing huge barriers to saving, which can leave them significantly worse off when compared to other women and men.

The research showed the average private pension income for single mothers is £18,300, which is a third of the average woman at £51,000.

Indeed, this is also staggeringly lower than an average pension pot for a man, which stands at £156,000.

The study attributed the large chasm in saving to a number of factors which affect single mothers on a day to day basis.

Despite single mothers often being employed at higher rates than the population average, many struggle to work full time hours, and take up part-time employment.

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As a result, they may not contribute to a workplace pension, and could lose out significantly.

Furthermore, part-time workers may not even meet the qualifying criteria for auto-enrolment – where Britons are automatically placed onto a workplace pension scheme.

This means missing out on vital employer contributions which could serve as a welcome boost to a person’s pension saving.

Samantha Gould, Senior Communication Manager at NOW: Pension commented on the group’s findings.

She said: “This new report shows how stark pension saving can be for certain groups of women, particularly single mothers.

“With the average nursery costs now greater than the average mortgage payment, policies aimed at alleviating childcare responsibilities, in terms of both time and stress could help to improve labour market inequalities experienced by single mothers.

“These kinds of policies could reduce levels of part-time working and help single mothers to overcome issues of vertical segregation and low pay in the workplace.

“It’s crucial that single mothers have greater access to affordable childcare and flexible working options in order to support career progression and ensure they can save adequately for later life.”

Previous analysis has shown divorced women are also at risk for retirement, with a diminished pension pot.

However, the research has shown single mothers are often facing a worse set of circumstances, with a pot almost one third less than divorced women, who on average have £26,100.

NOW: Pensions has stated the tough circumstances single mothers face have only been further exacerbated by the COVID-19 crisis.

As a result, they have highlighted changes which could be made to current auto-enrolment policies.

The organisation asserts that if auto-enrolment were to begin from £1 of earnings, this would bring an additional 300,000 single mothers into workplace pensions.

Under current rules, to be eligible for auto-enrolment, a person must be at least 22 and earning a salary of £10,000 or more. 

Joe Richardson, Research and Policy Officer at Gingerbread commented: “This new research shows that for many single mothers, chronic low income will persist well into retirement. 

“Urgent support is needed for the UK’s 1.8 million single parent families. Without this, these families will face a generation of mass unemployment, poverty and debt.”

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