Single parents have the lowest average income for both men and women, according to research by workplace pension provider Now: Pensions and the Pensions Policy Institute (PPI).
The underpensioned: defining the gender pension gap report revealed that single mothers earn 53% less than the average man and 37% less than the average woman, while single fathers earn 32% less than the average man. The different working patterns between men and women are the main source of this gap, because they can reduce women’s pensions wealth by 33%.
By their late 50s, women’s pension wealth was found to be equivalent to less than two-thirds (62%) of men’s savings. In the UK, women retire with an average of £69,000 in their pension pot, compared to men who retire with an average of £205,000.
Single mothers were found to have the lowest rate of labour market participation of all groups. Overall, women spend an average of 10 years away from the workforce to raise families or take on other caring responsibilities, amounting to an average of £39,000 in lost pension savings. In comparison, fathers accounted for just one in nine stay-at-home parents during 2022, compared to one in 14 in 2019.
The research also found that 54% of single mothers work part-time, compared to the UK average of 21%. One in three of all working single mothers are ineligible for a workplace pension under current auto-enrolment rules, despite 59% being in employment. Consequently, this group has missed out on more than £852 million in pension savings since the introduction of auto-enrolment in 2012.
Lauren Wilkinson, senior policy researcher, and John Adams, senior policy analyst at PPI, said: “This report explores the impact of factors that contribute to inequality in retirement outcomes between men and women, in order to provide greater clarity on how to define the gender pension gap and support effective policymaking decisions to narrow the gap.”