Three in four single mothers face living in poverty when they retire, according to a report by Scottish Widows.
The 19th annual Women and Retirement Report, published today (November 15), revealed that the ‘motherhood penalty’ – the financial and career disadvantages faced by working mothers – has an enduring impact into later life.
Deep-rooted structural inequalities cause women to earn less, work less and save less for retirement when they become parents.
This is exacerbated for single mothers who are unable to share the burden of day-to-day costs and childcare provision with a partner.
The latest report analyses women’s retirement prospects through the lens of the National Retirement Forecast (NRF), which uses the Pension and Lifetime Savings Association (PLSA)’s ‘Retirement Living Standards’ levels to calculate the quality of lifestyle that people are set to achieve when they stop working.
In forecasting savers’ anticipated lifestyles, the NRF recognises that factors other than pensions play a role in the income people will rely on in retirement, and also accounts for housing and other costs.
The issue of unavailable or expensive childcare disproportionately impacts the job prospects of mothers, as more than a third (37 per cent) leave jobs to look after their children.
Around half (48 per cent) say that having children slowed their career progression and 51 per cent of single mothers struggle to find jobs in the first place.
With almost half (46 per cent) of single mothers reducing their hours to manage childcare, the report found that a permanent move to part-time work at age 30 can cost women £47,000 in their pension pot at retirement.
The Parent Trap
Single mothers are already disadvantaged in the broader national picture presented by the NRF which highlights the gender pension gap of 39 per cent.
This is the difference in pension savings between men and women at retirement age.
The average woman is on track to receive £12,000 per year of income in retirement after paying for housing expenses, which in today’s money is £7,000 short of the £19,000 income for the average man.
A main driver of the gap is that women take on substantially more childcare than men, which limits the amount they can work over their lifetime and reduces the amount they can save into their pensions.
The report reveals that 50 per cent of fathers said they share childcare equally with their partners while only 31 per cent of mothers believe this to be true, with 56 per cent of mothers saying they do the majority of childcare.
Most parents do not use professional childcare services, and for many that comes down to cost.
The average cost of full-time professional childcare at a nursery for child under two in Great Britain is £14,071 per year.
This childcare cost represents 64 per cent of the take-home pay of the average person in Great Britain (65 per cent for England, 51 per cent for Scotland, 63 per cent for Wales).
