Around 2.8 million people from under-pensioned groups are missing out on workplace pension saving, up from 2.5 million in 2020, according to Now Pensions, with women taking the biggest financial hit.

The report, Pandemics and Pension Inequality, which was written using data from the Pensions Policy Institute (PPI), suggested that the impact of repeated lockdowns, home schooling and increased domestic responsibilities had pushed 300,000 women out of workplace pension saving in the last year.

It noted that the gender pay gap has also increased over the past year, partly due to the "disproportionately high" number of furloughed women, pointing out that women are 50 per cent more likely than men to reach retirement with no private pension savings at all as a result.

However, the report also pointed out that, since the start of the pandemic, the proportion of women working full-time has increased to 64 per cent, the highest level on record, attributing this to an increase in flexible working patterns amid Covid-19.

Indeed, Now Pensions' research found that 23 per cent of working UK parents agreed that flexible hours could support working mothers return to work, whilst 42 per cent suggested hybrid working and 30 per cent suggested better parental leave.

In light of this, Now Pensions suggested that, if flexible working patterns prove to be a long-term change, this could have a positive impact on reducing pensions inequality, having previously emphasised the need for more support for single working mothers.

Women were not the only group to face financial strains amid the pandemic, however, as the report revealed that the pandemic has worsened the savings for a number of under-pensioned groups, including carers, single parents and part-time workers.

Previous research from Now Pensions and the PPI identified seven particularly 'under-pensioned' groups in the UK: single mothers, divorced women, disabled people, ethnic minorities, carers, the self-employed and multiple job holders.

Despite calls for greater support for these savers, the latest report found that financial resilience has been much lower amongst these groups amid the pandemic, explaining that under-pensioned groups have experienced larger income level drops on average, and have struggled more on average with affordability and individual saving behaviour.

Now Pensions also suggested that the people in under-pensioned groups were more likely to be affected by labour market inequalities and redundancies as they are more likely to work in the industries that have been most impacted by the public health restrictions such as retail, hospitality and tourism, or are in low-paid, part-time or irregular employment.

However, the provider warned that, regardless of the economic recovery seen in the UK during 2021, it is very likely that under-pensioned groups will continue to be affected by the long-term effects of the pandemic.

In light of this, it emphasised the need to create a fairer UK pension system, suggesting that getting more people included under auto-enrolment (AE) would be the most effective way to start closing the savings gap faced by underpensioned groups.

In particular, it recommended removing the £10,000 AE trigger, estimating that this would introduce an addition 2.8 million savers.

The report also identified taking pension contribution from the first £1 as a key reform, suggesting that this would increase pension wealth for these groups by an average of 30 per cent, increasing to 52 per cent amongst single mothers.

Combined, Now Pensions estimated that the introduction of both policies would generate an additional £1.2bn in annual pension contributions.

Commenting on the report, PPI senior policy researcher, Lauren Wilkinson, highlighted the pandemic as a "unique opportunity" to observe how economic crises affect members of under-pensioned groups, and create better support in future.

"Developing a deeper understanding of the way in which changes in the labour market can impact future retirement outcomes of under-pensioned groups can help to ensure that policies are designed to support them more effectively during the recovery from the pandemic-related economic crisis, as well as future crises and changes in the labour market, in order to achieve better retirement outcomes over the longer term," she said.

Adding to this, Now Pensions head of campaigns and report author, Samantha Gould, commented: “It was very clear at the start of the pandemic that the under-pensioned groups that we identified in our 2020 report would be the most financially affected by the economic downturn.

“They are more likely to work in sectors that have been severely impacted by closures, furlough and redundancies. In this report, we look at both the short-term and long-term effects of the pandemic.

“We need to ensure that everyone has the same opportunity to save for later life and so we are calling on the government to make the policy changes that were recommended by the 2017 automatic enrolment review as soon as possible so that we can enable these groups affected by the pandemic to recover at a faster rate.

“We hope that this report will help raise the profile of these savings gaps and motivate the industry and policy makers to close these pension savings gaps and create a fairer pension system.”

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