Gen Z's pension dilemma

Over half (51%) of gen Z workers have hit pause on their pension contributions at some point because they’re struggling to afford everyday expenses, research shows.

Recruitment agency Robert Walters revealed that one-fifth (21%) of young people said they aren’t saving at all towards their retirement. Nearly the same amount (18%) said retirement savings weren’t ‘on their mind’.

The gen Z double whammy

Although not all gen Z-ers are currently old enough to work (the generation spans those between 12- and 27-years-old), the oldest among them could have been working full-time for about ten years.

But gen Z are hit with a double whammy – they’re the most likely age group (31%) to get the bare minimum contribution of 3% towards their pension from their employers – and the least likely (23%) to score higher pension contributions, which many companies allocate based on how long someone has been employed.

In contrast, nearly half (47%) of gen X – those aged 44 to 59 – enjoy employer contributions ranging from 7% to 10%. This difference means gen Z need to stump up some serious cash to hit the minimum total contribution of 8%.

Top priority pensions

Data from the Institute for Fiscal Studies shows that between 5 to 7 million people won’t have enough money in their pension funds to maintain even a basic standard of living.

It's no surprise that gen X, who are closer to retirement, are much more focused on saving for their pensions. About 75% of their contributions were a top priority, compared to just 56% of gen Z.

Since a single person needs an average annual salary of £43,000 throughout their career to retire comfortably, saving for the future is more crucial than ever.

But let’s be real: this can be a tall order for those on lower incomes who are only seeing the basic contributions from their employers. Across all ages, just one in three (34%) people said they are are satisfied with their employer’s contributions towards our pensions.

Last in line

Rental and living costs are skyrocketing faster than wages, making it harder and harder for young people to save for retirement.

Gen Z professionals are also last in line for financial perks, like annual bonuses or car allowance, even though they value bonus schemes more than any other generation (82%). Overall, they’re 14% less likely than gen X to enjoy such benefits.

How much should I save for my pension?

A common rule of thumb is to take the age at which you started saving for your pension and divide it by two. This helps you figure out what percentage of your salary you should be putting aside each year.

So, if you start saving at 20, you’d aim for a total of 10%, including what your employer adds, which is a step up from the minimum of 8%.

We’re here for you

If your finances are getting on top of you, it might be time to ask for support.

We can help you take control of your money by putting together a realistic budget you can stick to as well as offering free and impartial advice.

You can also check whether you’re getting all the help you qualify for with our free benefits calculator, or you can ask us about debt solutions – some are free, others have fees.