Put it away — there’s no future if we don’t help Gen Z with pensions today

Andy Baker
6 min readSep 14, 2022


Hands stacking coins

“You’ve got to start planning for the future,” they said.

Hmmm, easier said than done when there’s today to worry about.

And amidst endless conflicts abroad and the rising cost of living, who knows what tomorrow will bring?

Plus, with the environmental and economical consequences of climate change, things could look even more uncertain for younger generations.

But there is one way Gen Z can start protecting themselves against the unknown — and that’s with their pensions.

This Pensions Awareness Day (15th September) we’re breaking down everything the next generation needs to know about saving for the future. That means your organisation can help younger employees prepare for their later years, whilst still getting the best out of them today.

But first things first, let’s check the balance on pensions.

Opening the pot: the state of pensions so far

According to the ONS, over 22m employees are currently enrolled in a workplace pension scheme.

And this has steadily grown over the years — partly due to employees being automatically enrolled on pension schemes in 2012. In fact, since the government initiated this, levels of participation rose from 47% in 2012 to 79% in 2021.

Good news, right?

Sure. But the problem is that research suggests only 6% of 18 to 24-year-olds are “highly engaged” in their pension plans ( Financial Conduct Authority (FCA). Worse still, 42% described their engagement as “very low”.

And being this tuned out of your pension can mean you have no idea how much you’ve saved and, more importantly, how much you need. Because although auto-enrolment has been successful, there are worries that many people are still under-saving for retirement. A review of the policy in 2017 recommended lowering the age of auto-enrolment from 22 years to 18 but there’s been no sign of this happening yet.

OK, but what about the State Pension? This will top things up nicely, surely.

You’d hope so. But most experts are suggesting this will won’t be enough.

“Currently if you’re eligible for the full new State Pension you would receive just under £9,400 a year. That’s less than a minimum wage salary and is unlikely to be enough to give you what you want or need to live off when you come to retire,” says the team at Standard Life.

Not good. So how can employees check how much they’re likely to receive from the government?

Well, the amount of State Pension they’ll get is based on the number of years of National Insurance (NI) contributions they’ve made (or been credited) before they claim it. Currently, all workers need to have paid National Insurance Contributions for at least 10 years to qualify for the State Pension. To receive the full amount of £179.60 per week (2021/22) you’ll need to have paid for at least 35 years.

But if they aren’t sure about all this, just direct them over to gov.uk where they check their State Pension forecast online. But they should do it sooner rather than later. Because it may feel like ages away when you’re 21, but this is one job they can’t afford to put off until tomorrow.

Tomorrow never knows (if you don’t plan for it today)

Research from Fidelity Investments found that 45% of people aged 18 to 35 “don’t see a point in saving until things return to normal.”

But what is normal, anyway?

Whatever it is, we still feel pretty far from it at the moment.

But when we’re so unsure about what’s around the corner, doesn’t that make it even more irresponsible to stop saving for the future?

Maybe. But it’s understandable why Gen Z and even Millennials might have given up.

“It’s easy to lambast the younger generations for what some might consider a risky or, plainly, dumb financial move, but can we really blame them?” asks Logan Mahan at InsideHook.

“Generation Z and Millennials haven’t had an easy go at it since, uh, they were born. They’ve lived through multiple wars, two recessions and a pandemic and are now faced with worrying about the climate crisis, the war in Ukraine, sky-high inflation and an unaffordable housing market,” she continued.

And that’s not all they’re worried about.

According to Standard Life’s Consumer Attitudes Report, Bringing retirement into focus: 2021, which surveyed around 5,000 people in the UK, a quarter of Gen Zers said they expect to be paying for long-term care for a loved one in retirement.

But with an ageing population — not to mention the growing strain on social care that comes along with it — Gen Z has got to get going ASAP.

One good thing for such a conscious generation is that pensions don’t just have to be an investment in you. These days, they can work for the greater good too.

Sustainable saving has never been more possible

We talked before about how serious Gen Z are about climate change. In fact, Pew Research found up to 76% of Gen Zers said climate change was one of their biggest societal concerns.

But do the Gen Zers working in your organisation know their pension could have a positive impact on the environment?

If not, it’s time to let them know.

By their very design, pensions take a long-term view and this can positively steer the direction the world goes in.

“For a new person who’s just joined a company, age 18 or so, the pension outlook will be way into the middle of this century,” says Nick Robins, a professor of sustainable finance at the Grantham Research Institute on Climate Change. “…pensions are really long term and therefore can take account of issues like climate,” he told the BBC.

In fact, 53% of the Gen Zers surveyed by standard LIfe said pensions should be invested sustainably; that’s compared with 51% of Millennials, 44% of Gen Xers and 36% of Baby Boomers.

And there are plenty of options out there. Good With Money has a useful list of 7 of the best ethical pensions here.

Whoever they choose to invest with, though, paying the bare minimum throughout their career is unlikely to be enough to provide a comfortable retirement — and that’s the key takeaway here.

But it’s not all doom and gloom…

A pot of gold at the end of the rainbow

Surveying 2,000 UK citizens, PensionBee found that Gen Z savers actually appeared to be on track with their savings. These respondents had an average pension pot of £21,765 which was just behind Millennials (£22,049) and long-term savers Gen X (£33,547).

And whatever their age, there’s one thing all generations have in common.

“Our research highlights that most savers would like to retire early,” says Romi Savova, CEO of PensionBee. And that’s why “…it’s of paramount importance that they build up a personal pension that they can access from the age of 55 (rising to 57 in 2028), in order to not have to keep working until the State Pension age of 66,” she tells Actuarial Post.

PensionBee has offered a lot of advice on the subject of retirement planning but here are three useful pointers to pass on to Gen Z employees:

1. Calculate what you have (and how much you need) — It’s estimated most people will need about 70% of their salary to live comfortably in retirement. However, the amount you’ll need does depend on your circumstances and lifestyle. So think about how much you can afford to save, how long you’ve got until retirement and your desired income after giving up work.

Get them to have a go at one of the countless pension calculators online to give themselves an idea. Here’s one from Which?

2. Start saving sooner than later — essentially, the earlier you start a pension, the more time it will have to grow. And If you leave it untouched for several decades, it can grow considerably due to compound interest. On the flip side, the longer you wait to start, the more of your salary you’ll have to sacrifice each month to reach your goal. It’s simple.

3. Make sustainable withdrawals — if you are able to access your pension, be mindful of withdrawing from it. Think about future withdrawals in percentage terms instead of pounds and pence. That’s because if you set a percentage figure for your withdrawals, these automatically reduce in size when markets are lower. This should stop you from cashing in too much of your pension too soon.

OK, we know it’s impossible to predict what the future looks like — that part’s unwritten. But we can help Gen Z protect themselves against whatever it brings. And when they’ll be tasked with picking up the pieces and creating tomorrow’s solutions, it’s up to us to help them in any way we can.

If you need any help hiring gen-z or even just fancy a search to see what’s out there, head on over to our grad recruitment app and check out today’s burgeoning talent.

Originally published at https://employers.digitalgrads.com on September 14, 2022.



Andy Baker

Friendly neighbourhood copy chameleon. Whatever the tone, I’ve got you.