Saving for a pension: why gen Z aren’t all banking on retirement

Mehjabin, 23, is a supply teacher who lives with her parents in London. She does not know whether she will ever be able to stop working.
She works for a teaching agency, and for a full week she could typically earn about £650. However, sometimes she only gets two or three days a week.
“It’s hard to get a permanent job, and because I don’t have anything stable right now, it’s hard to reach my financial goals,” she says. “It feels really concerning thinking about the future. I don’t think retirement may even be possible … even saving small amounts of money is becoming impossible.”
Mehjabin is not alone. According to research from People’s Pension, a large workplace pension scheme in the UK, 12% of generation Z – broadly those born between 1997 and 2012 – think pensions are pointless because they do not view retirement as ever being an option.
A third surveyed felt the financial services industry failed to communicate the benefits of saving for retirement. A fifth said financial companies made pensions seem boring and irrelevant.
When the Guardian asked readers why they were not saving for a pension, some cited immediate cost-of-living concerns.
Alex, 28, lives in Cumbria and was enrolled in a pension through work but only managed to put a very small percentage of his pay into the scheme. He has since opted out and, instead, tries to manage his money month to month.
He lives with his husband, and together they take home £1,500 a month – which, he says, is limited by caring responsibilities and therefore unlikely to increase in the near future.
“By the time essentials and driving lessons are paid for, we have about £260 for things like clothing, travel, entertainment etc,” he says. “Anything left goes into savings. We rarely go out, and buy most things secondhand. We even cut our own hair.”
Alex says putting money into an instant-access savings account – which often means a low interest rate – is the best for their financial circumstances as it means funds can be easily withdrawn for any unexpected costs.
“We need to make sure we can access those savings, as you just don’t know what’s going to happen,” he says. “It’s hard to think about something like retirement when we’re just trying to make it through in the present.”
Alex says there is a disconnect between how he and his parents view finances, in that they were unable initially to understand why he stopped pension contributions in his late 20s.
“I had to sit my dad down and break down my finances in full for him to understand that we don’t have much left after housing costs, bills – which rise year on year – and essentials,” he says.
“He was genuinely shocked, and now understands why younger people have difficulty looking into the future.”
When talking about retirement, Alex uses the conditional “if”. He says it is likely to be different from his parents’ idea of retirement.
“While they’re looking forward to things like travelling, revisiting old hobbies, buying property, I struggle to picture retirement and old age and how it would work,” he says. “I imagine my senior years will be more concerned with paying the bills and affording groceries.”
A report published by the Pensions Policy Institute in 2025 found gen Z had less trust in financial institutions than older generations, and that many believed current systems would not be in place in the future.
It found 73% expected the state pension to be reduced, with 25% expecting a significant cut. Meanwhile, 46% believed it would not exist by the time they retired.
Kirsty Ross, the director of proposition at the People’s Pension provider, says: “When there’s economic unease and uncertainty, things can feel out of our control, especially when it comes to finances. Our research shows one in 10 young adults worry they won’t ever retire comfortably, or even at all. That level of concern reflects the pressure many feel under.”
Personal finance experts say that while it is never too late to start a pension, missing out on the early years of saving will cost you.
“They remain one of the most tax-efficient ways to save for retirement,” says Damien Fahy, the founder of personal finance advice website Money to the Masses. “If you start at 20 and save £100 a month, assuming 7% growth, you could have about £260,000 age 60.
“If you wait until 30 to start that same £100, you’re looking at roughly £120,000. Waiting a decade literally costs you half your potential pension pot.”
Helen Morrissey of investment platform Hargreaves Lansdown says the benefit of being young is that you have a longer time horizon over which to invest, so even small contributions can make a difference.
“Making resolutions to boost contributions every time you get a pay increase can also be a good way of boosting how much goes in over time,” she adds.
“Using things like online calculators are a great way to see how much you might end up with, and you can model the impact of boosting contributions if needed.”