Saturday 13th July 2024

Is Gen Z taking retirement saving seriously enough? Just 15% claim to have a workplace pension 

MRM and Mouthy Money’s Young Money Report finds only 15% of 18-30-year-olds have workplace pensions, emphasising the need for awareness and early savings.

Just three in 20 (15%) of 18 to 30-year-olds claim to have a workplace pension, new research from financial services consultancy MRM in partnership with Mouthy Money has found. 

Of the 500 young people surveyed as part of the latest Young Money report, just 15% said that they had a workplace pension. The study also found that retirement and retiring early sits at the bottom of the list of most important financial aspirations, with just 14% of this cohort focused on this.  

With a cost-of-living crisis raging across the UK, the fact that pension saving is low on the list of priorities for younger people isn’t exactly surprising. But more surprising is that three in five (62%) young people are confident that they’re on course to have a prosperous or early retirement.  

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A 22-year-old who’s yet to start saving, but wants to achieve a comfortable retirement, will need to put away £379,000 over their lifetime. So, while the current environment is undeniably challenging, I can’t help but wonder if Gen Z needs to be taking long-term saving a little more seriously.  

So, where now? 

The current pension rules state that if you are aged 22 or over and earn more than £10,000 a year, you’ll automatically be enrolled into your company’s pension scheme after three months’ service. This means it’s likely a chunk of those we engaged with simply aren’t eligible for ‘auto-enrolment’ yet. But with the number of people who claim to have a workplace pension rising to just 24% for the over 25 cohort, there is a real risk that young people are ditching their valuable pension contributions.    

Cath Collins, senior writer at Quietroom, who spends a great deal of time helping pension schemes that want to reach younger members, says these numbers should be taken with a pinch of salt.

“We’d expect pensions to be low on the radar for most young people”, she said. “If you’ve never been offered a pension before, the chances are that you won’t know how they work, or have a particularly strong opinion on them”.  

Collins believes this could in part be down to a feeling of inertia that’s unintentionally been created by auto enrolment.

She adds: “If you have been automatically enrolled because you were opted in by your employer, and didn’t consciously make any decisions about how much you wanted to save or where your money is invested, you may also have no concept of what a pension is or how it works”.  

Either way, Gillian Hepburn, commercial director at financial planning solutions company, Benchmark, says that the benefits of starting to save for retirement as early as possible cannot be overstated.

“It’s important young people understand the benefit of long-term investing and that whilst pensions might be a lower priority, having an income in retirement will become more important as they get older particularly as by the time they reach pension age, the pensions landscape will be very different.”

Interestingly, the study showed more young people to be following social media financial influencers (51%) than don’t (40%), and those that do have an overwhelming level of trust (71%) towards their content and its purpose. So, could finfluencers be the key to helping younger people achieve their retirement savings goals?  

James Marston DipPFS financial planning consultant at Quilter Financial Advisers, certainly thinks they could play a role. “Despite graduating with a business degree, I was unaware that pensions were the most tax-efficient savings method or that income protection insurance existed. Finfluencers, along with banks, pension providers, and financial advisers, are beginning to fill this knowledge gap.” 

Tom Selby, head of retirement policy at AJ Bell, agrees: “Retirement saving tips from knowledgeable professionals on TikTok might be extremely useful, for example, whereas a new cryptocurrency investment ‘opportunity’ being punted by a reality TV star clearly comes with sizeable risks.” 

Whatever the answer, the data presents a big wake up call to young people and the pensions industry alike. I know first hand that thinking about retirement is hard when you’re young and there are so many other things to save for *right now*. But with workplace pensions far less generous than they used to be, it’s more an important than ever to start saving even small amounts early on. Your future self will thank you when you get closer to retirement. 

If you’re between 18-30 (or older, for that matter!) and want to see where you are with your pension, check out my previous blog on four easy things you can to do make sure your long-term savings pots are working for you.  

Read the full results of the Young Money report 2023

Photo Credits: Pexels

Helena MacPherson

Helena MacPherson writes about pensions and financial services. In her free time she can mostly be found chasing after her golden retriever, Cheddar.

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