“Unique financial pressures” are threatening the retirement prospects of Gen Z (ages 18-29), according to a new report from the Pensions Policy Institute (PPI)

The report, The Concerns of Gen Z, found that despite “universal benefits” from automatic enrolment (AE) in workplace pension schemes, young people’s ability to save is being constrained by economic uncertainty, high student debt, unaffordable housing, and changing employment patterns.

According to the report, these pressures have led many to prioritise short-term financial flexibility, often at the expense of long-term savings.

For example, while AE has improved participation rates, the PPI noted that gig workers and the self-employed are nearly always excluded, leaving them without sufficient retirement savings.

The report suggested that a possible over-reliance on defined contribution (DC) schemes have exposed Gen Z to investment and longevity risks, with modelling showing that while a median earner saving at AE minimum rate could accumulate a pension pot of approximately £158,000 by the state pension age, this would translate into an annual retirement income of just £13,000, “significantly lower” than the average public sector defined benefit (DB) pension.

Given the findings, PPI policy researcher, Shantel Okello, said Gen Z’s retirement prospects will have long-term implications for pension policy, economic stability, and social equity.

“While automatic enrolment has expanded pension participation, rising living costs and insecure work make it harder for many young people to save enough for later life. If these issues are left unaddressed, we risk a future where more people reach retirement without adequate savings,” she added.

“This report highlights the key barriers and potential levers for building a pensions system that better reflects the realities of modern working lives.”

The PPI argued that targeted measures could be required to address gaps in Gen Z’s retirement preparedness.

These could include expanded pension access, which introduces mechanisms to include gig workers and the self-employed in retirement saving systems to reduce disparities in pension participation.

Assessing the adequacy of AE contribution rates could also help ensure Gen Z is saving at levels sufficient for a secure retirement.

The report suggested further reducing financial pressures, supporting pension continuity, encouraging flexible schemes, and improving digital engagement could improve retirement prospects.

“As Gen Z progresses in their careers, tackling these issues is critical – not just for their financial security, but for the long-term viability of the pensions system,” continued Okello.

“Policymakers and industry leaders have a chance to adapt pension policies to support younger savers better and build a more resilient system for the future.”

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