Research reveals that only half of Gen-Z professionals believe pensions are important, compared to three-quarters of Gen-X workers who prioritise their pension contributions. The findings highlight a growing concern that younger professionals may be jeopardising their future financial security as they struggle to save for retirement amid rising living and rental costs.
The research, part of the upcoming Benefits Guide by recruitment consultancy Robert Walters, surveyed over 3,000 white-collar professionals. It warns that Gen-Z should not underestimate the significance of pension contributions, even during the early stages of their careers.
Chris Eldridge, CEO of Robert Walters UK & Ireland, stressed the importance of early pension planning: “Pensions aren’t something that should only be considered closer to retirement age. It’s crucial to start saving from your first day of professional employment. Neglecting contributions now could mean a delayed retirement later in life due to insufficient savings.”
The average base salary needed for a single person to retire comfortably currently stands at around £43,000 per year, but with living costs rising faster than wages, young professionals are finding it increasingly difficult to save.
Pensions Not a Priority for Many Gen-Z Workers
The research found that 51% of Gen-Z professionals have either paused or reduced their pension contributions to manage immediate financial needs. A further 18% admitted that retirement savings are “not on their mind,” while 21% are not saving anything towards their pension at present.
In comparison, 36% of professionals over the age of 27 are setting aside between 6-10% of their salary towards their pensions, compared to just 26% of Gen-Z workers.
Eldridge added: “Many younger professionals have spent less time in the workforce, so it’s understandable they have saved less. But many are already suspending their pension savings to cover day-to-day expenses.”
Disparities in Pension Contributions Across Generations
The survey also highlighted significant disparities in pension contributions between younger and older professionals. Gen-Z workers are the most likely generation (31%) to receive the statutory minimum employer pension contribution of 3%, while only 23% receive contributions between 7-10%, compared to almost half (47%) of Gen-X workers.
Eldridge noted the importance of maximising pensions, even for those in the early stages of their career: “Professionals under 30 are at a critical point for laying a solid foundation for their pension pot. Even contributing 4% of your salary, matched with an employer’s minimum contribution, can create a healthy base for future savings.”
Financial Struggles Worsen Pension Outlook
The survey also found that Gen-Z professionals are most likely to be in lower-paying, non-managerial positions (79%), and are less likely to receive additional financial benefits such as bonuses, car allowances, or equity. Despite valuing bonus schemes highly when considering job offers, 14% fewer Gen-Z professionals receive these benefits compared to Gen-X.
Eldridge commented: “Not only are Gen-Z workers earning less, but they’re also missing out on additional financial benefits that could supplement their savings, making it even harder to set aside money for the future.”
However, the research suggests that pension concerns extend beyond Gen-Z. Only 34% of UK professionals across all age groups expressed satisfaction with their employer’s pension contributions.
In contrast, FTSE-listed companies such as BP and Unilever have significantly enhanced their pension schemes, offering contributions of up to 20-25%. This provides employees the option to either use the full amount for retirement savings or allocate part of it as a salary top-up.
Eldridge concluded: “With every penny counting in today’s economic climate, it’s vital that professionals consider long-term financial benefits when evaluating new job offers. Employers offering meaningful perks beyond salary alone will not only support employees in building secure futures but also foster greater loyalty and retention within the workforce.”
