Gen Z staff neglect pensions to deal with every day prices

More than half of Gen Z workers have stopped paying into their pension during their short career as they struggle with daily expenses, according to research.

Some 21 per cent of youngsters said they are currently saving nothing towards their retirement, data from recruitment firm Robert Walters reveals, while 51 per cent have paused their contributions at some point. 

With Gen Z aged between 12 and 27 years old, a considerable number of them are in employment. The oldest could have been working full-time for around a decade.

Of those that do contribute to their pension, 31 per cent are receiving only the statutory minimum contribution from their employer. 

This is usually 3 per cent, with the employee in that scenario needing to contribute 5 per cent to make up the minimum total contribution of 8 per cent. 

In comparison, almost half of Gen X – those aged between 44 and 59 – receive contributions of between 7 per cent and 10 per cent from their employer alone.

One suggestion for how much you should save is to divide the age at which you started saving into a pension by two, to calculate the percentage of your salary that goes towards it each year. 

It means someone starting at 24 would be saving 12 per cent in total, including their employer’s contribution, compared to the minimum eight per cent contribution. 

However, that could be a tough ask for those on smaller incomes who are only receiving the bare minimum from their employer. 

Unsurprisingly as the generation approaching retirement, Gen X are more focused on pension saving, with three quarters viewing their pension contributions as a priority.

Chris Eldridge, chief executive of Robert Walters UK & Ireland said: ‘Pensions aren’t something that you should start only considering as you get closer to retirement age – you should be putting something aside from your first day of professional employment.

‘Young professionals neglecting their pension contributions now, could see their retirement postponed later in life due to insufficient savings.’

With a single person now needing an average base pay of £43,000 per year thoughout their career in order to retire comfortably, saving for retirement is more important than ever.

But rental and living costs are growing more quickly than salaries, meaning pension saving is also becoming more difficult, especially for the young.

Data from the Institute for Fiscal Studies shows that between five and seven million people are on track to see their pension fail to be enough o fund the minim standard of living. 

Eldridge said: ‘By and large, Gen Z professionals have spent the least amount of time in the labour market and will generally have the least amount of money saved towards their eventual retirement. Yet many are already putting their savings on hold to afford their daily expenses.

‘Professionals under 30 are at a crucial time in their career to craft a solid foundation for their pension pot. But, as our research suggests, many are not getting the chance to do so with their current employer.’

Unsurprisingly, younger workers are also less likely to be eligible for higher pension contributions, many of which are offered by companies according to the length of an employee’s service.

Only 23 per cent of Gen Z professionals receive contributions of between seven per cent and 10 per cent from work.

Eldridge said: ‘Not only are Gen Z more likely to being earning less, but they are also less likely to be eligible for any financial benefits to supplement their base salary – making it even more difficult for them to put any savings aside for the future.’