Why Gen Z are planning for life without a state pension

Ashleigh, 23, from central Manchester, agrees with Joel that the state pension is unlikely to come to her: “I don’t think anyone will retire at this rate, I think eventually everyone will have to fend for themselves.”

But as someone on a lower income, his retirement choices are less squirrelly. While he was working for a major retailer, he says his employer chose to stop contributing to his auto-enrollment pension.

“I’ve given up on that. I need money now.” “I’d rather save for a house and at least have something to show for it,” he explains.

Some experts warn that the gap between rich and poor in retirement could widen significantly for this generation.

Deputy director of the Pension Policy Institute (PPI), Dr. Aside from how much Gen Z saves privately, Suzy Morrissey believes another factor will widen the gap: many more of them will rent.

“Renting in retirement increases retirees’ likelihood of poverty, and as younger people they face challenges to savings that previous generations did not face when they were the same age,” he says. “If we have people paying rent in retirement and not having large retirement funds to cover those expenses, that means the risk of retiree poverty is higher.”

But Morrissey sees a silver lining: Pension auto-enrolment, the system that automatically puts most workers into workplace pensions unless they opt out. If they are employees, “they will have spent their working lives contributing to retirement income and will be the first generation to spend their entire lives doing so.”

For many this would be a step back, but the minimum contribution rate is unlikely to be enough for a comfortable retirement. This isn’t automatic for the self-employed, and people like Ashleigh have opted out due to immediate financial pressures, so it looks like many won’t be able to reap the benefit of this silver lining.