Report calls for new approach to Gen Z retirement planning

26 February 2025

A new report from the Pensions Policy Institute (PPI), commissioned by the Institute and Faculty of Actuaries (IFoA), identifies the challenges unique to Gen Z that are putting at risk their ability to save adequately for retirement. 

Generation Z (Gen Z) is characterised by individuals born between 1997 and 2012. ‘The concerns of Gen Z’ report details how this cohort faces a number of barriers to building their retirement savings.  These include economic and employment challenges, financial pressures and short-term priorities, as well as reliance on defined contribution pension schemes. 

In particular, coping with the rising cost of housing and the burden of student loan repayments has left many individuals delaying paying attention to their pension because they need to address these more immediate financial concerns. 

The financial wellbeing of Gen Z will have profound long-term implications for economic stability, social equity, and the sustainability of pension systems, unless the issue is addressed as a priority. 

The IFoA is concerned about the delay to phase two of the government’s pensions review, part of which was focussed on the challenges facing Gen Z. We would urge policymakers to consider how a modern pensions system might better support Gen Z now, and encourage them to consider how their approach to pensions saving will affect them in later life. 

Measures that could address this are outlined in today’s report, including:  

• policies that address housing affordability and student debt. This could help to relieve the pressure on Gen Z to prioritise short-term finances over long-term investment in retirement savings. 
• creating pension schemes that support the increase in people working in gig-based roles and self-employment; although Gen Z are the first generation to benefit universally from automatic enrolment, the changing employment landscape excludes some workers.   

The report also highlights Gen Z’s attitudes and beliefs about pensions and how they view their own retirement. Of those surveyed, 46% believe the state pension will not exist by the time they reach retirement. A potential increase in Gen Z’s state pension age, currently 68 years of age, could lead to delays in retirement.  Many in Gen Z already expect that they will delay full retirement; 47% say they plan to move to part-time work rather than stop working entirely once they reach retirement age. In contrast, 76% of current retirees stopped working completely at retirement.  

Alexandra Miles, IFoA Pensions Gap Working Party, said:  “Lifespans are extending and Gen Z are likely to face longer working lives and a longer period of retirement. This is in addition to the more immediate financial pressures that Gen Z face, including rising housing costs and student loan repayments. Many are prioritising addressing these over thinking about saving for retirement.  

“Traditional retirement models are becoming increasingly unsustainable and the burden of having the funds needed in later life is now firmly on the individual saver, especially for this generation where DB pensions will not be an option for the vast majority. The current rigid life-stage model will need to shift to a far more fluid, adaptable approach where retirement is redefined as an evolving phase rather than a fixed endpoint. 

“Industry, regulators and policymakers all need to play our part in addressing this shift, ensuring financial security, purpose, and well-being for all throughout our own unique and un-sequential lives.” 

Kartina Tahir Thomson, IFoA President, said: “The primary purpose of a pension is to provide an income in later life. However, with higher costs of living and repaying student loans, it is understandable that Gen Z are having to prioritise their income in the present instead. On top of this, the changing job landscape has excluded some people from automatic enrolment. 

“We need to think about how we can better support individuals, including those in Gen Z, to make financial choices that will support them later in life. This will require a coordinated approach with industry, governments and policymakers working together to come up with tangible solutions, that tackle issues now, in order to safeguard the future. Actuaries' expertise in pensions and life expectancy means that they can play a crucial role in finding solutions to these challenging issues.” 

Shantel Okello, Policy Researcher (PPI) and author of the report, said:  

“Gen Z is navigating a vastly different financial landscape from previous generations, with high housing costs, student debt, and insecure work limiting their ability to save for retirement. The rising cost of homeownership means that fewer young people are accumulating housing wealth, increasing the likelihood of renting in later life. At the same time, the increase in reliance on DC pensions has transferred much of the risk onto individuals, leaving many Gen Z savers exposed to the potential for inadequate retirement incomes. 
  
“If policymakers and industry leaders want to improve outcomes for Gen Z, urgent action is needed to address barriers to pension saving. Expanding access for gig workers and the self-employed, reassessing contribution adequacy, and modernising communication strategies could help build a system that better reflects modern working lives. Without meaningful reform, there is a risk that a growing proportion of young people will reach retirement without the savings necessary to maintain an adequate standard of living.”  

~ENDS~