Gen Z workers opting out of workplace pensions amid cost-of-living pressure

A growing number of young UK workers are withdrawing from workplace pension schemes because of financial pressures, a trend that experts warn could leave an entire generation with inadequate retirement savings. Hassan Nassar, a 26-year-old NHS trainee GP, recently paused monthly pension contributions of around £430 to cover rent, student loan repayments and family medical costs. He estimates the decision could cost him between £5,000 and £10,000 in future retirement income due to lost compound interest.

The scale of the problem

Around 22.6 million workers — about 90% of those eligible — are enrolled in automatic workplace pension schemes in the UK. But 2.5 million eligible workers are not saving at all. Pensions Minister Torsten Bell warned that a rising number of young workers are not saving, and that tomorrow's retirees are on track for lower private pension incomes than today's pensioners. Under UK law, workers aged 22 or over earning more than £10,000 are automatically enrolled, contributing a minimum of around 5% of gross earnings, with a mandatory employer top-up.

Financial advice and the real cost

Financial adviser April Leeson from The Private Office urges young workers not to stop contributing entirely — at minimum, reducing contributions rather than stopping allows them to retain employer matching funds. She points out that £100 saved now, compounded at 4% annually over 30 years, grows substantially. Evie, a 22-year-old events worker from Cornwall, opted out entirely because her £800 monthly rent left little room for saving. She hopes to re-enrol once her financial situation improves.