Why Gen Z are planning for life without a state pension

In central Manchester, 23‑year‑old Ashleigh agrees with Joel that the state pension is unlikely to be coming her way: “At this rate I don’t think anyone’s ever going to retire, I think everyone will just have to fend for themselves in the end.”

But as someone on a lower income, her pension choices are less squirrel‑like. When working for a big retailer, she says that she chose to stop contributing to her employer’s auto-enrolment pension.

“I opted out of it. I need the money now.” She explains: “I’d rather save for a house and then at least I have something to show for it”.

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

Dr Suzy Morrissey, deputy director at the Pensions Policy Institute (PPI), believes that alongside how much Gen Z save privately, another factor will widen the divide: far more of them will be renting.

“Renting in retirement increases your chances of pensioner poverty, and they do face challenges to save, as younger people, that previous generations didn’t face when they were at the same age,” she says. “If we have people paying rent in retirement who don’t have large pension pots to cover those expenses, then that equals higher risk of pensioner poverty.”

But Morrissey sees a silver lining: pensions auto-enrollment, the system that automatically puts most employees into a workplace pension unless they opt out. If they’ve been employees, “they will have spent their working life contributing into a pension pot, and they will be the first generation that will have spent their whole life doing that.”

It’ll be a backstop for many, but the minimum contribution rate is unlikely to be enough for a comfortable retirement. It’s not automatic for the self-employed and people like Ashleigh have opted out because of immediate financial pressures, so it looks like plenty won’t see the benefit of that silver lining.