Four in 10 Gen Z workers are on track for retirement poverty if they remain at auto-enrolment contribution levels, according to research from Penfold.
The research found that younger people want to retire earlier and achieve greater financial freedom, but retirement saving can struggle to compete with more immediate financial priorities, with high housing costs and wider economic uncertainty are adding to these pressures.
Younger workers are also prioritising accessible and flexible savings options such as cash savings and ISAs.
According to analysis from JPMorgan Asset Management, Gen Z investors often prioritise ISAs over pensions because of their greater accessibility and flexibility. Research from the Society of Pension Professionals has also found that retirement saving remains a lower priority than other financial objectives for many younger workers.
Penfold says the findings highlight the need to improve understanding of retirement saving and help younger people see how pensions can support their longer-term financial goals.
It says making pensions more visible and easier to understand could help more people engage with retirement saving and understand the value of contributing earlier in their working lives.
Penfold co-founder Chris Eastwood says: “Pension planning still asks Gen Z to prioritise a future that is decades away, while many young people are focused on paying rent, saving for a home and managing the rising cost of living.
“Many younger people already know financial security is important and aspire to achieve greater financial freedom, including earlier retirement than previous generations. Yet pensions are often presented as a sacrifice today for security tomorrow, rather than a tool for building long-term financial confidence.
“If we want younger generations to take a more active role with pensions, we need to make them simpler to understand and more clearly connected to the financial goals people are already working towards. Technology that gives people a clearer picture of what they have already saved has a strong role to play.
Eastwood adds: “The development of Pensions Dashboards for the 2027/2028 financial year is a significant opportunity. When savers can see their pension savings in one place, retirement planning becomes more tangible and easier to act on.
“Rather than focus exclusively on retirement, we can broaden the conversation to include financial freedom and confidence. People are more likely to take action when they can clearly see the value of what they are building.”
