Only half of Gen-Z professionals think pensions are important, and a similar proportion have either currently or previously paused contributions into their workplace pension plan.
The research, from recruitment agency Robert Walters, found that 21 per cent of this cohort (aged 27 or under) are not currently saving at all towards retirement, and a third are only savings the statutory minimum into their auto-enrolment pensions. A further 18 per cent said that retirement savings ‘aren’t on their mind’ at present.
Perhaps not surprisingly the research found a contrast among older Gen X workers, aged between 44 and 59 who are now prioritising pension contributions. Almost half of this group (47 per cent) are receiving contributions of between 7 and 10 per cent into their pensions.
Overall, 36 per cent of professionals over the age of 27 are currently saving between 6-10 per cent towards their pension, compared to just 26 per cent of Gen-Z professionals.
Robert Walters says this research shows that financial pressures being put on young professionals, with living and rental costs rising faster than salaries, resulting in many cutting back on pension contributions. The research also found that as well as earning less, due to their age and lack of seniority, Gen Z were also less likely to receive other financial benefits, such as bonuses and car allowances, when compared to older peers.
Robert Walters CEO of UK & Ireland Chris Eldridge urged younger workers not to overlook the importance of longer-term savings: “Young professionals neglecting their pension contributions now could see their retirement postponed later in life due to insufficient savings,” he said.
The research showed that it isn’t just Gen-Z who should be worried about their future financial health — only 34 per cent of UK professionals (of all ages) are satisfied with their employer’s contributions to their pension.
While many companies pay just the statutory minimum into company pensions schemes, Robert Walters highlighted that a number of FTSE-listed companies like BP and Unilever have strengthened their pension contributions in recent years — offering up to 20-25 per cent respectively. Many of these higher allocations are structured to allows employees decide whether to use the full amount towards pension savings, or to use some as a salary top-up.
Eldridge adds: “Professionals under-30 are at a crucial time in their career to craft a solid foundation for their pension pot. But, as our research suggests, many are not getting the chance to do so with their current employer.
“However – professionals should calculate what they can afford to set aside each month – even contributing 4 per cent of your annual salary can be brought up by a minimum employer contribution to a healthier 7 per cent — this provides a solid basis which can then be built up.”