Having grown up amidst economic uncertainty and faced with the challenges of the modern world, Gen Z is raising the bar for employers by setting higher expectations for benefit schemes. Auto-enrolment is helping Gen Z start pension savings earlier, more than the generations before them. But the lack of pension reform commitment could leave Gen Z missing out on funds which would help towards retirement, until the changes to workplace pensions for young workers have been enforced.
Businesses need to ensure they are prepared to fully engage this new generation of workers, offering competitive pension benefit schemes that will attract and retain their workforce.
Unlike previous generations, who may have deferred retirement planning until later in their careers, Gen Z individuals want to be informed about the options available to them and are taking proactive steps to think about their long-term stability from an early age.
However, this has also led to reduced loyalty to employers, with Gen Z 19 per cent more likely to plan to change employers according to research from PWC. They also have more access to information on their employers and can therefore make more informed comparisons between job opportunities.
Many Gen Z’ers also want career flexibility. This is in part due to the pandemic allowing room for less traditional workforce models, with hybrid working being introduced in the last 12-18 months by 73.9 per cent of participants surveyed in Gallagher’s UK 2023 Benefits Strategy & Benchmarking Survey.
The pension benefits that Gen Z deem a requirement are not merely perks but are viewed as essential components of a comprehensive employee benefits package. Employers must live up to these expectations by employing an all-inclusive offering and having the infrastructure in place that will attract and retain Gen Z with their benefit systems.
A robust retirement plan is a key part of this, with 93 per cent of Gen Z saying that a retirement savings plan is important to them. AE schemes are valued highly by Gen Z, with 55 per cent of Gen Z’ers saying they value auto-enrolment in a retirement savings plan when it comes to financial support.
Further, according to our Benefits Strategy & Benchmarking Survey, company-funded private healthcare schemes, including dental plans and healthcare cash plans, are increasing in popularity with 80 per cent of employers now offering access in some way, shape or form, so firms should take this into account when devising strategies for a Gen Z workforce.
A hands-on approach is also expected, with Gen Z looking for continuous support from their employers. One study found that 30 per cent of Gen Z value professional management of fund allocations in a retirement savings plan, and 27 per cent value personalised financial advice or counselling. Employers must demonstrate their support through valuable benefits, such as emergency savings options, which can help to address Gen Z’s concerns about financial stability.
However, this support shouldn’t stop at financial assistance. Our survey found 81 per cent of employers now offer wellbeing support aimed at the working population.
Pay also functions as a hygiene factor for Gen Z; however, for it to fulfil this role, employers must demonstrate both internally and externally that the organisation offers compensation at an appropriate level.
According to our Benefits Strategy & Benchmarking survey, 57 per cent of respondents expressed their intention to assess compensation design within the next 12 months due to the prevailing economic conditions.
Further, Gen Z look for clear communication from employers, with transparency surrounding the benefits on offer. Employers should therefore employ clarity in their pension plan communication to build trust and improve employee satisfaction and retention. They need to leverage pension benefits as a competitive advantage in recruitment, and discuss how competitive pension schemes can differentiate them in the talent market.
Competitive pension schemes are crucial in meeting Gen Z’s expectations and driving employee engagement. Firms must prioritise the development of tailored pension schemes to meet the evolving needs of Gen Z employees and proactively adapt their offerings to retain Gen Z talent in an increasingly competitive market.
