The Pensions Policy Institute (PPI) has urged policymakers and pension providers to adapt to help Gen Z’s retirement prospects which it warns will be hit by their ‘unique’ financial pressures.

It made the call in a new report, The Concerns of Gen Z, sponsored by the Institute and Faculty of Actuaries (IFoA).

The report examines the financial challenges facing Gen Z and how Gen Z-ers will shape their ability to achieve financial security in retirement.

Gen Z is usually defined as those born between the mid-1990s and the early 2010s. 

As the first generation to benefit universally from automatic enrolment (AE), Gen Z has early access to workplace pensions, the PPI report pointed out.

However, their ability to save is constrained by economic uncertainty, high student debt, unaffordable housing and changing employment patterns, the report said.

While AE provides a strong foundation, minimum contribution rates may be insufficient. A median earner saving at AE minimums could retire with a DC pension pot of £158,000, translating to just £13,000 per year (not including state pension).

Fragmented savings and small pension pots are also a growing issue. Those working in the gig economy lack access to employer pension provision, for example.

Digital platforms like TikTok and Instagram are primary sources of financial information, but unregulated guidance risks poor decision-making. Pension communication should align with Gen Z’s digital habits to improve engagement. Delays in marriage and parenthood reduce immediate financial pressures but concentrate them in later life, potentially affecting retirement planning.

The report analysed the challenges and considered potential policy measures to improve retirement outcomes for Gen Z and future generations. It concluded that policymakers and the pensions industry needs to consider several changes:

• Expand AE criteria to include gig workers and the self employed
• Review AE minimum contribution levels to ensure adequacy
• Policies need to be in place to ensure affordable housing to allow for long-term saving
• Pension continuity needs to be improved by making it easier to consolidate pots

Shantel Okello, policy researcher at the PPI said: “Gen Z’s retirement prospects will have long-term implications for pensions policy, economic stability, and social equity.”

She said that while automatic enrolment has expanded pension participation, rising living costs and insecure work make it harder for many young people to save enough for later life.

Ms Okello warned: “If these issues are left unaddressed, we risk a future where more people reach retirement without adequate savings. The report highlights the key barriers and potential levers for building a pensions system that better reflects the realities of modern working lives.”

She said that as Gen Z progresses in their careers, tackling the issues is critical, not just for their financial security, but for the long-term viability of the pensions system. Ms Okello said: "Policymakers and industry leaders have a chance to adapt pension policies to better support younger savers and build a more resilient system for the future.”