Why Gen Z are planning for life without a state pension
Joel has finally secured his first graduate engineering role after several years in lower-paid positions. In his early 20s, living with his parents in London, he has chosen to increase his contributions to his workplace pension rather than spend the extra income on holidays or a house deposit.
The reason behind this decision is his skepticism about receiving a state pension. Approximately half of Generation Z (born 1997–2012) do not expect the state pension to be available when they retire. Growing up amid frequent reports on an ageing population, a shrinking working-age demographic, and financial pressures on government budgets, Joel believes his generation will bear the consequences.
"I don't believe that I'll be a recipient of a state pension. I know a lot of people my age don't think they're going to be... There just won't be enough money," he says.
While retirement often feels distant for those in their 20s, a new sentiment among today’s under-30s is emerging: not only distance but doubt.
"It just mathematically doesn't make sense… There has to get to a point where that state pension is taking up too much of the budget and can't exist in the way that it exists right now," Joel explains.
The state pension age is increasing. From April, the eligibility age began rising from 66 to 67 by March 2028, with plans to increase it to 68 in about 20 years, possibly sooner pending an independent government review.
Connor, a 27-year-old retail manager who contacted BBC Your Voice, expresses frustration over these changes, saying,
"The goalpost keeps moving. At the minute I'll be 68 by the time I can retire, but I do think I'll be probably closer to 75, if I'm honest."
Currently, more than 13 million people (19% of the population) are of state pension age. By 2050, even with the pension age rising to 68, this group is projected to exceed 15 million, nearly a quarter of the population, and is expected to approach 17 million by the 2070s. This means a larger number of pensioners and a proportionally smaller working population contributing taxes to fund pensions.
Simultaneously, nearly half of working-age adults do not contribute to private pension schemes, leaving many reliant solely on the state pension. With pensioner relative poverty rates at 14%, the challenges of depending solely on the state pension are evident.
Experts caution that if an entire generation loses faith in the state pension's future, it may lead to riskier investments, overly cautious financial behavior, or a failure to save altogether.
Is a significant pension crisis looming for Gen Z? Could this generation redefine retirement?
Scrapping the triple lock
For those reaching state pension age today, qualifying after 35 years of National Insurance contributions, the weekly pension is £241.30.
This amount increases annually to keep pace with living costs, guaranteed since 2011 by the triple lock system, which raises pensions by the highest of inflation, average earnings, or 2.5%.
Recently, calls to revise these rules have intensified. The Resolution Foundation, a centre-left think tank, advocates ending the triple lock, arguing it unfairly prioritizes pensioners over working-age adults and children.
The Tony Blair Institute (TBI), founded by the former prime minister, proposes abolishing the state pension entirely, replacing it with a "Lifespan Fund." Thomas Smith, TBI's director of economic policy, states,
"Britain's state pension system was built for a different era. We can't keep pouring money into a system that is increasingly unaffordable."
TBI suggests ending the triple lock and allowing early access to portions of the state pension for those facing redundancy or frequent job changes.
Connor from Chesterfield finds this appealing as he faces redundancy at a global cosmetics firm. The ability to withdraw some future pension funds could help him manage financially.
"There's not that many jobs out there at the minute, unfortunately. I still live at home with my parents luckily, but I pay board to them. I still have a car payment, I still have my insurance to pay."
Former pensions minister Steve Webb opposes these changes, calling them "a huge backward step." He values the current system's simplicity and warns against replacing it with a complex, intrusive scheme that would take decades to implement.
The government has committed to maintaining the triple lock for the remainder of this parliament. The Pensions Commission, an independent body reviewing UK private pensions, is exploring ways to ensure secure retirements for future pensioners.
It is likely that those currently in their 20s will not benefit from a triple-locked pension, making it harder to live on the state pension alone as its value may increase more slowly than essential costs.
Discussion often turns to how to sustain the state pension long-term, with means-testing frequently proposed. Currently, very low-income pensioners may receive Pension Credit, an additional benefit. Joel believes more radical measures may be necessary.
"I don't think a means-tested state pension is necessarily a bad thing. But it would be a bad thing if it only applies to people in 50 years and not now when we should be saving some of that money."
Opting-out
Joel, the engineer, is cautious about the future of the state pension and is increasing his private pension contributions despite the cost-of-living pressures.
"I'm going to have to increase the amount of my paycheck that goes into a private pension, which obviously isn't good with cost of living through the roof," he says.
The scale of savings required adds to concerns. Investment firm Rathbones estimates a single person retiring today at 65 (with the state pension) needs approximately £796,000 in savings for a comfortable retirement. For a 25-year-old today, this rises to about £1.68 million with the state pension and exceeds £2.4 million without it.
Joel notes that many peers are considering opting out of private and workplace pensions to invest independently, often in cryptocurrencies or index funds.
"There's a sense, whether it's right or wrong, that that's more secure than putting it in a pension where they're also going to take a chip on top."
While individual investments may yield higher returns, they carry significant risks.
Behavioral economics suggests loss of trust in a system can lead to opting out or overcompensating, both of which have drawbacks. Saving more in private pensions may limit current lifestyle options, while opting out can result in riskier or no retirement savings.
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In Manchester, 23-year-old Ashleigh shares Joel's skepticism about the state pension's future:
"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."
On a lower income, Ashleigh opted out of her employer's auto-enrolment pension while working for a major retailer.
"I opted out of it. I need the money now." She adds, "I'd rather save for a house and then at least I have something to show for it."
Experts warn this could widen the retirement wealth gap.
Dr Suzy Morrissey, deputy director at the Pensions Policy Institute (PPI), highlights that more Gen Z individuals will rent in retirement, increasing pensioner poverty risk.
"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 explains. "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."
However, Morrissey notes a positive aspect: pensions auto-enrolment ensures many will have contributed to a pension pot throughout their working lives, a first for any generation.
While this provides a safety net, the minimum contribution rates may be insufficient for comfortable retirement. It is not mandatory for the self-employed, and some like Ashleigh have opted out due to financial pressures, meaning many may not benefit fully.
Grown-up gap years
Some respond to retirement uncertainty by focusing on the present.
Lauren from Hull says,
"Money always comes back, time doesn't. The world is so vast, we shouldn't wait till the last 10/20 years of our lives to go out and see it!"
At 24, she plans to take six months off from her job as a business coordinator. Many in her generation are taking regular career breaks or "mini retirements." HSBC's 2025 UK survey found 63% of Gen Z intend to take at least one mini-retirement, compared to 32% of Gen X and 13% of Boomers.
Lauren adds,
"The majority of my friends don't pay into pensions and instead decide to take their whole wage [after taxes] and spend it how they see fit. A large proportion goes on travels or holidays."
"I currently don't pay into a pension, actually I never have. I'd way rather have my money now and use it to live life," she says.
The experience of the Waspi women—born in the 1950s and affected by poorly communicated increases in the state pension age—serves as a warning. Their financial difficulties highlight how pension costs may become apparent too late to adjust plans.
If Gen Z's concerns prove accurate and the state pension becomes less reliable, many will need to adopt new strategies regarding retirement, savings, and life choices to navigate the evolving landscape.
Additional reporting by Kris Bramwell and Harriet Whitehead
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