Two recent Pensions Policy Institute (PPI) reports shed light on the shifting landscape of UK retirement.
The concerns of Gen Z explores the financial realities of the youngest working cohort, while the generations deep-dive in the UK Pensions Framework 2025 provides a system-wide assessment of adequacy, sustainability and fairness.
Together they reveal that, despite reforms such as automatic enrolment (AE), younger adults face structural obstacles that could leave them with lower retirement incomes than previous generations.
Many Gen Z workers begin their careers with heavy financial burdens. High housing costs, student debt and rising living expenses reduce disposable income and limit the ability to save.
Rising care responsibilities, including supporting ageing relatives, add to these pressures and can interrupt contributions. More irregular employment patterns (gig work, self-employment) further restrict access to workplace pensions.
Gen Z men are expected to live to around 89 and women to around 92, meaning their savings must last for decades
Although AE gives most employees a pension pot, PPI modelling shows that saving only the minimum contribution would deliver a median pot of around £158,000 by retirement, translating to roughly £13,000 a year before the State Pension – a level unlikely to provide a comfortable standard of living.
Longer life expectancy adds risk. Gen Z men are expected to live to around 89 and women to around 92, meaning their savings must last for decades. With defined contribution (DC) pensions, individuals shoulder both investment and longevity risk.
Frequent job changes also create multiple small pots that can be eroded by charges; a £500 pot left untouched from age 22 could shrink to about £100 by 68.
Spotlight: What Gen Z really thinks about financial advice
Trust in the system is low. Nearly half of Gen Z doubt the State Pension will exist when they retire, and average trust in the pensions industry is only 4.6 out of 10.
Many young savers are unaware that their DC pots are invested, a gap that widens with age and limits engagement. Around 45% of Gen Z individuals use social media such as TikTok or Instagram for financial information, raising concerns about unregulated advice.
The UK Pensions Framework evaluates the retirement system against 41 indicators. Since the last review, only three improved while three deteriorated, leaving adequacy and fairness weak even as sustainability is relatively strong.
State Pension costs have increased at a slower pace than National Insurance contributions, and a number of defined benefit (DB) schemes are in surplus, which points to a broadly stable fiscal position.
Yet indicators of adequacy remain troubling. Employment rates have not recovered to pre-pandemic highs and healthy life expectancy has fallen. Real household incomes are broadly flat, meaning today’s workers must save a higher proportion of pay to achieve the retirement outcomes enjoyed by older cohorts.
Persistent inequalities, including gender and ethnic pay gaps, continue to shape both earnings and pension contributions
Housing wealth illustrates the generational divide: home ownership among current pensioners is at record levels, while younger adults struggle to buy, limiting their access to a key source of financial security in later life.
Persistent inequalities, including gender and ethnic pay gaps, continue to shape both earnings and pension contributions, reinforcing disparities in later-life income.
Viewed together, the two reports highlight a shared message: younger generations face greater barriers to retirement adequacy.
Both note that AE has successfully expanded pension coverage but that contribution levels remain too low to deliver strong outcomes. Gen Z’s low projected pots echo the Framework’s finding that adequacy is the weakest of its three pillars.
Gen Z’s scepticism about the State Pension and preference for digital information channels contrast with the more traditional behaviours of older savers
Housing is a critical point of divergence. The Framework shows older pensioners benefiting from decades of rising property wealth, while the Gen Z report documents how high rents and deposits limit saving. This wealth gap compounds inequalities and challenges the system’s fairness.
Attitudes and engagement also differ. Gen Z’s scepticism about the State Pension and preference for digital information channels contrast with the more traditional behaviours of older savers.
The combined findings point to several policy avenues for closing the generational gap.
Key options include:
• Supporting early and consistent saving: Higher AE contributions, phased in over time, could help younger workers build adequate pots.
• Cover non-traditional workers: Expanding pension access for gig workers and the self-employed could address gaps in participation.
• Consolidate small pots: Default consolidation could prevent erosion by charges and improve investment efficiency.
• Support engagement: Clear, digital-first communication and pensions dashboards could help guide informed decisions.
• Address wider cost pressures: Broader housing and debt policies, though outside the pension system, could free up income for retirement saving.
Younger adults face a combination of higher costs, longer retirements and fragmented careers that makes adequate saving harder than for previous generations
The PPI evidence indicates a system that is reasonably stable from a funding perspective but where adequacy and fairness are under pressure.
Younger adults (Gen Z and Millennials) face a combination of higher costs, longer retirements and fragmented careers that makes adequate saving harder than for previous generations.
The revived Pensions Commission provides opportunities to focus on adequacy and intergenerational fairness, ensuring the system delivers sustainable incomes for all age groups.
Shantel Okello is policy researcher at the Pensions Police Institute (PPI)
