Why do only half of Gen Z professionals think pensions are important?
Just 56 per cent of Gen Z think saving for a pension is important compared to 77 per cent of Gen X – and that spells trouble for their retirement, says Daniel Harris
Generation Z professionals may not be taking their pension contributions seriously enough – a mindset which could potentially impact their future retirement.
New research from Robert Walters found that only 56 per cent of Gen Z professionals consider pensions as ‘important’. This is in sharp contrast to their Gen X counterparts, of whom 77 per cent prioritise their pension contributions.
Adding to concerns, 51 per cent of Gen Z professionals have at some point paused their pension contributions in order to use that money for their daily costs. While these figures are troubling, they’re not surprising, considering the rising living and rental costs making it more challenging for all professionals to save for retirement.
This, however, is not just about numbers. It is about a mindset that has started to take shape within the Gen Z workforce that could jeopardise their financial security in the long run.
Gen Z – who are aged up to 27 years – are at an important stage in their professional lives. This is the time to build a solid foundation for their retirement, yet many are not giving themselves the chance to do so.
But why is there such a stark difference in the importance that Gen Z and Gen X place on pensions? Perhaps it is a lack of understanding about the importance of early career pension contributions. Or perhaps young professionals are too busy considering the present, making it difficult for them to think about retirement in the distant future.
Whatever the reason, it is clear that Gen Z professionals need guidance and support to understand the importance of saving for their retirement. The general rule of thumb for the percentage you should be saving towards your pension is half your age, but it’s not a mandatory obligation. Truly, any amount that young professionals can afford to set aside now can create that basis which could help them considerably in the future.
However, we shouldn’t place all the onus on young people themselves. Companies must also provide the necessary support. This means investing in their employees’ futures by offering meaningful financial benefits that will help them build a secure retirement. After all, the financial health of employees is directly tied to the health of the company.
Unfortunately, the current scenario is not encouraging. Gen Z professionals are the least likely to receive any financial benefits such as an annual bonus, car allowance, or tuition contributions. This only adds to their financial woes and makes it even more challenging for them to save for their retirement.
My advice to young professionals is to always consider their financial benefits when considering a new role – don’t be afraid to ask what an employers’ pension contributions are as well as if they offer any other financial benefits.
Gen Z need to understand the importance of early and consistent pension contributions but also need to step up their game and offer meaningful financial benefits that will help their employees secure a comfortable retirement. It is not just about the immediate gains, but about securing a future that is financially stable and secure.
Daniel Harris, Director of Robert Walters London and South East