Why Gen Z are planning for life without a state pension

Joel has finally landed his first graduate engineering job after several years of lower‑paid roles. He's in his early 20s, lives with his parents and works in London. But instead of splashing the extra cash, or saving up for holidays or a house deposit, he's decided to squirrel more of it away into his workplace pension.

The reason? He doesn't think he'll get any kind of state pension. Like Joel, around half of Gen Z (those born from 1997–2012) say they don't expect the state pension to exist by the time they retire. It's stark testimony to a generation growing up with constant headlines about an ageing population, a proportionally smaller working-age population, and the pressure that government finances are under. Joel's cohort believes it will be his generation that bears 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.

Retirement has always felt distant when you're in your 20s - something to think about later. But what's emerging among today's under‑30s is something different: not just 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 says.

The state pension age is shifting. At the start of April, the age at which you receive it began to gradually creep up, rising from 66 years to 67 years by March 2028. It's due to go up again in 20 years' time to 68, though that might happen earlier as the government has an ongoing independent review.

That's a frustration for 27‑year‑old retail manager Connor, who says "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."

More than 13 million people - 19% of the population - are currently of state pension age. By 2050, even with the state pension age rising to 68, that group is projected to exceed 15 million people, nearly a quarter of the population, with numbers projected to climb towards 17 million by the 2070s. In other words, there will be lots more people qualifying for the state pension, and fewer working people, as a proportion, paying taxes into the pot to cover the bill.

At the same time, almost half of working‑age adults are not paying into a private pension pot. That means many will be relying solely on the state pension for their retirement income - and with relative poverty rates among pensioners now at 14%, we can already see how difficult that can be.

Experts warn that if a whole generation stops believing the state pension will be there, it could push people towards more risky investments, prompt overly restrictive behaviour, or lead others not to save at all.

The scale of what younger workers may need to save is daunting. Investment company Rathbones estimates that a single person retiring today at 65 (with the state pension) may need around £796,000 in savings to fund a "comfortable retirement". If the state pension remains, a 25‑year‑old today would need a pot of around £1.68m to retire comfortably as a single person. Without the state pension, the figure for Gen Z jumps to more than £2.4m.

Against this backdrop, Joel says many of his friends are considering opting out of private and workplace pensions altogether and investing independently instead, mostly in "crypto or index funds and things like that. "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."

It's possible that individual investment choices could earn more than a pension scheme, but it's a big gamble. Behavioural economics suggests that when people lose trust in a system, they tend to either opt out entirely or over‑compensate. Both can be problematic. Saving extra in a private pension may limit current life options, but opting out can leave many with riskier retirement savings, or indeed none at all.

In central Manchester, 23‑year‑old Ashleigh agrees with Joel that the state pension is unlikely to be coming her way: "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."

But as someone on a lower income, her pension choices are constrained. When working for a big retailer, she chose to stop contributing to her employer's auto-enrolment pension.

"I opted out of it. I need the money now. I'd rather save for a house and then at least I have something to show for it."

Some experts warn that the gap between rich and poor in retirement could widen significantly for this generation. Dr Suzy Morrissey, deputy director at the Pensions Policy Institute (PPI), believes that alongside how much Gen Z save privately, another factor will widen the divide: far more of them will be renting.

"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. 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."

But Morrissey sees a silver lining: pensions auto-enrollment, the system that automatically puts most employees into a workplace pension unless they opt out. If they've been employees, "they will have spent their working life contributing into a pension pot, and they will be the first generation that will have spent their whole life doing that." It'll be a backstop for many, but the minimum contribution rate is unlikely to be enough for a comfortable retirement. It's not automatic for the self-employed and people like Ashleigh have opted out because of immediate financial pressures, so it looks like plenty won't see the benefit of that silver lining.

For some, the response to an uncertain future is to focus 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's about to take six months off from her job as a business coordinator. She's one of a growing number planning to take regular career breaks, or "grown-up gap years", which many are terming "mini retirement". HSBC's 2025 UK survey found that 63% of Gen Z plan to take at least one mini‑retirement, compared with 32% of Gen X and 13% of Boomers.

"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."

There's a warning for Gen Z from the experience of the Waspi women - hundreds of thousands born in the 1950s who campaigners say have suffered because of poorly communicated rises in the state pension age. Their financial shock shows that costs may only become clear when it's too late to course-correct.

If Gen Z's suspicions are right, and the state pension becomes a less dependable part of income in later life, then more will have to take a totally different approach to retirement, savings and life choices to navigate the new landscape.