UK Gen Z workers opt out of pensions as living costs bite - Punch Newspapers
Young workers in the UK are increasingly opting out of workplace pension schemes as rising living costs force them to prioritise immediate financial needs over retirement savings, the BBC reports on Thursday. “A growing number of Gen Z and millennials are opting out of these schemes due to cost-of-living pressures and the government has warned they could be on track for lower private pension incomes than people retiring today,” the report read. One of them is 26-year-old Hassan Nassar, a trainee doctor in England, who stopped paying about £430 monthly into his NHS workplace pension in September. Nassar said he needed the money to support a sick family member, save for his first home and meet rent and student loan repayments. He estimates opting out could cost him between £5,000 and £10,000 in future retirement income because of the compound growth he would miss.See more Punch stories on Google.Add Punch on Google While most people in the UK are eligible for a state pension, it provides a basic level of retirement income, meaning many workers rely on workplace or private pensions to supplement it. “People will say, you’re silly, look at what you’ll be missing out in the future. But I need to look at what I’d be losing now if I didn’t opt out,” he told the BBC. Another young worker, 22-year-old Evie from Cornwall, said she opted out because she needed to cover rent, food and transport while saving towards a house and car. “How can I save for a house, how can I save for a car and afford my outgoings? I don’t want to just work day in, day out to live, I want to work to have a life,” she said. The UK Department for Work and Pensions said about 22.6 million people, or 90 per cent of those eligible for automatic enrolment, were paying into workplace pensions, while about 2.5 million were not. Pensions Minister Torsten Bell warned that a growing number of young workers were not saving enough for retirement. “There is a danger tomorrow’s retirees are on track for lower private pension incomes than today’s,” he told the BBC. Financial adviser April Leeson said young workers should consider the long-term impact of stopping pension contributions, particularly the loss of employer contributions and compound growth. She said money saved in a person’s 20s could have decades to grow before retirement. Okiki Adeduyite Okiki is a journalist with over seven years experience covering politics, foreign news, society, entertainment and the film industry.
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