How Gen Z workers engage with their pension today

Postponing pension saving by just five years in your twenties could result in £40,000 less in retirement. Here’s what you can do to help your Gen Z workers engage with their pension sooner rather than later.

Pension saving might not be top of the to-do the list for employees in their twenties, when retirement feels like a faraway concept. However, new research by Standard Life reveals that delaying saving could leave your Gen Z workers worse off in retirement.

The analysis finds that starting pension contributions aged 27 could mean £40,000 less in retirement than starting aged 22. In fact, the longer people wait to start contributing to their pension, the more they could miss out on in future.

Gen Z workers could see a smaller pension pot if they delay saving

Standard Life’s research shows that those who begin working on a salary of £25,000 per year and pay the minimum monthly auto-enrolment contributions (5% employee, 3% employer) from the age of 22, could have a total retirement fund of £210,000 by the age of 68, adjusted for inflation.

However, waiting just five years until age 27 to start contributing could result in a total pot of £170,000-£40,000 less.

Postponing for even longer could have an even bigger impact on your employees’ retirement pots:

Total retirement fund at age 68*
Started saving for retirement at 22 years old	Started saving for retirement at 27 years old	Started saving for retirement at 32 years old	Started saving for retirement at 37 years old	Started saving for retirement at 42 years old
£210,000	£170,000	£136,000	£107,000	£82,300
	-£40,000	-£74,000	-£103,000	-£127,700

^{*Assuming 3.50% salary growth per year, and 5% a year investment growth. Figures account for 2% inflation. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. Earning limits not applied.}

While your employees will be trying to strike a balance between putting money away for their future and managing their day-to-day costs, our research highlights the challenges that delaying saving for a number of years can create in the long run.

As an employer, you’re perfectly placed to help your younger workers realise the benefits of investing in their pension early on.

Here are some tips to help you encourage your employees to make the most of their pensions.

Tips to help Gen Z workers engage with their pensions

Showcase the benefits of your workplace pension scheme

Do your Gen Z workers know the advantages of having a workplace pension? Whether they’re in the dark or in need of a refresher, it’s a good idea to regularly communicate how your workplace pension works and the benefits it can bring.

For example, if you offer a matching scheme – where you match an employee’s additional pension contributions – consider running a targeted campaign to raise awareness amongst your younger employees.

Doing so could encourage them to pay in more than the minimum and help them maximise the benefits of their workplace pension.

If you’re with Standard Life for your workplace pension scheme, our ready-made campaign materials can help you get started with setting up an engaging communications campaign.

Offer a bonus? Promote awareness of salary sacrifice

If you offer employees a bonus, they could keep more of it in the long run by deciding to pay some or all of it into their pension using salary sacrifice. This could save them paying some tax and National Insurance (NI) – and could be a great way to give their pension savings a boost.

Younger employees just starting out in their career may not know they can do this, so consider boosting awareness by communicating the benefits and what they need to think about if they opt to use salary sacrifice.

It’s not suitable for everyone, so it’s important they understand all the pros and cons.

An added bonus: salary sacrifice can help you save on employer NI contributions too. Read Standard Life's How do salary sacrifice pensions work and what are the benefits to employers? article for more details.

Help employees manage their day-to-day finances

The better informed your employees are about their money, the more likely they are to feel confident making financial decisions – including about their pension.

Supporting your Gen Z workers with their wider financial wellbeing can make a big difference to their financial knowledge and confidence levels. And a good place to start is to encourage them to get a solid understanding of their spending.

To help, you could signpost to resources such as MoneyHelper. This has a range of budgeting tools that can help them break down what they spend into categories.

Standard Life workplace pension scheme members can also use our Money Mindset platform. This uses open finance technology to give employees a real-time view of their finances – including bank accounts, credit cards, and pensions – making it easier to budget and spot opportunities for increasing their pension contributions.

The information here is based on our understanding in July 2025.

Standard Life accepts no responsibility for information on external websites. These are provided for general information.