Gen Z pension opt-outs surge as cost-of-living crisis forces retirement savings trade-offs

Hassan Nassar, 26, made a choice that millions of young British workers are now making: he stopped feeding money into his pension. The trainee GP working in the West Midlands had been setting aside roughly £430 each month into his NHS workplace scheme, but by early September he couldn't sustain it anymore. He needed the cash for immediate things—helping a sick family member, saving toward a first home, covering rent, managing student loan repayments. The math of his situation left no room for the future.

He knows what he's giving up. By pausing contributions now, he estimates he'll lose somewhere between £5,000 and £10,000 in retirement income, money that would have compounded over decades. "People will say, you're silly, look at what you'll be missing out in the future," he told the BBC. "But I need to look at what I'd be losing now if I didn't opt out." That tension—between the immediate and the eventual—is reshaping how a generation thinks about retirement.

The numbers tell the story. Among workers aged 22 to 29 who recently started jobs, opt-out rates have climbed to 11.5% in the three months ending December last year, nearly double the 6.6% rate from the same period in 2020. For those in their thirties, the jump is steeper still: from 7.4% to 12.7%. These are people who were automatically enrolled in workplace pensions—a system designed to protect workers from themselves, to build retirement savings without requiring active choice. Now they're actively choosing out, and the government is watching with concern. Pensions Minister Torsten Bell warned that "a rising number of young workers aren't saving, and overall there is a danger tomorrow's retirees are on track for lower private pension incomes than today's."

The system itself is straightforward. Employers must enroll workers aged 22 and above who earn over £10,000 into a pension scheme. A percentage—usually around 5%—comes directly from the worker's pay, with tax relief added. The employer contributes a minimum amount on top. For Hassan, that meant he was paying 10.7% of his gross earnings while the NHS added a substantial sum. But the NHS, like some employers, doesn't allow staff to reduce contributions when money gets tight. It's all or nothing. So he chose nothing, at least for now.

Evie, 22, a recent drama school graduate working at a London events company, faced the same wall. She never entered the pension scheme in the first place. With £800 in monthly rent, food costs, and travel expenses, she couldn't make the math work. "How can I save for a house, how can I save for a car and afford my outgoings?" she asked. "I don't want to just work day in, day out to live, I want to work to have a life." The question cuts to something deeper than budgeting—it's about whether young workers can afford to think about retirement at all when the present is this expensive.

Financial advisors see the danger clearly. April Leeson, from The Private Office, a chartered financial advice firm, urges people not to stop pension contributions if they can help it, even if that means reducing them rather than eliminating them entirely. The math is brutal in its simplicity: £100 saved in your twenties, compounded at 4% annually over 30 years, becomes far more than £100 saved 15 or 20 years later. And there's the employer contribution—free money—that disappears the moment you opt out. "You really need to think of your future self and what that person will need to retire comfortably," Leeson says.

Kharlee, 47, a teacher in South East London, is living the consequences of those decisions made years earlier. She stopped contributing to her workplace pension twice over the past five years, each time for financial reasons. She estimates she missed out on roughly £5,000 in savings. She's in better financial shape now, but recently became self-employed and lost access to a private pension scheme altogether. "I would like to feel my pension is secure, and I don't feel like that," she said. "I worry I'm not going to be able to live comfortably at the age of retirement."

Hassan remains optimistic about his own future. He's confident that over a 30 to 40-year career, he'll accumulate enough to retire on, and he's determined to rejoin the pension scheme as soon as he can afford to. But the broader picture is darker. Of the roughly 22.6 million people eligible for automatic enrollment pensions, about 90% are paying in. That leaves 2.5 million who are not—and the gap is widening, especially among the young. The government's warning is clear: if this trend continues, an entire generation will reach retirement with significantly less saved than those retiring today, relying on a state pension that provides only a minimum level of income. The choice Hassan and Evie and millions like them are making now will echo through decades they haven't yet lived.