An increasing number of Gen Zers have stopped believing in pensions and are convinced they will never be able to stop working.
We have seen the FIRE (Financially Independent, Retire Early) believers, but we may now be seeing a lot more NERDs: the Never Ever Retiring Demographic.
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The term refers to a growing number of Gen Zers and millennials across the UK and Europe who feel they will never be able to retire and who, as a result, believe there is little point saving into a pension plan at all.
A recent study by People's Pension, a leading UK workplace pension provider, found that 47% of Gen Zers aged between 18 and 27 do not engage with their pension.
Despite having decades ahead of them, 12%, or 2.2 million young people, have already stopped saving for retirement altogether, believing they will have to work forever.
This shift stems mainly from the cost-of-living crisis affecting several parts of the world, which has made traditional life milestones such as buying a house, getting married, having children and retiring feel increasingly out of reach for many young people.
Stagnant wages and increasingly frequent rounds of surprise layoffs, particularly in sectors such as tech, have contributed to this instability, alongside geopolitical volatility fuelling inflation.
While socioeconomic and geopolitical factors have driven the rise of NERDs, another significant contributor has been a breakdown in how the financial services sector communicates with young people about these issues.
A widening divide
The survey results point to a stark divide between young people and the financial services sector, with 36% saying it does not properly communicate the advantages of saving for retirement.
Of these, 27% feel firms are mainly concerned with selling their products rather than education or raising awareness, while 16% take issue with the complicated language or jargon used.
Around 20% of these Gen Zers also said financial services providers often make pensions sound irrelevant and boring.
While only 13% of Gen Xers and Baby Boomers felt pension companies do not properly explain why pensions and savings matter for young people, 29% of Gen Zers felt this way.
Some 17% of Gen Zers also believed companies do not use the channels they actually engage with, compared with only 4% of previous generations.
Around 70% of Gen Zers said they would have saved if they had known that starting in their 20s could potentially double their retirement pot, compared with starting in their 30s.
Similarly, 63% said they were motivated by learning that tax relief and employer contributions could significantly boost their savings.
"In a world where financial doom dominates pension conversations, young savers are tuning out. Our research shows they are not disengaged because they don't care, they are disengaged because the messages aren't working. Scare tactics and jargon are alienating the very people we need to reach," said Kirsty Ross, proposition director at People's Pension, said in a release.
"What cuts through is honesty, simplicity and practical advice that shows how small steps today can have a huge impact tomorrow," she added.
What could help?
One of the most popular fixes Gen Zers identified was simple progress bars or goal trackers, cited by 31%.
Around 26% wanted to know they could start with a small amount, while 23% would like more examples of what people their age are doing.
For 22%, clear, bite-sized steps to follow would be useful, while for 19%, light-hearted, relatable stories would make a difference.
Taking this feedback into account, People's Pension has launched a new campaign, Pension Drop, to get more people talking about their pensions, using social media influencers, special events and lifestyle personalities.
"Looking back, I really wish I'd started earlier. Putting something away in your 20s or 30s can make a massive difference later, we're talking tens of thousands of pounds. And I get it, people are really struggling right now, money is tight, and even small luxuries like a takeaway can feel like a big deal," said Iain Stirling, comedian, TV presenter and Pension Drop ambassador, in comments released by People's Pension.
"But the reality is, your pension isn't all on you. Things like employer contributions and tax relief can give you a boost, so even small amounts go further than you think. It doesn't have to mean missing out today, just making smart moves so you don't miss out tomorrow," he added.
Stirling also advised young people to take a few practical steps, such as checking who their pension provider is and finding out if they have more than one.
He also emphasised the importance of matching what an employer is willing to contribute so as not to leave money on the table, as well as topping up pension contributions with every pay rise and every bonus.
