Hassan Nassar, a 26-year-old trainee GP working in the West Midlands, made a difficult decision in early September. Until then, he had been contributing approximately £430 monthly to his NHS workplace pension. Facing immediate financial pressures—caring for a sick family member, saving for his first home, and managing rent and student loan repayments—he chose to suspend his pension contributions for between six and 12 months. Yet he recognises the long-term price: he estimates losing between £5,000 and £10,000 in future retirement income due to forgone compound interest over decades.
"People will say, you're silly, look at what you'll be missing out in the future," he explains. "But I need to look at what I'd be losing now if I didn't opt out."
Why are young workers stepping back from pensions?
Across the UK, a growing proportion of younger employees are withdrawing from workplace pension schemes, driven by cost-of-living pressures that make immediate needs feel more urgent than distant retirement planning. The trend reflects a broader struggle among Gen Z and millennials to balance competing financial demands in an expensive economy.
Evie, 22, a recent drama school graduate working at a London events company, exemplifies this tension. She opted out of her workplace pension scheme, unable to reconcile the deduction with her other essential expenses: food, travel, and £800 monthly rent.
"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."
According to the Department for Work and Pensions' latest figures published in July 2026, opt-outs among newly enrolled workers rose to around 11–12% in the latest year, while the overall number of active savers stopping contributions remained broadly stable. Among 22 to 29-year-olds who recently started a job, 11.5% opted out in the three months to December 2025, up from 6.6% in the same period of 2020. For those aged 30 to 39, the figure climbed from 7.4% to 12.7% over the same timeframe.
What is the scale of the problem?
The automatic enrolment system requires all employers to place eligible workers—those aged 22 or above earning over £10,000 annually—into a workplace pension unless they actively opt out. A percentage, typically around 5%, is deducted from wages, supplemented by tax relief and a mandatory employer contribution. However, not all employers offer flexibility to reduce contributions during financial hardship, as Hassan discovered with the NHS.
According to DWP data released in July 2026, 90% of eligible employees were saving into a workplace pension in 2025, up one percentage point on 2024. This represents 22.6 million eligible employees actively contributing. Eligible employees saved £166.1 billion into workplace pensions in 2025, £63.5 billion more in real terms than in 2012. However, approximately 2.5 million eligible workers remain outside these schemes.
Pensions Minister Torsten Bell has 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."This concern is grounded in evidence: DWP research from 2023/24 found that 55% of working-age adults reported pension saving in the previous 12 months; among those not saving, 9% were eligible for automatic enrolment but had opted out or stopped saving.
Why does opting out now matter so much?
The financial impact of stepping back from pensions compounds dramatically over time. April Leeson, a chartered financial adviser at The Private Office, emphasises that workers should avoid suspending contributions if possible, even if reducing them instead. The reasoning is twofold: employees forfeit employer contributions they will never recover, and they lose decades of compound growth.
"The current minimum pension age is 57, so any money you save in your 20s will have at least 30 years to compound and grow. £100 saved now, compounded at 4% a year over 30 years, is going to be worth a lot more than £100 saved in 15 to 20 years' time."Leeson urges younger savers to consider their future needs:
"You really need to think of your future self and what that person will need to retire comfortably."
Starting pension saving at 18 rather than 22 could add approximately £12,600 to a typical saver's pension wealth by age 67, according to analysis by a major investment firm, illustrating how early contributions yield outsized returns.
What are the long-term consequences?
Kharlee, 47, a teacher from South East London, has experienced the regret that can follow pension interruptions. She suspended contributions twice over the past five years due to financial strain and estimates she missed out on saving approximately £5,000 into her pension pot. Though her circumstances have since improved, she recently became self-employed and is no longer covered by a private pension scheme—a situation she hopes to remedy.
"I would like to feel my pension is secure, and I don't feel like that. I worry I'm not going to be able to live comfortably at the age of retirement."
While most people in the UK will eventually receive a state pension, it provides only a baseline level of retirement income. The majority of retirees depend on private pensions to supplement this and maintain their standard of living. A shortfall in private pension savings can therefore translate directly into financial hardship in later life.
Hassan remains optimistic about his own retirement prospects, confident that over a 30 to 40-year career he will accumulate sufficient savings. He is determined to resume pension contributions as soon as his immediate financial pressures ease. His situation illustrates the tension many younger workers face: the genuine need for money today versus the abstract but substantial cost of delaying retirement savings.
What happens next for pension policy?
For the 2026–27 tax year, the automatic-enrolment earnings trigger remains £10,000, with lower and upper qualifying earnings limits set at £6,240 and £50,270 respectively. The government retains powers under the Pensions (Extension of Automatic Enrolment) Act 2023 to lower the minimum enrolment age from 22 to 18 and to calculate contributions from the first pound of earnings rather than only above the lower earnings limit, though no immediate changes have been announced.
Key Facts:
- Opt-outs among newly enrolled workers aged 22–29 rose to 11.5% in late 2025, nearly double the 6.6% rate in late 2020
- Hassan Nassar estimates his six to 12-month pension suspension could cost him £5,000–£10,000 in future retirement income
- 22.6 million eligible employees were actively saving into workplace pensions in 2025, with £166.1 billion contributed that year
- Starting pension contributions at 18 instead of 22 could add approximately £12,600 to retirement savings by age 67
- The state pension provides only baseline retirement income; most retirees rely on private pensions to maintain their living standards
