Auto-enrolment five years on


Auto-enrolment five years on: minimum contributions provide £2,400 boost to pension pots, becoming £11,400 over the next five years.

  • Those on an average salary, making minimum contributions from October 2012, would now have a fund of £2,440
  • Saving the minimum for another five years, would build a pot of £11,430, from just £4,600 of personal contributions
  • However, increasing contributions to 10% this month would generate a £15,420 pot in five years, more than doubling to £33,480 after ten years

October marks five years since auto-enrolment launched in the UK, with a minimum workplace pension contribution of 2% of income. During this half decade, more than 8 million people have been auto-enrolled into a workplace scheme*, and according to new analysis from Aegon, for the first wave of employers taking part in the programme, those 2% minimum contributions will have already generated a pension pot of £2,440. As minimum contributions rise to 5% in April 2018, and 8% in April 2019, those choosing to remain enrolled for the next five years will have built a pot of £11,430.

 Auto-enrolment was introduced by the government in October 2012 to reverse the decline in the number of pension savers, using inertia to get more people saving in a workplace pension. As soon as someone meets the eligibility conditions, they are automatically enrolled into a workplace pension and start saving a proportion of their salary, as well as receiving an employer contribution. While one can chose to opt-out, this would mean surrendering the employer contribution.

Aegon’s analysis finds that someone on an average income of £26,500 (2017/18), who was auto-enrolled in October 2012, paying the minimum 2% of their income as pension contributions, and receiving the average investment returns experienced over the last five years, would now have a fund of £2,440. This total comprises £786 from employee contributions, £983 from employer contributions, £197 from government tax relief, and £474 accrued through investment returns.

Over the coming five years, as minimum contribution levels rise to 5% in April 2018, and then 8% in April 2019, the same individual would build up a fund of £11,430 by 2022, assuming a 4.25% investment growth**. This is an increase of more than fourfold and shows the benefits of the increased contributions and assumed year on year investment growth. Of that sum, £4,600 would be from their income, meaning that the extra £6,830 has been added from a combination of employer contributions, tax relief and investment growth.

Building up £11,430 over ten years is a strong start, especially when many people will work four or five times longer. However, the hope is that people, and their employers, will choose to contribute more. An average earner saving the minimum 2% since 2012, but upping their combined contribution to 10% from this month, would boost their pot to £15,420 over the next five years, and more than double to £33,480 over ten years.

Kate Smith, Head of Pensions at Aegon said: “Five years on, it is hugely encouraging to see that auto-enrolment is having the desired effect, improving the financial preparedness of workers right across the UK. However, it’s important people don’t become complacent and think that they’re home and dry by simply paying the minimum contributions. Clearly, having some savings is better than having none, so those that have contributed 2% of ‘band earnings’ over the last few years are on the right track. But contribution levels do need to increase significantly if people are going to have enough to carry them through retirement comfortably.

“The good news is that minimum contribution levels are set to rise from next April, so people will soon be saving more unless they choose to opt out. But people need to think very carefully before deciding to give on pension savings and lose their employer’s contribution. People in the UK are living longer, and social care costs are now are falling at the feet of more and more retirees. It’s essential that people plan for these sorts of eventualities, and as these figures show, just contributing a little bit more really pays off in the long run. An adviser can help arrive at the right contribution to meet retirement aspirations.”

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* The Pensions Regulator ‘Automatic enrolment declaration of compliance report’, September 2017

** These figures are just examples. They’re not guaranteed. Don’t forget that inflation will reduce what you could buy in the future with the amounts shown. In this projection we’ve assumed a salary of £26,500 will increase by 4.25% each year. The figures are based on an illustration created for this purpose. 


Aegon has calculated the estimated pension pot of an average income earner (£26,500 p/a) who started saving in October 2012, five years ago, assuming investment growth over the last five years of 9.01% and 4.25% investment growth going forward, after deducting charges. Numbers have been rounded and the assumptions have been simplified in terms of timing and across growth rates.                         

Further information

Neil Cameron

Media Relations Manager
Aegon UK
Tel: 0131 549 3393
Mob: 07972 403 757

Notes to Editors

  • In the UK, Aegon offers retirement, workplace savings and protection solutions to around two million customers, and employs more than 3,450 staff. More information:

  • As an international life insurance, pensions and asset management company based in The Hague, Aegon has businesses in over twenty five markets in the Americas, Europe and Asia. Aegon companies employ over 28,000 people and have millions of customers across the globe. Further information:

Aegon is a brand name of Scottish Equitable plc. Scottish Equitable plc, registered office: Edinburgh Park, Edinburgh EH12 9SE. Registered in Scotland (No. 144517). Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register number 165548. An Aegon company.  

© 2017 Aegon UK plc