• This Pensions Engagement Season, Standard Life analysis shows the long-term impact of different employer pension packages on retirement outcomes
  • The analysis highlights that salary shouldn’t be the only monetary factor considered when taking on a job

When taking on a new job, salary is usually one of the biggest deciding factors, while the benefits and pension package can often be an afterthought. However, new analysis from Standard Life, part of Phoenix Group, demonstrates how the pension contribution levels a company offers can have a huge impact on retirement outcomes, and therefore job hunting is a key time to pay your pension some attention.

Someone that began working full-time at a company with a salary of £25,000 per year and paid the standard monthly auto-enrolment contributions (5% employee, 3% employer)3 from age of 22, would amass a total retirement fund of £459,000 at the age of 66*, not taking inflation into account. However, if they were to join a company on the same salary but with a more generous company pension scheme that paid an additional 2% (5% employee, 5% employer) from the age of 22, they would accumulate £574,000 by the age of 66* – an extremely significant £115,000 more than the standard contributions would achieve.

Contribution level and potential total retirement fund

Total retirement fund at age of 66*
Standard contributions of 5% employee and 3% employer Contributions of 5% employee and 4% employer Contributions of 5% employee and 5% employer Contributions of 5% employee and 6% employer Contributions of 5% employee and 7% employer Contributions of 5% employee and 8% employer Contributions of 5% employee and 9% employer Contributions of 5% employee and 10% employer
£459,000 £517,000 £574,000 £632,000 £689,000 £747,000 £804,000 £862,000
  +£58,000 +£115,000 +£173,000 +£230,000 +£288,000 +£345,000 +£403,000

*assuming £25,000 starting salary, 3.50% salary growth per year, and 5% a year investment growth. Figures are not reduced to take effect of inflation. Annual Management Charge of 0.75% assumed. The figures are an illustration and are not guaranteed. Earning limits not applied.

To emphasise this further if a company was to contribute even more, for example an additional 5% (5% employee, 8% employer) from the age of 22, a pension pot of £747,000 would be achieved – £288,000 more than standard.

Gail Izat, Managing Director for Workplace at Standard Life said: “These days, unless you work in the public sector, you’re very unlikely to have a Defined Benefit pension offering a guaranteed payment in retirement. Instead, your eventual pension pot will depend on how much you and your employer pay in throughout your career, as well as your investment returns. Crucially, workplace pension packages can massively differ, and it’s therefore important to understand what your employer is offering when deciding whether to start a new job. Our analysis shows that even a small increase in monthly pension contributions from your employer can have an extremely significant impact over the course of a career.

“For example, if you had two different jobs offers that pay the same salary, but one offer includes a pension package that pays just 2% more in pension contributions (5% employee and 3% employer vs 5% employee and 5% employer), this would produce £115k of additional savings by the time you retire. That’s the equivalent of around 42 months of average salary for a UK full time worker**. The more generous your employer’s pension package, the bigger impact it could have over time.

“Of course, there are many factors to consider when accepting a job offer, including salary, but it’s good to see your pension as part of the decision-making process. It’s worth taking time to understanding the short- and long-term impact on both your monthly income and pension savings, so you can weigh up what’s best for your individual circumstances.”



James Ikin
07519 556776

Darragh Leeson
Standard Life

Notes to editors:

1 Calculations assume the following:

Starting Salary £25,000
Starting Age 22
Investment Growth 5.00%
Salary Growth 3.50%
Annual Inflation 0.00%
Annual Investment Cost 0.75%

2 Calculations are intended only for the sole purpose of providing an illustration regarding the projection of savings and pensions. They should not be used with the intention to give an accurate representation of real-world outcomes


3 The changes incorporated in the extension to auto-enrolment which received Royal Assent on Tuesday 19 September 2023 will take time to implement, so making additional contributions now is a decision people weighing up jobs can take in the meantime to boost their retirement prospects.

About Standard Life

  • Standard Life is a brand that has been trusted to look after peoples’ life savings for nearly 200 years.
  • Today it proudly serves millions of customers who come to Standard Life directly, through advisers and through their employers’ pension scheme.
  • Standard Life is part of Phoenix Group, the largest long-term savings and retirement business in the UK. We’re proud to be building on nearly 200 years of Standard Life heritage together
  • Our products include a variety of Pensions, Bonds and Retirement options to suit people’s needs, helping our customers to invest and save for their future. We’re proud to offer a leading range of sustainable and responsible investment options.
  • We support our customers on their journey to and through retirement with comprehensive, easy-to-understand guidance so they can invest in the right way for their needs and plan a future they feel confident about.
  • The value of investments can go down as well as up and may be worth less than originally invested.

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