Employees may decide that this puts too big a dent in their monthly pay packet and opt out, but they could be missing out on £542,000, according to analysis from pension provider Aegon.

This is the amount a 22 year old with average earnings of £27,404 could amass by the time they reach pension age, including their employers’ contributions, government bonus and investment returns.

Since its introduction in 2012, over 10 million people have been automatically enrolled into a workplace pension. The minimum contribution levels have risen from 2% to 5%, but from 6th April, this will rise further to a level of 8%, incorporating a 4% employee contribution, 3% employer contribution and government tax relief of 1%.

Government figures show around 9% of employees opted-out of their workplace pension in the tax year 2016/17, although rises in minimum contributions levels don’t appear to have affected opt-out rates.

Kate Smith, head of pensions at Aegon, said: “Choosing to opt out of a workplace pension can be a costly mistake. Immediate priorities such as saving for a house deposit will inevitably be the focus for those starting on the career ladder. However, young employees should not choose to forgo their pension contributions as they could stand to lose out on a significant pension pot if they fail to rejoin.

“From April 6th, an individual contributing £40 a month from take-home pay into their pension will receive a £10 bonus from the government, assuming 20% tax relief, and £30 from their employer. This brings the total amount going into their pension to £80 and the decision to opt out effectively means throwing away these benefits.

“Workplace pensions are beginning to turn around the UK’s savings habits. For many employees, it is their main means of savings for retirement and we should applaud the role that auto-enrolment has played in this. However, for people to achieve the level of retirement income they aspire to they need to save more.”