Even 8% would see an income of £3800
You need to distinguish growth during the accumulation stage from growth during the drawdown stage.
During accumulation you can ride the rollercoaster and accept more risk for greater probable return. Some IFAs I know aim for 10% p/a on their own portfolios, but would be strung up by the goolies (by the regulators) if they put customers money in such a risky portfolio. Aiming for more than about 8% simply isn't allowed.
However, during the drawdown stage it is considered best to switch out of high risk, high return stuff in favour of steady eddy stuff which is much less volatile. It won't grow as much, but on the other hand it won't drop much during a stock market crash either. Once you switch out of the high risk/high return stuff the returns will drop from 8% to perhaps only 4%.
It would be fair to say that my portfolio is very aggressive... Very little cash and no bonds, and only about 3% in greater europe.
My best performing fund is Black rock European Dynamic. Up 135% in 9 years. I also hold funds in China and India up by similar amounts. One pension pot invested in various global funds rose by over 40% in one year - 2016. Did something happen in 2016?
BTW does a 3% annual deposit increase offset 3% annual inflation?
Basically yes. It's a rule of thumb. Some providers allow automatic increases linked to CPI, or RPI or Wage inflation.