Pension Calculator

UK pensions enjoy the most generous tax treatment of any savings vehicle: contributions receive tax relief at your marginal rate (20%, 40% or 45%), growth inside the pot is tax-free, and from age 55 (rising to 57 from April 2028) you can take 25% as a tax-free lump sum. The remaining 75% is taxed as income when drawn — usually in retirement at lower rates than during your career. The Annual Allowance (AA) is £60,000 in 2025/26 (or 100% of relevant earnings if lower), tapered from £60,000 down to £10,000 for those with adjusted income above £260,000. The Money Purchase Annual Allowance (MPAA) of £10,000 kicks in if you have already flexibly accessed a defined contribution pension. The Lifetime Allowance was abolished in April 2024 and replaced by a Lump Sum Allowance (£268,275) and Lump Sum and Death Benefit Allowance (£1,073,100). This calculator projects your pension pot at retirement and the resulting annual income, taking into account current pot, monthly contributions (yours plus employer), expected investment return, retirement age and inflation. It applies the 25% tax-free lump sum, then converts the residual pot into income via either a 4% safe-withdrawal rate (UK equity-bond drawdown standard) or an annuity quote based on current gilt yields. With pensions, a typical UK rule of thumb suggests saving half your age as a percentage of salary from the age you start — so a 30-year-old starts at 15%, a 40-year-old at 20%, and so on. Workplace auto-enrolment requires a minimum 8% combined contribution (5% employee, 3% employer) on qualifying earnings between £6,240 and £50,270. Most people should consider contributing more — particularly higher-rate taxpayers, where every £1,000 of pension contribution costs only £600 after relief, and salary sacrifice arrangements add NI savings on top (saving you up to 47% net cost for a £1,000 of pension if your employer passes back the employer NI saving). The calculator does not handle defined benefit (final-salary) pensions, public sector pensions like NHS or Teachers’ Pension, drawdown vs annuity comparisons in detail, or international pensions held under QROPS rules. For State Pension projection use the State Pension Forecast Calculator. For salary sacrifice modelling use the Salary Sacrifice Calculator. Combine all three for a realistic retirement income picture: typical UK retirees aim for two-thirds of pre-retirement income, with State Pension covering ~£12,000 of that and workplace/personal pensions filling the rest.