Finance & Business
Pension Calculator
Calculate your projected pension income and plan for a secure retirement.
Reviewed by the calculator.uk.com Team · Last reviewed 21 September 2026 · Our methodology
Enter your pension details to see projections
What £100 in your pension really costs
| Your tax band | Goes into pension | Cost to you | How you get the relief |
|---|---|---|---|
| Basic rate (20%) | £100 | £80 | Added by the provider automatically |
| Higher rate (40%) | £100 | £60 | Extra 20% reclaimed through Self Assessment |
| Additional rate (45%) | £100 | £55 | Extra 25% reclaimed through Self Assessment |
The higher rate relief is never added automatically, so it is easy to miss. Someone who pays £8,000 into a SIPP gets £10,000 invested; claiming the further £2,000 on their tax return brings the true cost down to £6,000. Claims can be backdated for four tax years.
Worked example: auto-enrolment minimums on £30,000
Minimum workplace pension contributions are 8% of "qualifying earnings": pay between £6,240 and £50,270, with at least 3% from the employer. For 2026/27 these thresholds, and the £10,000 earnings trigger for automatic enrolment, are unchanged.
- Qualifying earnings: £30,000 − £6,240 = £23,760
- Total minimum contribution: 8% = £1,900.80 a year (£158.40 a month)
- Employer pays 3% = £712.80
- Employee pays 5% = £1,188, of which £237.60 is tax relief, so it costs £950.40
That is only 6.3% of the full £30,000 salary. To check whether minimum contributions are enough, put £158.40 into the monthly contribution box above and see what pot it builds by your retirement age. Employer contributions above the minimum, or matching schemes, are effectively a pay rise worth asking about.
Key limits for 2026/27
| Annual allowance | £60,000 | Or 100% of your UK earnings if lower; unused allowance can be carried forward from the previous 3 tax years |
| Money purchase annual allowance | £10,000 | Applies once you have flexibly drawn taxable income from a defined contribution pension |
| Tapered annual allowance | Down to £10,000 | Starts when threshold income exceeds £200,000 and adjusted income exceeds £260,000 |
| Tax-free lump sum | 25% | Usually capped at £268,275 in total (the Lump Sum Allowance) |
| Full new State Pension | £241.30 a week | £12,547.60 a year; needs 35 qualifying years of NI, with a minimum of 10 for any payment |
How big a pot do you need?
The full new State Pension of £12,547.60 a year is now only £22.40 below the £12,570 Personal Allowance, so almost any private pension income on top of it is taxable at 20% or more. A common rule of thumb is that withdrawing 4% a year gives a reasonable chance of the money lasting 30 years: £20,000 a year from a private pension would need a pot of roughly £500,000. The State Pension age is rising from 66 to 67 between 2026 and 2028, so check yours on GOV.UK before relying on it.
Related to Pension Calculator
Our pension calculator helps you project your future pension pot and retirement income based on your current savings, contributions, and investment strategy. It uses compound interest calculations while accounting for inflation to provide realistic projections in today's money terms.
Real Returns Calculation
The calculator adjusts your expected investment return for inflation to show results in today's purchasing power. This is calculated using the formula: Real Return = ((1 + Nominal Return) / (1 + Inflation Rate)) - 1. This approach provides a more realistic view of your future pension's buying power.
Contribution Growth
The calculator combines your personal and employer contributions, applying compound growth over your investment timeline. It assumes contributions are made monthly and that investment returns are compounded annually, providing a detailed projection of your pension pot's growth.
Income Projection
To estimate sustainable retirement income, the calculator uses the widely-accepted 4% withdrawal rule. This suggests withdrawing 4% of your pension pot in the first year of retirement, with subsequent withdrawals adjusted for inflation, aiming to make your pension last through retirement.
The calculator provides several key metrics to help you understand your pension position and make informed decisions about your retirement planning. The results are presented in both numerical form and through an interactive graph showing the growth of your pension pot over time.
Final Pension Pot
This represents the projected total value of your pension savings at retirement, adjusted for inflation to show its value in today's money. This helps you understand the real purchasing power your pension will have when you retire.
Investment Gains
This shows how much of your final pension pot comes from investment returns rather than contributions. It helps illustrate the power of compound interest and the importance of starting pension savings early.
Projected Annual Income
Based on the 4% withdrawal rule, this indicates how much annual income your pension pot might sustainably provide throughout retirement. This can help you assess whether your current savings and contribution strategy aligns with your retirement income goals.
1. How much should I contribute to my pension?
A common rule of thumb is to contribute a percentage of your salary equal to half your age when you start saving. For example, if you start at age 30, aim to contribute 15% of your salary (including employer contributions). However, this is just a guideline - your ideal contribution level depends on your retirement goals, current age, and financial circumstances.
2. What investment return should I expect?
Historical data suggests that a diversified pension portfolio might achieve returns of 5-7% per year above inflation over the long term. However, returns can vary significantly and past performance doesn't guarantee future results. It's often prudent to use conservative estimates (like 5%) for planning purposes and adjust your strategy if you achieve better returns.
3. How does employer contribution affect my pension?
Employer contributions are essentially free money and can significantly boost your pension pot. For example, if your employer matches your contributions up to 5% of your salary, you could double your pension contributions without increasing your personal contribution. Always try to contribute enough to maximize your employer's matching contribution.
4. Is the 4% withdrawal rule reliable?
The 4% rule is based on historical research suggesting that withdrawing 4% of your initial retirement savings, adjusted for inflation each year, provides a high probability of your money lasting 30 years. However, it's not guaranteed and may need adjustment based on market conditions, life expectancy, and your personal circumstances. Some financial advisers now recommend a more conservative 3-3.5% withdrawal rate.
5. What is the scientific source for this calculator?
The compound-growth projections here use standard actuarial compounding mathematics, and the inflation adjustment applies the Fisher equation from economics to separate nominal from real returns. The 4% initial withdrawal figure referenced above comes from William Bengen's 1994 research in the Journal of Financial Planning, which has since been revisited and often revised downward by subsequent studies. Contribution and projection assumptions are broadly consistent with guidance from the Financial Conduct Authority (FCA), the Pensions and Lifetime Savings Association (PLSA), and research from the Institute and Faculty of Actuaries (IFoA) on UK retirement adequacy.