UK Pension Calculator 2026/27
Project your retirement pension pot with tax relief, employer contributions, compound growth and salary sacrifice. See your 25% tax-free lump sum and compare drawdown vs annuity income.
👤 Personal Details
🏆 Pension Contributions
📈 Growth & Retirement
📊 Your Pension Projection
💰 Pension Breakdown
Calculations use compound annual growth on a monthly basis. Tax relief at source adds 20% basic rate automatically. Higher/additional rate taxpayers can claim extra relief via Self Assessment. Employer contributions grow with salary. The 25% tax-free lump sum (PCLS) is deducted before income calculations. Drawdown assumes the remaining pot is drawn evenly over the chosen period. Annuity estimates use a ~5% conversion rate (varies by provider and age). State Pension (£11,502/year for 2024/25 full new State Pension) is shown separately.
How UK Pension Tax Relief Works
Every pound you contribute to a pension gets a government top-up through tax relief. This is one of the most powerful tax advantages available to UK taxpayers.
| Your Tax Band | Your Contribution | Government Adds | Total in Pot | You Can Claim Extra |
|---|---|---|---|---|
| Basic Rate (20%) | £80 | £20 | £100 | Nothing |
| Higher Rate (40%) | £80 | £20 | £100 | £20 via tax return |
| Additional Rate (45%) | £80 | £20 | £100 | £25 via tax return |
For basic rate taxpayers, a £100 pension contribution only "costs" you £80 from your take-home pay. For higher rate taxpayers, it only costs £60 after you claim the extra relief. This makes pension contributions extraordinarily tax-efficient, especially for those in the 40% and 45% bands.
Salary Sacrifice: The Ultimate Tax Hack
With salary sacrifice, your employer reduces your gross salary by your pension amount and pays it directly into your pension. This means you save:
- Income Tax at your marginal rate (20%, 40% or 45%)
- National Insurance at 8% (or 2% for higher earners)
- Your employer may also pass on their 13.8% employer NI saving
A £100 salary sacrifice pension contribution costs a basic rate taxpayer only £72 in lost take-home pay — compared to £80 with relief at source. For higher rate taxpayers, the cost drops from £60 to just £52.
Retirement Income Options
Pension Drawdown (Flexible Access)
Take 25% tax-free, leave the rest invested, and withdraw as needed. You control the pace — take more in early retirement, less later. The pot continues to grow (or shrink) based on investment returns. Risk: you could run out if you withdraw too fast or markets perform poorly.
Annuity (Guaranteed Income)
Use your pension pot (minus the 25% tax-free cash) to buy a guaranteed income for life from an insurance company. The rate depends on your age, health, and interest rates. Currently a £100,000 annuity at age 68 provides roughly £5,000-£6,500/year. Benefit: guaranteed for life regardless of how long you live. Drawback: no flexibility and poor value if you die early.