Estimate how your pension pot could grow by retirement, what 25% tax-free lump sum might look like, and indicative annual income from drawdown or annuity-style baselines.
Updated for 2025/26 · Reviewed by James Whitfield · Methodology and assumptions
Build a realistic pension projection in three steps, then use the outputs for retirement planning conversations.
Enter current age, retirement age and your existing pension pot to define the projection period.
Include personal and employer contributions plus growth and inflation rates to model nominal and real-terms outcomes.
Review tax-free cash and indicative drawdown income as planning ranges, not guaranteed pension provider quotes.
The UK government adds tax relief to pension contributions at your highest marginal income tax rate. For a basic-rate taxpayer, contributing £80 to a personal pension results in a £100 pension contribution after HMRC adds £20 relief. Higher-rate taxpayers claim an additional 20% (total 40%) via Self Assessment; additional-rate taxpayers claim an extra 25% (total 45%).
Salary sacrifice pensions are different. Your employer pays your contribution directly from gross salary before tax and NI are calculated, so you save both Income Tax and employee National Insurance (8% on earnings up to £50,270). A £500/month salary sacrifice contribution at the basic rate saves approximately £100 in Income Tax plus £40 in NI — a total saving of £140 per month compared to contributing from take-home pay.
The annual allowance for 2025/26 is £60,000 (or 100% of earnings if lower). This covers combined employer and employee contributions. The money purchase annual allowance (MPAA), which applies once you start drawing from a defined contribution pot flexibly, is £10,000. There is no lifetime allowance after its abolition in April 2024.
| Figure | Amount |
|---|---|
| Full new State Pension (weekly) | £221.20 |
| Full new State Pension (annual) | £11,502 |
| State Pension age | 67 (from 2028) |
| Annual allowance (pension contributions) | £60,000 |
| Money purchase annual allowance (MPAA) | £10,000 |
| Tax-free lump sum (PCLS) | 25% of pot (up to £268,275 tax-free) |
| Lifetime allowance | Abolished April 2024 |
| Minimum pension access age | 55 (rising to 57 in 2028) |
State Pension figures are for those with a full 35 qualifying NI years. You need at least 10 qualifying years for any State Pension entitlement. Check your State Pension forecast via the HMRC personal tax account.
The widely-used 4% drawdown rule estimates that a pot can sustain a 4% annual withdrawal indefinitely (adjusted for inflation) based on historical portfolio returns. For a target income of £30,000 per year in retirement (after including state pension of approximately £11,502), the private income needed is approximately £18,498 per year — implying a pot of approximately £462,000 (£18,498 ÷ 4%).
The table below shows target pot sizes at common income levels using the 4% rule. State pension is subtracted from the target income before calculating required pot size, as it is funded separately.
| Target annual income | Private income needed | Pot required (4% rule) |
|---|---|---|
| £20,000 | £8,498 | ~£212,000 |
| £25,000 | £13,498 | ~£337,000 |
| £30,000 | £18,498 | ~£462,000 |
| £40,000 | £28,498 | ~£712,000 |
| £50,000 | £38,498 | ~£962,000 |
Assumes full new State Pension of £11,502/year. The 4% rule is a planning heuristic based on historical equity/bond returns — not a guarantee. Actual drawdown sustainability depends on investment returns, charges and longevity. Use the pot pages above or the full calculator to model your specific inputs.
Currently yes — the minimum pension access age is 55. However, from 6 April 2028 this rises to 57 (with protections for some existing pension holders). Taking your pension at 55 reduces the number of years contributions and growth can compound, and you forgo additional State Pension accrual until at least 67. Use the calculator above to model the difference between retiring at 55 versus 60 versus 67 with your current pot and contributions.
A common rule of thumb is to save half your age as a percentage of salary — so at 30, target 15% combined (employee plus employer). Auto-enrolment minimum is 8% total (3% employer, 5% employee including relief). For most people these minimums will not build a pot sufficient for a comfortable retirement. Running the pension calculator above with your current age, projected retirement age and contribution levels gives a more accurate picture than rules of thumb alone.
You can take up to 25% of your pension pot as a tax-free lump sum (PCLS) at retirement. The maximum PCLS is capped at £268,275 (the legacy lifetime allowance figure). Beyond that cap, additional lump sums are taxable as income. The remaining pot can then be used for drawdown income or to purchase an annuity — both of which are taxed as income in the normal way.
Defined contribution pensions are generally outside your estate for inheritance tax purposes. If you die before 75, beneficiaries can typically inherit the full pot tax-free. If you die after 75, withdrawals by beneficiaries are taxed at their marginal income tax rate. Annuities usually cease on death unless a guaranteed period or joint-life option was selected. Check the specific nomination of beneficiary options with your pension provider.
This calculator provides planning estimates only. For advice specific to your circumstances, consult a regulated financial adviser. Reviewed by James Whitfield.