Pension Pot Calculator

How pensions work in the UK

Most UK pensions are defined contribution — you and your employer pay in, and the pot grows (or shrinks) based on the underlying investments. From age 55 (rising to 57 in 2028) you can take 25% of the pot tax-free. The remaining 75% is taxed as income when you withdraw it.

Auto-enrolment minimums

If you're over 22 and earn at least £10,000 a year, your employer must auto-enrol you in a workplace pension. The minimum contributions are 5% from you and 3% from your employer — but many employers offer "matching" up to a higher level (e.g. 5% if you put in 5%). Always take the full match: it's free money.

Tax relief

Pension contributions get tax relief at your marginal rate. A basic-rate (20%) taxpayer who pays £80 sees the pot top up to £100. A higher-rate (40%) taxpayer can claim back another £20 through Self Assessment, so the £100 only "costs" £60. Additional-rate (45%) taxpayers can claim £25 back.

Annual allowance

You can pay in up to £60,000 (or 100% of earnings, whichever is lower) and get tax relief for 2025/26. High earners with income over £260,000 see their allowance taper down to a minimum of £10,000.

Why the "real-terms" figure matters

A £500,000 pension in 35 years sounds like a lot, but inflation chips away at purchasing power. At 2.5% inflation, today's £500,000 would be worth roughly £210,000 in today's money in 35 years. The calculator shows both — focus on the real-terms figure when planning what kind of lifestyle that pot will buy.

The 4% rule

A common rule of thumb: you can withdraw 4% of your pot in year one, increase that with inflation each year, and have a high probability of the money lasting 30+ years. So a £400,000 pot supports about £16,000/year on top of your State Pension (currently around £11,973/year for the full new pension in 2025/26).