Pension Calculator

Your Pension: Free Money from the Government

A UK pension is one of the most tax-efficient ways to save for retirement. When you contribute to a pension, the government adds 25% in tax relief (basic rate) — so £100 contributed becomes £125 in your pension. If you're a higher-rate (40%) or additional-rate (45%) taxpayer, you can claim even more relief through your self-assessment. This is free money, and it's the single biggest reason to prioritise pension contributions over other savings.

On top of tax relief, most employers match your contributions (typically 3-5% of salary) through workplace pension auto-enrolment. Between tax relief and employer matching, a workplace pension is one of the few investments where £100 contributed can have well over £100 working for you from day one — few other investments offer that kind of immediate uplift.

How This Calculator Works

Enter your current age, retirement age, current pension pot, monthly contribution, employer match, and expected growth rate. The calculator projects your pot forward, adding 25% tax relief to your personal contributions, including the employer match, and compounding at the growth rate. It then estimates your retirement income using the 4% drawdown rule on 75% of the pot (the taxable portion), assuming you take 25% as a tax-free lump sum.

The 4% Drawdown Rule

The 4% rule is a widely-used guideline for sustainable retirement income: withdraw 4% of your pot per year, and it should last 30+ years in most market conditions. On a £500,000 pot, that's £20,000/year. Combined with the State Pension (about £11,500/year in 2026), this gives you a target retirement income. If the number looks too low, you need to save more — and this calculator shows you exactly how much difference extra contributions make.

Related Tools

• ISA Calculator — tax-free savings alongside your pension.
• Compound Interest Calculator — the power of long-term growth.