How UK pensions work: workplace, personal and State pensions
A practical guide to workplace and personal pensions, tax relief, annual allowances, investment choices, the State Pension and turning pension savings into retirement income.
Retire · Calculator 15
How much retirement income could your pension provide?
Project your pension across cautious, central and stronger return assumptions, then compare the result with your retirement-income target.
1 Enter your figures2 Review assumptions3 Explore the result
Your figures
Your entries stay in this tab and are not sent to Money Considered. A shareable link includes only the assumptions shown in its URL.
Central projected pot in today’s money
£389,760£665,276 in future pounds at age 67.Private pension income£13,6423.5% of the central real pot
Income after State Pension£26,190£12,548 State Pension assumption
Annual income shortfall£3,810Against £30,000 after State Pension
Contribution needed on the central path
Add £228 a monthThat means a total starting contribution of £645 a month, increasing by 2.5% a year. This is gross pension funding before any tax-relief mechanics.Pension range
Three return assumptions, one plan
Central scenario · 5.0% gross return£389,760 in today’s money
£13,642 illustrative private-pension income, rising to £26,190 after the entered State Pension begins.
Central pot composition
What builds the future-pound balance?
- Starting pot
- £100,000
- Future contributions
- £189,560
- Net modelled growth
- £375,716
The gap can be attacked through contributions, time or the target itself.
The extra contribution is solved using the central 5.0% gross return, 0.5% fee and 2.0% inflation assumptions. Retiring later or reducing the desired income would lower it; weaker returns would raise it.
Assumptions used
- Projects a defined-contribution pension only; defined-benefit pensions need separate income inputs.
- Returns are smooth annual assumptions of 2.0%, 5.0% and 8.0% before the entered 0.5% fee.
- Contributions are based on salary today and rise by 2.5% each year.
- Today-money values use 2.0% annual inflation.
- The entered State Pension is treated as inflation-linked and is not verified against your National Insurance record.
- The target pot adds capital to replace the entered State Pension before it starts, without modelling post-retirement returns, then capitalises the later private-income gap at the entered drawdown rate.
- Tax on pension withdrawals, tax-free cash, annuity pricing and inheritance are excluded.
Use your actual pension statements and State Pension forecast where possible. A real retirement plan also needs to consider tax, investment risk after retirement, longevity, partner income, housing and care costs.
Common questions
UK pension calculator FAQs
How does the pension calculator work?
It grows the current pension and monthly employee and employer contributions to the selected retirement age. It shows cautious, central and stronger smooth-return scenarios after the entered fee, then adjusts each pot for inflation.
What return assumptions should I use?
Use a central assumption you can justify and keep a meaningful range around it. The default 2%, 5% and 8% gross returns mirror the maximum lower, intermediate and higher rates used in certain FCA standardised personal-pension projections, but your investments may justify lower assumptions.
How is the State Pension included?
The calculator uses the annual State Pension amount and starting age you enter. The full new State Pension is £241.30 a week in 2026/27, but your actual amount depends on your National Insurance record and may differ, so use your GOV.UK forecast.
What is the difference between nominal and real pension values?
Nominal values are the future-pound amounts produced by the model. Real values divide those amounts by the compounded inflation assumption and express estimated purchasing power in today’s pounds.
How much should I contribute to my pension?
The calculator solves for the starting monthly contribution needed to reach the target pot under the central assumptions. It includes the employer contribution, so the additional amount shown is extra gross pension funding rather than necessarily the reduction in take-home pay.
What does the drawdown rate mean?
It is the percentage of the private pension pot used to illustrate one year of retirement income. It is not a guaranteed sustainable withdrawal rate: the result depends on returns, inflation, fees, tax, longevity and the timing of withdrawals.
Does the calculator include tax on pension withdrawals?
No. Results are gross before retirement tax. The calculation also excludes tax-free cash choices, annuity pricing, the lump-sum allowance and other income that can change the tax actually paid.
Can I include a final-salary or defined-benefit pension?
Not in the projected pot. A defined-benefit pension promises income rather than building an individual investment pot. Deduct its expected inflation-adjusted annual income from your desired income before using this calculator, or model it separately.
Does the pension annual allowance apply?
The standard annual allowance is £60,000 in 2026/27 across private pensions, but it can be lower after flexible access or for some high earners. The calculator flags contributions above £60,000 but does not calculate tapering, carry forward or tax charges.