UK Pension & Retirement Calculator

The standard Annual Allowance is £60,000 - the total amount you can contribute to all UK pensions (workplace, personal, SIPP) each tax year and still get tax relief. The £60k includes employee + employer contributions + tax relief. Above the limit you owe an 'Annual Allowance charge' at your marginal income-tax rate via Self Assessment. For people with adjusted income over £260,000, the AA tapers down to as low as £10,000 (£1 lost per £2 over).

You can take up to 25% of your pension pot as a tax-free lump sum from age 55 (rising to 57 from April 2028). The official name is the Pension Commencement Lump Sum (PCLS). The lifetime cap is £268,275 unless you hold valid Lifetime Allowance protection. You can take it in one go or in chunks. The remaining 75% stays invested and is taxed as income as you draw it down, or you can use it to buy an annuity.

The "4% rule" (William Bengen, 1994) suggests you can withdraw 4% of your starting pot in year one of retirement, then increase annually with inflation, and the pot should last for a 30-year retirement under typical UK equity-bond return scenarios. It's a rule of thumb, not a guarantee - bad market sequences early on can deplete the pot faster. For UK retirees with longer life expectancy, 3.5% is a more cautious starting point.

Yes. State Pension and pension drawdown are both taxable income (no National Insurance because you've stopped working). They stack on top of your personal allowance (£12,570). For a typical UK retiree with a full State Pension of ~£12,000 plus £16,000 drawdown, total gross income is ~£28,000 - the amount above the personal allowance is taxed at the basic rate (20%), giving roughly £3,000 of income tax. Net income would be ~£25,000. Full income-tax guide.

Drawdown keeps your pot invested and lets you take flexible income. Gives you control and growth potential but exposes you to investment risk and the risk of running out. Annuity converts your pot into a guaranteed income for life - no investment risk, but you give up the pot. Annuity rates in 2026 are around 5-6% for a 65-year-old level single-life policy; joint or inflation-linked annuities pay materially less. Most UK retirees use a mix: drawdown for flexibility, plus a small annuity to cover essential bills.

Currently 55. From 6 April 2028, the minimum pension access age rises to 57. This is separate from the State Pension Age, which is 66-67 depending on your date of birth and is being reviewed by the government on a rolling basis. Some older "protected" pension schemes let members access the pot earlier than 55, but most workplace and personal pensions follow the standard rule.