What is a pension gap?▾
A pension gap is the difference between the retirement income you want and the retirement income your current savings are projected to provide. If you want £25,000 per year but your pension will only generate £18,000, your gap is £7,000 per year.
How does the 4% rule work?▾
The 4% rule suggests you can withdraw 4% of your pension pot each year in retirement without running out of money over a 25-30 year period. For example, a £500,000 pot would provide £20,000 per year. This is a guideline, not a guarantee — actual returns vary.
What is the current UK state pension?▾
The full new State Pension is £241.30 a week for 2026/27, which is £12,548 a year over 52 weeks. You need 35 qualifying years of National Insurance contributions to get the full amount. With 10 years you get the minimum, and partial amounts are calculated proportionally.
How much should I have in my pension by age 40?▾
A common rule of thumb is to have 3x your annual salary saved by age 40. So if you earn £40,000, aim for £120,000 in your pension. However, the right amount depends on your target retirement income and when you plan to retire.
Does this calculator include employer contributions?▾
Yes. You enter both your personal monthly contribution and your employer's monthly contribution separately. Both are included in the growth projection. Under auto-enrolment, the minimum employer contribution is 3% of qualifying earnings.
What growth rate should I assume?▾
A 5% annual growth rate is a reasonable default for a balanced pension fund after fees. Conservative funds might return 3-4%, while aggressive equity-heavy funds might average 6-8% over long periods. Past performance does not guarantee future returns.
What happened to the lifetime allowance?▾
The lifetime allowance was abolished on 6 April 2024. Two allowances replaced it: the lump sum allowance of £268,275, which caps the tax-free pension commencement lump sum you can take across all your pensions, and the lump sum and death benefit allowance of £1,073,100, which also covers serious ill-health and death benefit lump sums. Because the standard tax-free lump sum is 25% of the pot, the lump sum allowance starts to bite once your total pot passes £1,073,100. The calculator flags this. Anything above the allowances is taxed as income at your marginal rate rather than facing the old lifetime allowance charge.
Can I use this for a SIPP or workplace pension?▾
Yes. This calculator works for any defined contribution pension — workplace pensions, SIPPs, personal pensions, or a combination. Simply enter your total current pot value and total monthly contributions across all schemes.
How accurate is the projection?▾
The projection uses compound growth with constant assumptions. Real investment returns fluctuate year to year. Use this as a planning tool to understand the ballpark, not as a guarantee. Review and recalculate regularly as your circumstances change.
Should I pay more into my pension or invest elsewhere?▾
Pension contributions benefit from tax relief (20-45% depending on your rate) and employer matching, up to the annual allowance of £60,000 for 2026/27 or 100% of your relevant UK earnings if that is lower. The allowance tapers for high earners and falls to £10,000 once you have flexibly accessed a pension. However, you cannot normally access pension money until age 55, and the normal minimum pension age rises to 57 on 6 April 2028. For flexibility, consider ISAs alongside pensions. Seek professional advice for your specific situation.