UK workplace pension rules & tax relief
Under UK auto-enrolment legislation, employers must contribute at least 3% and employees contribute 5% on qualifying earnings (£6,240 to £50,270). The employee 5% contribution includes 1% government tax relief, making the net cost just 4%.
At retirement (currently age 55, rising to 57 on 6 April 2028), you can take up to 25% of your total pension pot completely tax-free (subject to the standard £268,275 Lump Sum Allowance), with the remainder drawn down flexibly or used to purchase an annuity.
Worked example: UK workplace pension growth
A UK employee earning £36,000 paying 5% (£124/mo) with a 3% employer match (£74/mo) and an existing £25,000 pot achieves a projected fund of £360,000 by age 65 with 5.0% annual growth.
Upon reaching retirement, the individual can withdraw £90,000 (25%) tax-free cash, leaving £270,000 invested to generate £900 per month in taxable flexi-access drawdown income.
Inputs for the uk pension calculator
Current Pot & Earnings
Enter your existing workplace pension or personal pension balance and monthly contributions.
Tax-Free Cash Entitlement
The model calculates your 25% tax-free lump sum up to the statutory Finance Act 2024 £268,275 cap.
CALCULATOR QUESTIONS
UK pension calculator questions
When can I access my UK private pension?
The normal minimum pension age is currently 55, rising to age 57 from 6 April 2028 under the Finance Act 2022.
How is tax relief applied to my contributions?
In relief-at-source schemes, the government automatically adds 20% basic rate relief. Higher (40%) and additional (45%) rate taxpayers claim the remaining 20% or 25% via Self Assessment.
What is the UK Lump Sum Allowance (LSA)?
Effective 6 April 2024, the standard LSA caps cumulative tax-free cash withdrawals at £268,275 across all registered pension schemes.