UK Pension Calculators & Guides 2026/27

Pension planning in 2026/27

The pension annual allowance for 2026/27 is £60,000 (or 100% of your earnings if lower). High earners with adjusted income above £260,000 face a tapered allowance that can reduce to as little as £10,000. Unused allowances from the previous three tax years can be carried forward, a valuable option if you receive a bonus or have a high-earning year.

Auto-enrolment means most employees are already saving into a workplace pension. But the minimum total contribution of 8% of qualifying earnings (3% employer, 5% employee) is unlikely to provide a comfortable retirement income on its own. The general rule of thumb is to save half your age as a percentage of salary, so if you start at 30, aim for 15%.

Salary sacrifice: the most tax-efficient way to save

Salary sacrifice remains the most tax-efficient way to contribute to a pension in employment. Because your employer reduces your contractual gross pay before tax is calculated, you save income tax at your marginal rate and National Insurance at 8% (or 2% above £50,270).

Your employer also saves 15% employer NI on the sacrificed amount, many employers pass some or all of this saving back into your pension pot. It's worth asking your HR or payroll team whether your employer offers NI sharing.

For a higher-rate taxpayer, salary sacrifice can mean a £100 pension contribution costs only £52 in reduced take-home pay, combining 40% income tax relief and 2% NI saving. For basic-rate taxpayers the cost is around £68.

The State Pension in 2026/27

The full new State Pension is £11,973 per year in 2026/27, up under the triple lock guarantee, which increases it each April by the highest of inflation, earnings growth, or 2.5%. You need 35 qualifying National Insurance years to receive the full amount; fewer years give a pro-rata entitlement, with a minimum of 10 years needed to receive anything.

State Pension age is currently 66 for both men and women, rising to 67 between 2026 and 2028. You can check your NI record and State Pension forecast on the HMRC website. Voluntary Class 3 NI contributions can fill gaps in your record, often a worthwhile investment given the lifetime value of the State Pension.

How much do you need to retire?

The Pension and Lifetime Savings Association (PLSA) publishes Retirement Living Standards that give a useful benchmark. In 2026, a single person needs around £14,400 per year for a minimum standard, £31,300 for a moderate standard, and £43,100 for a comfortable standard, all above the State Pension alone.

A common rule of thumb is to multiply your desired annual income by 25 to find your target pot size (based on a 4% drawdown rate). So a £30,000 annual income requires roughly a £750,000 pot, on top of whatever State Pension you receive. The pension calculator above can show you how your current contributions track against any target.

Types of pension: workplace, SIPP, and defined benefit

Most people in employment have a workplace defined contribution (DC) pension. Both you and your employer pay in, and the pot grows with investment returns. On retirement the pot is yours to draw down or purchase an annuity. The size of your income depends on how much was contributed and how well the investments performed.

A Self-Invested Personal Pension (SIPP) works the same way as a DC pension but gives you control over exactly what you invest in — funds, shares, ETFs, bonds, or commercial property. SIPPs suit the self-employed, those with complex situations, or people who want to manage their own investments.

Defined benefit (DB) pensions — also called final salary pensions — are rare in the private sector but common in public sector roles (NHS, teaching, civil service). Instead of a pot, you receive a guaranteed income for life based on your salary and years of service. They're generally very valuable; always take independent financial advice before transferring out of a DB scheme.

Pension tax relief: how it works

Tax relief is what makes pension saving so powerful. For every £80 you contribute from your take-home pay, HMRC adds £20 — restoring the basic-rate tax you already paid on that income. Higher-rate taxpayers can claim a further 20% back through their self-assessment tax return (or PAYE adjustment), making an effective £60 contribution per £100 in the pot.

There are two relief methods. Most personal and SIPP contributions use relief at source, where your provider claims the 20% from HMRC and adds it to your pot. Workplace schemes often use net pay arrangement, where contributions are deducted before tax is calculated, meaning you automatically get relief at your full marginal rate without needing to claim it separately.

You can contribute up to 100% of your earnings (or the annual allowance of £60,000, whichever is lower) and receive tax relief. Contributions above this attract a tax charge that claws back the excess relief.