Initial Pension Setup
Age when starting drawdown
PCLS vs UFPLS - affects how tax-free portion is accessed
Platform + fund fees (typical: 0.5-1.5%)
Withdrawal Strategy
Total desired income - state pension will reduce pension withdrawals
Above inflation (0% = maintain power, negative = decrease with age)
Long-term average ~2-3%
Investment Returns (Nominal)
Historical avg ~7-8% nominal
Typically matches or below inflation
UK Tax (2025/26)
State Pension
Age 67 for those born 6/3/1961 - 5/4/1977
Maximum for 35 qualifying years (2025/26)
You'll receive (your years / 35) × full amount
State pension rises by max(inflation, earnings, 2.5%)
| Year | Age | Opening Balance (£) |
Investment Return (£) |
Charges Paid (£) |
Gross Withdrawal (£) |
Tax-Free Portion (£) |
Taxable Portion (£) |
Tax Paid (£) |
Net Withdrawal (£) |
State Pension (£) |
Total Income (£) |
Closing Balance (£) |
Real Value (Today's £) |
|---|
How This Calculator Works:
25% Tax-Free Options (CRITICAL):
You have TWO ways to access your 25% tax-free portion:
Option 1: PCLS (Pension Commencement Lump Sum)
• Take 25% of entire pot tax-free upfront
• Example: £360,000 pot → £90,000 tax-free immediately
• Remaining £270,000 stays invested
• ALL future withdrawals are 100% taxable
Option 2: UFPLS (Uncrystallised Funds Pension Lump Sum)
• Keep full pot invested (select "No" option)
• Each withdrawal is 25% tax-free, 75% taxable
• Example: £20,000 withdrawal → £5,000 tax-free, £15,000 taxable
• More flexible, spreads tax-free allowance over time
Charges: Annual charges are deducted from your pot each year and reduce investment returns. Typical charges range from 0.5% to 1.5% including platform and fund fees.
Target Income: Your total desired annual income in today's money. The calculator: • Increases by inflation + real growth each year • Deducts state pension (when it starts) • Withdraws remainder from pension pot • More state pension = less pension withdrawal needed
Real Income Growth: Additional growth above inflation: • Positive: Income increases faster than inflation • Zero: Income maintains purchasing power • Negative: Income decreases with age (lower spending)
Inflation: Single consistent assumption affecting: • Annual withdrawal increases • Real value calculations • Net investment returns • State pension triple lock
Investment Returns: Specified as nominal (before inflation/charges) Real return = Nominal - Inflation - Charges Example: 8% - 2.5% - 0.5% = 5% real
State Pension: Starts at state pension age: • Calculation: (Your years ÷ 35) × Full amount • Example: 10/35 × £11,502 = £3,286/year • Increases by triple lock: max(inflation, 2.5%) • Reduces pension pot withdrawal needed
Tax Calculation: • PCLS taken: Total income = Gross withdrawal + State pension • UFPLS: Total income = Taxable portion (75%) + State pension • Progressive UK tax bands applied • Tax deducted to give net income
Withdrawal Rate: The "4% rule" suggests ~4% annually for sustainable 30-year retirement. Above 4.5% significantly increases running-out risk.
Option 1: PCLS (Pension Commencement Lump Sum)
• Take 25% of entire pot tax-free upfront
• Example: £360,000 pot → £90,000 tax-free immediately
• Remaining £270,000 stays invested
• ALL future withdrawals are 100% taxable
Option 2: UFPLS (Uncrystallised Funds Pension Lump Sum)
• Keep full pot invested (select "No" option)
• Each withdrawal is 25% tax-free, 75% taxable
• Example: £20,000 withdrawal → £5,000 tax-free, £15,000 taxable
• More flexible, spreads tax-free allowance over time
Charges: Annual charges are deducted from your pot each year and reduce investment returns. Typical charges range from 0.5% to 1.5% including platform and fund fees.
Target Income: Your total desired annual income in today's money. The calculator: • Increases by inflation + real growth each year • Deducts state pension (when it starts) • Withdraws remainder from pension pot • More state pension = less pension withdrawal needed
Real Income Growth: Additional growth above inflation: • Positive: Income increases faster than inflation • Zero: Income maintains purchasing power • Negative: Income decreases with age (lower spending)
Inflation: Single consistent assumption affecting: • Annual withdrawal increases • Real value calculations • Net investment returns • State pension triple lock
Investment Returns: Specified as nominal (before inflation/charges) Real return = Nominal - Inflation - Charges Example: 8% - 2.5% - 0.5% = 5% real
State Pension: Starts at state pension age: • Calculation: (Your years ÷ 35) × Full amount • Example: 10/35 × £11,502 = £3,286/year • Increases by triple lock: max(inflation, 2.5%) • Reduces pension pot withdrawal needed
Tax Calculation: • PCLS taken: Total income = Gross withdrawal + State pension • UFPLS: Total income = Taxable portion (75%) + State pension • Progressive UK tax bands applied • Tax deducted to give net income
Withdrawal Rate: The "4% rule" suggests ~4% annually for sustainable 30-year retirement. Above 4.5% significantly increases running-out risk.
FCA Risk Warnings:
Past performance is not a reliable indicator of future results. The value of investments can go down as well as up. Income from drawdown is not guaranteed and you may need to reduce withdrawals or your pot may run out. Your income will depend on investment performance, the amount you withdraw, charges, and how long you live. Tax treatment depends on individual circumstances and may change. Consider taking regulated financial advice.
⚠️ Important
- This is an illustration, not financial advice
- Investment returns are not guaranteed and may be higher or lower than shown
- Your pension pot can go down as well as up
- You could run out of money before you die
- Tax rules may change in the future
- Consider seeking regulated financial advice before making pension decisions