When can I access my UK pension pot?

You can normally access a defined-contribution pension from age 55 (rising to 57 from 6 April 2028). Earlier access is only allowed in cases of severe ill-health that prevents you ever working again, or if you hold a protected pension age from a pre-2006 scheme. Once eligible, you can take the whole pot, draw down income flexibly, buy an annuity, or mix all three - this is what 'pension freedoms' has meant since April 2015.

How does the 25% tax-free lump sum work?

Each time you crystallise pension funds, 25% of the crystallised amount can be taken as a tax-free Pension Commencement Lump Sum (PCLS). The remaining 75% is designated for drawdown (or annuity) and is taxable when drawn. Since 6 April 2024 the lifetime tax-free entitlement is capped by the £268,275 Lump Sum Allowance (LSA) - the post-LTA-abolition replacement. Most savers stay well below the LSA, so 25% is the operative figure.

What is the Money Purchase Annual Allowance (MPAA)?

The MPAA is a £10,000 annual cap on tax-relieved DC pension contributions that bites once you 'flexibly access' your pension - the most common trigger being taking any taxable income from drawdown (even £1). Once triggered, it cannot be undone, and contributing above £10,000 across all your DC schemes loses tax relief on the excess. Taking a 25% PCLS on its own (with no taxable income from the same crystallisation event) does NOT trigger the MPAA - useful for savers who want to ring-fence their future contribution allowance.

How is pension drawdown income taxed?

Taxable drawdown is paid via PAYE and taxed at your marginal Income Tax rate - the same rates that apply to salary. National Insurance does NOT apply to pension income, so drawdown is more efficient than equivalent earned income on the NI side. Withdrawals stack on top of any other taxable income you have that year (salary, State Pension, rental income), which is why a large one-off withdrawal can push you into a higher band; spreading drawdown across multiple tax years often saves tax.

What happens to my pension when I die?

If you die before age 75, any uncrystallised pot (and most drawdown funds) can be passed to beneficiaries free of Income Tax, provided the scheme is informed within two years. Death from age 75 onwards means beneficiaries pay Income Tax at their marginal rate on withdrawals from the inherited pot. Pension funds typically sit outside the deceased estate for Inheritance Tax purposes - though the Autumn 2024 Budget announced this will change from 6 April 2027, bringing most pensions into the IHT net.

How long will my pension pot last?

The widely-cited industry rule-of-thumb is that a 4% initial withdrawal rate (uprated for inflation each year) from a balanced portfolio sustained a 30-year retirement in historical US data ('the Trinity study'). Real outcomes vary with portfolio mix, sequence-of-returns risk, fees, and inflation - the 4% figure is a starting point not a guarantee. Our sustainability projection scales this: drawing 8% of your pot in year one halves the projected horizon to ~15 years; drawing 2% doubles it to ~60.

Is UFPLS different from flexi-access drawdown?

Uncrystallised Funds Pension Lump Sum (UFPLS) lets you take ad-hoc chunks straight from the uncrystallised pot, with 25% of each chunk tax-free and 75% taxable. Flexi-access drawdown by contrast crystallises a tranche of the pot upfront - 25% PCLS paid at that point, 75% moved into a drawdown wrapper from which you can take income flexibly. Both routes trigger the MPAA as soon as taxable income flows, and both stay subject to the £268,275 Lump Sum Allowance on the tax-free portion. UFPLS suits ad-hoc withdrawals; drawdown suits regular retirement income.

UK Pension Drawdown Calculator 2026/27

Model flexi-access drawdown from a UK defined-contribution pension pot. Take up to 25% as a tax-free lump sum (capped at the £268,275 Lump Sum Allowance), draw the remaining 75% as taxable income at your marginal rate via PAYE - National Insurance does not apply. Taking any taxable drawdown triggers the £10,000 Money Purchase Annual Allowance on future contributions. Verified against gov.uk - tax on pension.

Worked scenarios

£250k pot - 25% PCLS only at age 60 (no taxable income)

£62,500 net

PCLS £62,500 - taxable £0 - tax £0

MPAA: not triggered - pot left £187,500
£500k pot - £30k/yr drawdown alongside State Pension

£30,000 net

PCLS £30,000 - taxable £0 - tax £0

MPAA: not triggered - pot left £470,000
£1m pot - 4% sustainable withdrawal at age 65

£40,000 net

PCLS £40,000 - taxable £0 - tax £0

MPAA: not triggered - pot left £960,000
£1.5m pot - LSA cap on the tax-free portion

£354,521 net

PCLS £268,275 - taxable £131,725 - tax £45,479

MPAA: triggered - pot left £1,100,000

Longevity and capital risk. This calculator models the income tax due on a single year's drawdown. It does not model investment returns on the underlying pension pot, inflation, sequence-of-returns risk or how long the pot will sustain a given withdrawal rate against an uncertain life expectancy. Defined-contribution drawdown carries the risk that you outlive the pot, that poor early-year returns permanently impair sustainability, and that triggering the Money Purchase Annual Allowance limits any future tax-relieved contributions to £10,000. This page is for illustration only and is not regulated financial advice. For a retirement income plan, speak to an FCA-authorised pensions adviser; the free Pension Wise service offers a free 60-minute guidance appointment to anyone aged 50+ with a UK defined-contribution pension.

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How UK pension drawdown works

Since April 2015, the UK pension freedoms have allowed anyone aged 55 or over (rising to 57 from 6 April 2028) to access a defined-contribution (DC) pension flexibly. Instead of being forced to buy an annuity, you can take cash directly from the pot - in one go, in regular instalments, or in irregular ad-hoc lumps - and tax is applied as the cash flows out.

This calculator models the most common access route, flexi-access drawdown: you crystallise a tranche of the pot, take up to 25% as a tax-free Pension Commencement Lump Sum (PCLS), and the remaining 75% moves into a drawdown wrapper that you can draw income from at any rate you like. Income is taxed at your marginal Income Tax rate via PAYE, but - critically - National Insurance does not apply to pension income, which makes drawdown more efficient than equivalent earned income on the NI side.

The 25% tax-free rule and the Lump Sum Allowance

For most savers, the headline figure is the 25% tax-free lump sum. On a £100,000 pot, that’s £25,000 in PCLS payable on crystallisation; on a £500,000 pot, it’s £125,000. The remaining 75% sits in the drawdown wrapper as taxable income when drawn.

Since 6 April 2024, the lifetime tax-free entitlement is capped by the £268,275 Lump Sum Allowance (LSA) - the post-LTA-abolition replacement for the old Lifetime Allowance regime. Most savers stay well below the LSA, so the practical rule remains “25% of each crystallisation”. But on very large pots (above ~£1.07m), the LSA becomes the binding constraint. There’s also a higher £1,073,100 Lump Sum and Death Benefit Allowance (LSDBA) that caps total tax-free lump sums paid out across your lifetime AND on your death - relevant for very large pension pots passed to beneficiaries.

The calculator allocates your requested drawdown amount as PCLS first (up to the remaining LSA headroom) and treats the rest as taxable income. If you’ve already taken PCLS in earlier years - say £200,000 of the £268,275 LSA already used - only £68,275 of tax-free headroom remains, even on a pot whose 25% would notionally be much larger.

The Money Purchase Annual Allowance (MPAA) trigger

The single biggest “gotcha” of flexi-access drawdown is the Money Purchase Annual Allowance. The moment you take any taxable drawdown income - even £1 - the MPAA fires: from that point forward, your annual tax-relieved DC contributions are capped at £10,000 (down from the standard £60,000). Once triggered, the MPAA cannot be undone, and contributions above £10,000 across all your DC schemes lose tax relief on the excess.

Importantly, taking the 25% PCLS on its own - with no taxable income from the same crystallisation event - does not trigger the MPAA. This matters for savers who are still working and want to ring-fence their full £60,000 annual contribution allowance: take the lump sum to clear the mortgage or buy a car, but don’t tap the taxable 75% until you’ve fully retired. Once you draw a single pound of taxable income, the MPAA applies to that tax year and every subsequent year.

The MPAA also applies to UFPLS withdrawals (see below), and to a few other “flexible access” events listed in HMRC’s Pensions Tax Manual. Final-salary (defined-benefit) accruals are unaffected - the MPAA only caps money-purchase contributions.

UFPLS as an alternative

The other main flexible-access route is the Uncrystallised Funds Pension Lump Sum (UFPLS). Instead of crystallising a tranche of the pot into a drawdown wrapper, you take ad-hoc chunks directly from the uncrystallised pot. Each chunk is 25% tax-free and 75% taxable - the same overall split as flexi-access drawdown, but applied chunk-by-chunk rather than as a single upfront PCLS.

UFPLS suits savers who want occasional irregular withdrawals without the administrative overhead of setting up a drawdown wrapper. The trade-off is the loss of investment-strategy flexibility: in flexi- access drawdown, you choose the investments for the crystallised 75% and can rebalance over time; with UFPLS each withdrawal slices across the existing pot allocation. Both routes trigger the MPAA, and both are subject to the £268,275 LSA on the tax-free portion.

A common hybrid strategy is: take the full 25% PCLS upfront via flexi-access drawdown (clearing the LSA in one move and ring-fencing the future contribution allowance if you don’t also draw taxable income), then top up with UFPLS later if you want quick ad-hoc withdrawals.

Combining drawdown with other income

Drawdown income stacks on top of any other taxable income you have that year - salary, State Pension, rental income, dividends above the £500 allowance - and is treated as non-savings non-dividend income in the band order, sitting alongside salary at the basic / higher / additional rate boundaries.

This is why a large one-off withdrawal can push you into a higher tax band. Take a £50,000 taxable drawdown on top of a £40,000 salary, and you have £90,000 of combined income: about £29,500 of that sits in the basic-rate band (after the £12,570 Personal Allowance), and the remainder is taxed at higher rate. Compare with drawing £25,000 a year across two tax years: each year’s combined income stays within the basic-rate band, and the total tax bill drops significantly.

Spreading drawdown across multiple tax years is one of the simplest tax-planning levers retirees have. The calculator’s marginal-rate calculation makes the band-crossing cost explicit - useful for sizing each year’s withdrawal to avoid jumping a band.

State Pension stacks on top

The new State Pension is £241.30 a week for 2026/27 (the full rate with 35 qualifying NI years), or roughly £12,548 a year. It’s paid via PAYE and counted as taxable income in the same band order as drawdown.

Most retirees with a typical State Pension entitlement have already used most of their £12,570 Personal Allowance just from the State Pension alone, so the first £1 of drawdown income often falls in the basic-rate band right away. For Scottish residents that means at least 20% on the first slice (or 19% in the narrow starter band); for residents of England, Wales, or Northern Ireland it means 20%.

The State Pension also affects the MPAA decision: if it’s your only other income, drawing taxable drawdown to top it up triggers the MPAA on any DC pots you haven’t fully crystallised yet. That’s usually a non-issue for full retirees - but matters for partial retirees who plan to keep contributing.

What happens on death

If you die before age 75 with funds still in drawdown (or uncrystallised), the entire pot can be passed to your chosen beneficiaries free of Income Tax, provided the scheme is notified within two years of your death. Beneficiaries can take the pot as a lump sum, leave it invested in a beneficiary’s drawdown wrapper, or buy an annuity - and any income drawn from it is also tax-free.

If you die from age 75 onwards, the inherited pot is still passed on outside the probate estate, but beneficiaries pay Income Tax at their own marginal rate on every withdrawal. The pot itself stays sheltered from Inheritance Tax (in the current rules); the tax bite only lands when funds are actually drawn.

The Autumn 2024 Budget announced that most unused pensions will be brought into the IHT net from 6 April 2027, ending the long-standing IHT shelter on undrawn pots. This calculator currently models the rules in force for 2026/27, before that change takes effect.

Sustainability and the 4% rule

The “4% rule” is the most-cited starting point for sustainable drawdown rates. Originally derived from a 1998 study of US historical returns (“the Trinity study”), it suggested that withdrawing 4% of the initial pot value in year one, then uprating that figure each year for inflation, sustained a 30-year retirement in almost all rolling historical periods - including the 1970s stagflation and the 2008 crash.

The 4% figure isn’t a guarantee. Real outcomes depend on:

Portfolio mix - heavily bond-tilted portfolios sustain lower withdrawal rates than the 60/40 mix the rule assumes.
Sequence-of-returns risk - a big drawdown in year 1-3 hurts the pot’s long-term sustainability much more than the same drawdown in year 25-27.
Fees - 1% in platform + fund charges effectively raises your drawdown by 1%, meaning the equivalent “safe” rate falls to ~3%.
Inflation environment - the 1970s episode is the closest the 4% rule came to failing in US data; UK-equivalent studies put the “safe” UK rate slightly lower, at ~3.5%.

The calculator’s sustainability projection scales the 30-year baseline inversely with the requested withdrawal rate: a 4% rate projects 30 years, an 8% rate projects 15, a 2% rate projects 60. Treat these as rule-of-thumb anchors, not financial advice.

Verified against gov.uk

All figures and rules in this calculator trace back to authoritative HMRC and gov.uk sources retrieved 2026-05-23:

Pension Wise / gov.uk - withdrawing your pension - the consumer-facing summary of the four access routes.
Tax on your private pension contributions - marginal-rate Income Tax treatment of drawdown.
Money Purchase Annual Allowance - the £10,000 trigger.
Lifetime Allowance abolition - the LSA and LSDBA replacement framework from 6 April 2024.

State Pension calculator - the £241.30/week full new State Pension, by qualifying NI years.
Pension Annual Allowance calculator - the £60,000 allowance, tapered to £10,000 above £260,000 adjusted income.
Pension Contribution calculator - the cost of getting money INTO the pot, after tax + NI relief.
Inheritance Tax calculator - NRB, RNRB, and the post-April-2027 IHT-on-pensions framework.
How UK tax works (primer) - PAYE, marginal rates, and Personal Allowance taper.

Frequently asked questions

When can I access my UK pension pot?: You can normally access a defined-contribution pension from age 55 (rising to 57 from 6 April 2028). Earlier access is only allowed in cases of severe ill-health that prevents you ever working again, or if you hold a protected pension age from a pre-2006 scheme. Once eligible, you can take the whole pot, draw down income flexibly, buy an annuity, or mix all three - this is what 'pension freedoms' has meant since April 2015.
How does the 25% tax-free lump sum work?: Each time you crystallise pension funds, 25% of the crystallised amount can be taken as a tax-free Pension Commencement Lump Sum (PCLS). The remaining 75% is designated for drawdown (or annuity) and is taxable when drawn. Since 6 April 2024 the lifetime tax-free entitlement is capped by the £268,275 Lump Sum Allowance (LSA) - the post-LTA-abolition replacement. Most savers stay well below the LSA, so 25% is the operative figure.
What is the Money Purchase Annual Allowance (MPAA)?: The MPAA is a £10,000 annual cap on tax-relieved DC pension contributions that bites once you 'flexibly access' your pension - the most common trigger being taking any taxable income from drawdown (even £1). Once triggered, it cannot be undone, and contributing above £10,000 across all your DC schemes loses tax relief on the excess. Taking a 25% PCLS on its own (with no taxable income from the same crystallisation event) does NOT trigger the MPAA - useful for savers who want to ring-fence their future contribution allowance.
How is pension drawdown income taxed?: Taxable drawdown is paid via PAYE and taxed at your marginal Income Tax rate - the same rates that apply to salary. National Insurance does NOT apply to pension income, so drawdown is more efficient than equivalent earned income on the NI side. Withdrawals stack on top of any other taxable income you have that year (salary, State Pension, rental income), which is why a large one-off withdrawal can push you into a higher band; spreading drawdown across multiple tax years often saves tax.
What happens to my pension when I die?: If you die before age 75, any uncrystallised pot (and most drawdown funds) can be passed to beneficiaries free of Income Tax, provided the scheme is informed within two years. Death from age 75 onwards means beneficiaries pay Income Tax at their marginal rate on withdrawals from the inherited pot. Pension funds typically sit outside the deceased estate for Inheritance Tax purposes - though the Autumn 2024 Budget announced this will change from 6 April 2027, bringing most pensions into the IHT net.
How long will my pension pot last?: The widely-cited industry rule-of-thumb is that a 4% initial withdrawal rate (uprated for inflation each year) from a balanced portfolio sustained a 30-year retirement in historical US data ('the Trinity study'). Real outcomes vary with portfolio mix, sequence-of-returns risk, fees, and inflation - the 4% figure is a starting point not a guarantee. Our sustainability projection scales this: drawing 8% of your pot in year one halves the projected horizon to ~15 years; drawing 2% doubles it to ~60.
Is UFPLS different from flexi-access drawdown?: Uncrystallised Funds Pension Lump Sum (UFPLS) lets you take ad-hoc chunks straight from the uncrystallised pot, with 25% of each chunk tax-free and 75% taxable. Flexi-access drawdown by contrast crystallises a tranche of the pot upfront - 25% PCLS paid at that point, 75% moved into a drawdown wrapper from which you can take income flexibly. Both routes trigger the MPAA as soon as taxable income flows, and both stay subject to the £268,275 Lump Sum Allowance on the tax-free portion. UFPLS suits ad-hoc withdrawals; drawdown suits regular retirement income.