Pension Drawdown Calculator 2026/27
Pension drawdown lets you leave your pot invested and withdraw from it flexibly in retirement, rather than buying an annuity. The key risk is that you could run out of money. How long your pot lasts depends on how much you withdraw, how fast your remaining pot grows, and what charges you pay. This calculator simulates pot depletion year by year, shows the 25% tax-free lump sum you can take under the 2024 Lump Sum Allowance rules (capped at £268,275), and charts how your pot depletes over time.
How the drawdown simulation works
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1Tax-free cash is calculated first
If you choose to take the tax-free lump sum, 25% of your pot is calculated and capped at the Lump Sum Allowance of £268,275 (post-April 2024 rules). The Lifetime Allowance is abolished and does not apply. The remaining pot enters drawdown.
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2Annual growth and withdrawals are simulated
Each year, the pot grows by the net growth rate (investment growth minus annual charges), then the annual withdrawal is deducted. The simulation runs for up to 40 years or until the pot reaches zero.
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3Withdrawal rate indicates sustainability
The withdrawal rate (annual withdrawal as a percentage of starting drawdown pot) is a useful sustainability indicator. A rate below 4% is often considered sustainable in the long term, though this depends heavily on investment returns and inflation.
Tax-free cash rules (post-April 2024)
| Item | Value |
|---|---|
| Tax-free portion | 25% of pension pot |
| Lump Sum Allowance (lifetime cap) | £268,275 |
| Lump Sum and Death Benefit Allowance | £1,073,100 |
| Lifetime Allowance | Abolished April 2024, does not apply |
| Minimum access age (current) | 55 |
| Minimum access age (from April 2028) | 57 |
What your results mean
The simulation shows how long your pension pot could last given fixed assumptions about withdrawals, growth and charges. In reality, investment returns vary year to year, and a sequence of poor returns early in retirement (known as sequence of returns risk) can deplete a pot much faster than average returns suggest. The chart gives you a visual sense of the pace of depletion.
The 4% rule
A commonly referenced guideline is that withdrawing 4% of your starting pot per year is likely to be sustainable over a 30-year retirement, based on historical equity and bond return data. However, this rule originated from US market research and may not translate directly to UK portfolios. A withdrawal rate of 3.5% or lower is considered more prudent by many UK financial planners.
The Lifetime Allowance is abolished
From April 2024, the Lifetime Allowance no longer exists. It has been replaced by the Lump Sum Allowance (£268,275) for tax-free cash and the Lump Sum and Death Benefit Allowance (£1,073,100) for death benefits. If you see references to the Lifetime Allowance in older planning documents, they are out of date.
Income tax on drawdown withdrawals
Withdrawals above the tax-free cash are subject to income tax at your marginal rate, combined with any other income you have in retirement (including the state pension). Use the Retirement Income Tax Calculator to estimate your annual tax bill in retirement.
IHT change from April 2027: The government has announced that unused pension funds will likely be brought within scope for Inheritance Tax from April 2027. This changes the estate planning value of pension drawdown compared to other assets. Seek regulated financial advice before making drawdown decisions on this basis.
Frequently asked questions
Under the rules that replaced the Lifetime Allowance from April 2024, you can take 25% of your pension pot as a tax-free lump sum, up to a lifetime limit of £268,275 (the Lump Sum Allowance). If your pot is worth £1,073,100 or more, the cap means you cannot take a full 25%. Once you have used your Lump Sum Allowance, all further pension withdrawals are taxable. Tax-free cash does not have to be taken all at once, you can take it in stages using the uncrystallised funds pension lump sum (UFPLS) approach.
The minimum age at which you can access a private or workplace pension is currently 55. This rises to 57 in April 2028 for most people. Some pension schemes with protected pension ages (typically those with a scheme pension age of 55 in their rules as of a specified date) may allow access from 55 even after 2028, but this protection is complex and scheme-specific. You cannot access a pension before the minimum age except in cases of serious ill health.
An annuity converts your pension pot into a guaranteed income for life (or a fixed term), paid by an insurance company. You cannot run out of money, but you lose control of the capital and the income is usually fixed (unless you buy an inflation-linked annuity). Drawdown keeps your pot invested and lets you withdraw flexibly, preserving capital for heirs. However, you bear the investment risk and longevity risk, if your pot depletes before you die, you have no income. Many people in retirement use a combination of annuity (for a guaranteed base income) and drawdown (for flexibility).
Yes. If you start taking flexible income from a drawdown pension (rather than just the tax-free cash), you trigger the Money Purchase Annual Allowance (MPAA), which reduces your maximum pension contribution in future years from £60,000 to £10,000. This matters if you plan to continue working and contributing to a pension after starting drawdown. Taking only the tax-free cash does not trigger the MPAA. Buying an annuity also does not trigger it.
Pension funds held in drawdown can currently be passed on to beneficiaries outside your estate, free of Inheritance Tax, and potentially free of income tax if you die before age 75. After age 75, your beneficiaries pay income tax at their marginal rate on withdrawals. However, the government has announced that unused pension funds will likely be brought within scope for IHT from April 2027. This is a significant change that will affect the estate planning case for holding wealth in a pension rather than drawing it down.
Disclaimer: This calculator provides estimates for guidance purposes only. It does not account for variable investment returns, inflation, or tax on withdrawals. It does not constitute financial advice. Always consult a regulated financial adviser before making drawdown decisions.