State vs Private Pension Calculator 2026/27
Most people significantly undervalue their state pension. The full new state pension of £12,548 per year would cost around £250,000 to £300,000 to replicate with a private annuity -- yet people often treat it as an afterthought compared with their workplace pension pot. This calculator shows the annuity equivalent value of your state pension, your combined retirement income from both sources, and the split between guaranteed state income and flexible private income.
Why the state pension is often undervalued
When people discuss their retirement savings, they typically focus on their workplace pension pot balance. Yet the state pension, if you qualify for the full amount, delivers £12,548 per year guaranteed for life, triple-lock protected, with no investment risk and no charges. At current annuity rates, replicating this income with a private annuity would cost around £250,000 to £350,000.
The triple lock advantage
Unlike most private annuities which are level in cash terms, the state pension rises each April by at least 2.5% due to the triple lock. Over a long retirement this can make a meaningful difference to spending power. A level annuity bought today may be worth significantly less in real terms in 20 years time.
| State pension qualifying years | Weekly income 2026/27 | Annual income |
|---|---|---|
| 35 years (full) | £241.30 | £12,548 |
| 30 years | £206.83 | £10,755 |
| 25 years | £172.36 | £8,963 |
| 20 years | £137.89 | £7,170 |
| 10 years (minimum) | £68.94 | £3,585 |
Frequently asked questions
The full new state pension of £12,548 per year in 2026/27 would cost approximately £250,000 to £350,000 to replicate with a private annuity. This illustrates that even people with modest private pension pots have significant retirement wealth through the state pension. The exact figure depends on current annuity rates and whether you include inflation-linking.
Yes. The state pension and private pensions are entirely separate. You are entitled to the state pension based on your National Insurance record, regardless of how much private pension wealth you have. Having a large private pension does not reduce your state pension.
Yes. The new state pension is protected by the triple lock, which means it increases each April by the highest of earnings growth, CPI inflation, or 2.5%. This makes it more inflation-resistant than most private annuities, which are often level in cash terms.
A defined benefit pension pays a guaranteed income based on your salary and years of service, similar to the state pension. A defined contribution pension builds a pot based on contributions and investment growth. At retirement you access the pot through drawdown, annuity, or lump sums. Most modern workplace pensions are defined contribution.
The state pension uses up part of your personal allowance. In 2026/27, the full state pension of £12,548 leaves only £22 of personal allowance before private pension income starts being taxed. Any private pension income is therefore taxed at 20% or above from essentially the first pound. This is why many planners recommend spreading withdrawals carefully across tax years.
Disclaimer: This calculator provides estimates for guidance purposes only. Annuity equivalent values are illustrative and based on indicative rates. It does not constitute financial advice. Always consult a regulated financial adviser for personal retirement planning.