Pension Drawdown Calculator UK
See how much income your pension pot can provide, how long it could last, and the tax you’ll pay — including the trap of taking too much at once.
Pension drawdown — formally flexi-access drawdown — lets you take money from a defined-contribution pension while the rest stays invested, so you control how much income you draw and when. From the minimum pension age (currently 55, rising to 57 in April 2028), you can normally take 25% of your pot completely tax-free as a lump sum, with everything else taxed as income at your marginal rate when you withdraw it. The big risks are yours to manage: draw too much and the pot can run out — a £150,000 pot lasts comfortably at a 4% withdrawal but only about 18 years at 8% — and a market fall early in retirement can do lasting damage. Tax is the other catch, and it’s bigger than people expect: the full new State Pension of around £12,548 a year almost fills your £12,570 Personal Allowance, so drawdown income on top is taxed from nearly the first pound. Take a whole pot in one go and the taxable 75% can push you into the 45% band and lose your allowance entirely. This calculator shows your tax-free lump sum, the income and tax from your drawdown, and how long the pot could last. To estimate the pot you need, see the FIRE Number Calculator; for building it, the Pension Contribution Calculator.
Pension pot and age
Tax-free cash
Drawdown income
Tax position
Growth and charges
Drawdown result
Estimated pot lasts until
Calculating…
Calculating…
Tax-free cash now
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Initial gross income
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Initial net income
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Tax estimate year 1
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Sustainable gross income
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Final pot at plan age
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Pension drawdown — quick lookup
The left table shows how long a £150,000 drawdown pot lasts at different withdrawal rates, assuming 4% growth — the line between sustainable and running out is around 4–5%. The right shows the tax-free lump sum and remaining drawdown pot for different pot sizes. The core lesson: a sustainable withdrawal rate keeps the pot alive, while drawing too much exhausts it.
| Withdrawal | Per year | Lasts |
|---|---|---|
| 3% | £4,500 | sustainable |
| 4% | £6,000 | sustainable |
| 5% | £7,500 | ~42 years |
| 6% | £9,000 | ~29 years |
| 8% | £12,000 | ~18 years |
| Pot | 25% tax-free | In drawdown |
|---|---|---|
| £100,000 | £25,000 | £75,000 |
| £200,000 | £50,000 | £150,000 |
| £400,000 | £100,000 | £300,000 |
| £500,000 | £125,000 | £375,000 |
Left: how long a £150,000 pot lasts at each withdrawal rate, assuming 4% annual investment growth; at 4% or below the pot’s growth roughly keeps pace, so it can last indefinitely, while higher rates deplete it. Right: the 25% tax-free lump sum and the taxable remainder, capped by the £268,275 Lump Sum Allowance. Figures are illustrative; real returns vary and aren’t guaranteed.
How pension drawdown works
Drawdown gives you flexibility a fixed annuity can’t — but it hands you the responsibility too. Understanding the 25% tax-free rule, how the rest is taxed, and how fast you can safely draw is what separates a comfortable retirement from running the pot dry.
The 25% tax-free lump sum, then taxable income
When you access a defined-contribution pension, you can normally take 25% of the pot completely tax-free — the Pension Commencement Lump Sum — capped at £268,275 across all your pensions. The remaining 75% stays invested in a drawdown account, and any income you draw from it is taxed as ordinary income at your marginal rate. You don’t have to take the tax-free cash all at once; you can take it gradually, or leave the pot invested and take it later. The flexibility is the point: you choose how much to draw, and when.
Why tax bites harder than people expect
The surprise for many retirees is how quickly drawdown income is taxed. The full new State Pension of around £12,548 a year is 99.8% of the £12,570 Personal Allowance — leaving just £22 of tax-free room. So once your State Pension is in payment, almost every pound of drawdown income on top is taxed from the start, typically at 20%. Drawing £20,000 from your pot alongside the State Pension means a total income of £32,548, with around £3,996 in tax, leaving roughly £28,552. Planning withdrawals around your tax bands — and timing the tax-free cash — is central to keeping more of your pot.
How long the pot lasts
Because the pot stays invested, how long it lasts depends on the balance between your withdrawals and investment growth. Draw at or below a sustainable rate — often cited around 4% — and growth can roughly replace what you take, so the pot can last indefinitely. Draw faster and you eat into the capital: a £150,000 pot lasts about 29 years at 6% but only 18 at 8%. The danger is “longevity risk” — outliving your money — which is why a sustainable withdrawal rate matters more in drawdown than in any other product.
Worked examples
Four scenarios: the tax-free lump sum, drawdown income and tax, the danger of taking everything at once, and how long a pot lasts.
Scenario 1 · The tax-free lump sum
£50,000 tax-free from a £200,000 pot
Tax-free lump sum: £50,000
Remaining in drawdown: £150,000
On a £200,000 pot, you can take £50,000 completely tax-free, with £150,000 left invested to provide income. Many people use the lump sum to clear a mortgage, fund a one-off cost, or simply hold as accessible cash. You don’t have to take it all at once — taking it gradually can be more tax-efficient, since the rest stays invested and any growth on it remains within the pension wrapper. The 25% tax-free entitlement is one of the most valuable features of a UK pension, so it’s worth planning how and when to use it.
Scenario 2 · Drawdown income and tax
£20,000 drawdown plus the State Pension
Total income £32,548 · income tax ~£3,996
Net income: ~£28,552
Because the State Pension nearly fills your Personal Allowance, the £20,000 you draw is taxed almost entirely at 20%, costing around £3,996. That leaves about £28,552 net. The lesson is that your total income — State Pension plus drawdown plus anything else — determines your tax, so it’s worth keeping drawdown within the basic-rate band where possible and being aware of the higher-rate threshold. Spreading withdrawals across tax years, rather than taking large amounts in one, keeps the tax bill down.
Scenario 3 · The take-it-all trap
£54,332 tax on a single big withdrawal
£50,000 tax-free + £150,000 taxable at once
Income tax on the £150,000: ~£54,332
Taking a whole pot in one go is the costliest mistake in drawdown. The 25% (£50,000) is tax-free, but the remaining £150,000 is added to your income in a single year — pushing you into the 40% and 45% bands and starting to remove your Personal Allowance above £100,000. The result is around £54,332 in tax. Drawn gradually over several years within the basic-rate band, the same money could be taxed far more lightly. Flexibility cuts both ways: drawdown lets you spread withdrawals to manage tax, but only if you resist taking too much at once.
Scenario 4 · How long it lasts
Sustainable at 4%, gone in 18 years at 8%
Draw 4% (£6,000/yr): can last indefinitely
Draw 8% (£12,000/yr): runs out in ~18 years
The withdrawal rate decides everything about longevity. Drawing £6,000 a year (4%) from a £150,000 pot growing at 4%, the growth roughly replaces what you take, so the pot can last as long as you need it. Double the withdrawal to £12,000 (8%) and you’re eating into capital — the pot empties in about 18 years, which could leave you short in later life. This is why drawdown demands a sustainable rate and regular review; unlike an annuity, there’s no guarantee the income lasts.
Drawing down well — four decisions
Most drawdown calculators just split the pot 25/75 and apply tax. But a good retirement income plan turns on a few decisions most tools skip — about pace, tax, the annuity question, and the risks you’re taking on. Work through these four:
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1
Is your withdrawal rate sustainable?
The pot stays invested, so drawing too much exhausts it. Around 4% is often cited as sustainable; a £150,000 pot can last indefinitely at 4% but empties in ~18 years at 8%. Set a rate your pot can support over a long retirement, and review it as markets and your circumstances change.
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2
Are you managing the tax across years?
Drawdown income stacks on your State Pension and anything else. Because the State Pension nearly fills your Personal Allowance, extra income is taxed from almost the first pound. Spread withdrawals across tax years to stay in the basic-rate band, rather than taking large sums that hit 40% or 45%.
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3
Drawdown, annuity, or both?
Drawdown is flexible and the pot stays invested and inheritable, but you bear the risk. An annuity swaps the pot for a guaranteed income for life — roughly £9,750 a year on £150,000 at current rates — removing the risk of running out. Many blend the two: an annuity for essentials, drawdown for flexibility.
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4
Have you allowed for sequence risk?
A market fall early in retirement, while you’re withdrawing, can permanently shrink the pot — “sequence risk”. A cash buffer to avoid selling investments when they’re down, and flexibility to trim withdrawals in bad years, protect against it. The pot is yours to manage, so the risk is yours too.
£200,000 pot — the choices that matter
What different decisions produce:
The same £200,000 pot can be handled brilliantly or badly: take the £50,000 tax-free cash, then draw the rest gradually within the basic-rate band at a sustainable pace, and it can fund a long retirement; take it all at once and over £54,000 vanishes in tax. That’s why “how should I draw my pension?” is one of the most consequential financial decisions you’ll make. The sensible principles are: choose a sustainable withdrawal rate, spread taxable withdrawals across years to manage your tax band, decide honestly whether you want the certainty of an annuity for some of the pot, and keep a buffer against bad early markets. Pension decisions are complex and hard to reverse — this is an area where regulated advice or free Pension Wise guidance is genuinely valuable. The calculator shows the numbers; the decision deserves care.
The MPAA trap if you go back to work
One catch worth knowing: as soon as you take taxable income from drawdown (not just the tax-free lump sum), you trigger the Money Purchase Annual Allowance, which cuts the amount you can contribute to defined-contribution pensions with tax relief to just £10,000 a year. If there’s any chance you’ll return to work and want to keep building your pension, this matters — taking even a small taxable withdrawal permanently reduces your future contribution allowance. Taking only the tax-free cash, without any taxable income, doesn’t trigger it, which is one reason some people take their lump sum but delay drawing income.
Two scenarios that change the picture
What if…
You spread a big withdrawal over several years?
What if…
You bought an annuity instead?
Key pension drawdown terms explained
Drawdown comes with its own vocabulary — lump sums, allowances, and the alternatives to it. The ten below cover what you’ll meet planning your retirement income.
- Pension drawdown
- Taking income flexibly from a defined-contribution pension while the rest stays invested. Formally “flexi-access drawdown”. The main alternative to buying an annuity.
- Flexi-access drawdown
- The official name for modern drawdown, introduced in 2015. Lets you withdraw any amount, whenever you like, with no minimum or maximum, after taking your tax-free cash.
- Tax-free lump sum (PCLS)
- Up to 25% of your pot taken tax-free — the Pension Commencement Lump Sum — capped at £268,275 across all pensions. Can be taken in one go or gradually.
- Marginal rate
- The income tax rate on your next pound of income — 20%, 40%, or 45%. All drawdown income beyond the tax-free lump sum is taxed at your marginal rate.
- Annuity
- Swapping your pot for a guaranteed income for life from an insurer. Removes the risk of running out, but you give up the pot, its flexibility, and its inheritability.
- UFPLS
- Uncrystallised Funds Pension Lump Sum — taking ad-hoc lump sums where 25% of each is tax-free and 75% taxed, without formally moving the whole pot into drawdown.
- Sustainable withdrawal rate
- The yearly withdrawal a pot can support long-term, often cited around 4%. Draw at or below it and growth can roughly replace what you take; draw more and capital shrinks.
- Sequence risk
- The danger that poor returns early in retirement do lasting damage, because you’re withdrawing from a falling pot. A cash buffer and flexible withdrawals help guard against it.
- Longevity risk
- The risk of outliving your money. Drawdown carries it because the income isn’t guaranteed; an annuity removes it by paying for life however long you live.
- MPAA
- Money Purchase Annual Allowance — once you take taxable drawdown income, the amount you can pay into DC pensions with tax relief drops to £10,000 a year.
Five mistakes people make with pension drawdown
Drawdown’s flexibility is also its danger — there are several costly, hard-to-reverse errors. These five, drawn from the recurring r/UKPersonalFinance and r/FIREUK threads, are the common ones.
Taking the whole pot in one tax year
Withdrawing a large pot at once means the taxable 75% lands in a single year, pushing you into the 40% or 45% band and removing your Personal Allowance above £100,000. On a £200,000 pot that’s around £54,000 in tax. Spread withdrawals across years to stay in lower bands.
Cost: tens of thousands in avoidable tax Fix: spread withdrawals across tax yearsDrawing faster than the pot can sustain
Treating drawdown like a bottomless account, some withdraw 7–8% a year and run the pot dry in their later years. A £150,000 pot empties in about 18 years at 8%. Set a sustainable rate — often around 4% — and review it regularly as markets move.
Cost: running out of money in old age Fix: use a sustainable rate and review itTriggering the MPAA by accident
Taking even a small taxable withdrawal triggers the Money Purchase Annual Allowance, cutting future tax-relieved pension contributions to £10,000 a year. People who plan to keep working and contributing can be caught out. Taking only the tax-free cash doesn’t trigger it.
Cost: lost pension contribution allowance Fix: take only tax-free cash if still contributingIgnoring how the State Pension stacks tax
Forgetting that the State Pension nearly fills the Personal Allowance, people assume early drawdown income is tax-free. In fact, once the State Pension is in payment, drawdown is taxed from almost the first pound. Plan withdrawals around your total income, not the pension pot alone.
Cost: an unexpected tax bill Fix: plan around total income, including State PensionNot allowing for a bad early market
A market fall in the first years of drawdown, while you’re withdrawing, does far more lasting damage than the same fall later — you sell more units when prices are low. Without a cash buffer or flexibility to cut withdrawals, the pot can be permanently dented.
Cost: a permanently smaller pot Fix: hold a cash buffer; trim draws in bad yearsFrequently asked questions
What is pension drawdown?
Pension drawdown — formally flexi-access drawdown — is a way of taking income from a defined-contribution pension while the rest of the pot stays invested. You choose how much to withdraw and when, with no minimum or maximum.
You can normally take 25% of the pot tax-free, with the remaining 75% taxed as income when you draw it. It’s the main flexible alternative to buying an annuity, but you take on the investment and longevity risk yourself.
How much of my pension can I take tax-free?
You can normally take 25% of your pension pot tax-free — known as the Pension Commencement Lump Sum — from the minimum pension age (currently 55, rising to 57 in April 2028). On a £200,000 pot, that’s £50,000 tax-free.
The total tax-free amount is capped at £268,275 across all your pensions (the Lump Sum Allowance), so this only limits you if your pensions total more than about £1.07 million. You don’t have to take it all at once — you can take it gradually, leaving the rest invested.
How is drawdown income taxed?
Everything beyond the 25% tax-free lump sum is taxed as ordinary income at your marginal rate — 20%, 40%, or 45% — when you withdraw it. Crucially, it’s added to your other income, including the State Pension.
Because the full new State Pension (around £12,548) nearly fills the £12,570 Personal Allowance, drawdown income on top is usually taxed from almost the first pound. Drawing £20,000 alongside the State Pension gives about £32,548 total and roughly £3,996 in tax. Spreading withdrawals across tax years keeps you in lower bands.
How long will my pension pot last in drawdown?
It depends on the balance between your withdrawals and investment growth. Draw at or below a sustainable rate — often cited around 4% — and growth can roughly replace what you take, so the pot can last indefinitely.
Draw faster and you eat into capital: a £150,000 pot lasts about 29 years at 6% but only around 18 at 8%. Because the income isn’t guaranteed, a sustainable rate and regular reviews matter — this is the “longevity risk” that drawdown carries and an annuity removes.
Should I take my whole pension at once?
Usually not — it’s the costliest drawdown mistake. While 25% is tax-free, the remaining 75% is added to your income in a single year, often pushing you into the 40% and 45% bands and removing your Personal Allowance above £100,000.
On a £200,000 pot, taking it all at once can mean around £54,000 in tax on the taxable part. Drawn gradually within the basic-rate band, the same money is taxed far more lightly. Drawdown’s flexibility exists precisely so you can spread withdrawals and manage the tax.
What’s the difference between drawdown and an annuity?
An annuity swaps your pot for a guaranteed income for life — roughly £9,750 a year on £150,000 at current rates — removing the risk of running out, but you give up the pot and its flexibility and inheritability.
Drawdown keeps the pot invested and accessible and can be passed on, but the income isn’t guaranteed and you bear the investment and longevity risk. Many people blend the two: an annuity to cover essential spending, and drawdown for flexibility on top.
What is the MPAA and how do I trigger it?
The Money Purchase Annual Allowance (MPAA) limits how much you can pay into defined-contribution pensions with tax relief to £10,000 a year. It’s triggered the moment you take any taxable income from drawdown.
Taking only the 25% tax-free lump sum, with no taxable income, does not trigger it. This matters if you plan to keep working and contributing — even a small taxable withdrawal permanently cuts your future contribution allowance, so some people take their tax-free cash but delay drawing taxable income.
When can I access my pension?
You can normally access a defined-contribution pension from the minimum pension age, currently 55. This is scheduled to rise to 57 from 6 April 2028, in line with the State Pension age moving to 67.
Some older schemes or members with specific protections may have a lower protected age. There’s no obligation to take anything at the minimum age — you can leave the pot invested and start drawing later, or take the tax-free cash without drawing taxable income. This is a complex, hard-to-reverse area, so guidance from Pension Wise is worth using.
Related calculators
Drawing your pension connects to the pot you need, how it was built, and the income tax around it. These calculators handle each piece.
Methodology & sources
How the maths works
The calculator splits your pot into the 25% tax-free lump sum (the Pension Commencement Lump Sum, capped at the £268,275 Lump Sum Allowance) and the taxable remainder. For drawdown income, it adds your annual withdrawal to your State Pension and any other income, then applies UK income tax for the current year — the Personal Allowance, the 20% basic, 40% higher, and 45% additional bands, and the Personal Allowance taper above £100,000 — to show your tax and net income. For pot longevity, it projects the invested balance forward year by year, applying your assumed growth rate and subtracting each year’s withdrawal, to estimate how long the pot lasts. The annuity comparison applies an illustrative annuity rate to the pot to show a guaranteed income for contrast. National Insurance is not charged on pension income.
These are illustrative estimates to help you understand your options, not personal advice, a forecast, or a guarantee. Pension decisions are complex, often irreversible, and depend on your full circumstances — your other income, health, attitude to risk, whether you have a partner, your tax position, and how long you need the money to last. Investment values can fall as well as rise, and a poor sequence of returns early in retirement can shorten how long a pot lasts. Tax rules, allowances, the minimum pension age, the State Pension, and annuity rates are set by government and the market and change over time. The aim is to help you understand how drawdown works and roughly what it might produce — not to recommend drawdown, an annuity, or any particular withdrawal. For a decision this important, regulated advice or free Pension Wise guidance is strongly recommended.
Key facts used (current rules)
- Tax-free lump sum: 25%, capped £268,275 (Lump Sum Allowance)
- Minimum pension age: 55, rising to 57 from 6 April 2028
- Taxable income: 75% taxed at marginal rate when withdrawn
- Personal Allowance: £12,570 (tapered above £100,000)
- Income tax bands: 20% to £50,270, 40% to £125,140, 45% above
- Full new State Pension: ~£12,548/yr (99.8% of allowance)
- MPAA: £10,000/yr, triggered by taxable drawdown income
- No National Insurance on pension income