Pension Drawdown Calculator
Use this UK pension drawdown calculator to model year-by-year income, tax owed, and how long your pension pot will last using 2026/27 income tax bands. Take your 25% tax-free lump sum, set a drawdown amount, factor in growth and inflation, and see exactly when your pot runs out — all calculated privately in your browser.
| Age | Pot start | Drawdown | Tax owed | Net income | Pot end |
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How a Pension Drawdown Calculator Works in the UK
A pension drawdown calculator lets you model what happens when you keep your defined contribution pension invested in retirement and take flexible withdrawals each year. Unlike an annuity — where you swap your pot for a guaranteed income for life — drawdown leaves you in charge of how much you take, when you take it, and how the remaining money is invested. The trade-off is risk: a poor sequence of returns or excessive withdrawals can drain your pot before you reach the end of retirement.
This calculator builds a year-by-year model. It applies your expected annual growth rate to the remaining pot, subtracts your inflation-adjusted drawdown, then calculates the income tax owed using the 2026/27 UK bands — 0% on the first £12,570 of personal allowance, 20% basic rate to £50,270, 40% higher rate to £125,140, and 45% additional rate above. The tool combines your pension drawdown with any other taxable income (state pension, rental income or salary) so the marginal tax rate reflects your real position. It then shows the year your pot would run out, or whether it lasts beyond age 100 with money to spare.
The 25% Tax-Free Lump Sum and How Drawdown Is Taxed
Under current UK pension rules, you can usually take 25% of your defined contribution pension pot as a tax-free lump sum from age 55 (rising to 57 in April 2028). The maximum total tax-free lump sum across all your pensions is capped at £268,275 by the Lump Sum Allowance, which replaced the Lifetime Allowance in April 2024. Anything you take above the 25% slice — whether as a one-off withdrawal or as drawdown income — is taxed as ordinary income in the year you receive it.
That means drawdown income stacks on top of your other taxable income. If you have a state pension of £11,500 and you draw down a further £25,000 in pension income, your total taxable income is £36,500. The first £12,570 falls under your personal allowance and is tax-free. The remaining £23,930 is taxed at 20%, giving a tax bill of about £4,786. The personal allowance is tapered when total income exceeds £100,000 (reduced by £1 for every £2 above the threshold) — this calculator uses the standard allowance for simplicity.
How the calculation works
Tax-free lump sum = Pot × 25% (capped at £268,275)
Year-end pot = (Year-start pot − Drawdown) × (1 + growth rate)
Drawdown next year = Drawdown × (1 + inflation rate)
Tax owed = Income tax on (Drawdown + Other income) using 2026/27 bands
Sustainable Withdrawal Rates and Sequence Risk
The classic guideline for drawdown is the 4% rule — take 4% of your pot in year one and increase that amount by inflation each year. Research suggests this rule has historically given a high probability of the pot lasting 30 years. UK retirees commonly use 3.5% to account for lower expected returns and longer life expectancy. Drawing down 5% or more per year significantly raises the chance of running out, especially if a market downturn happens early in retirement — a problem known as sequence risk.
Sequence risk is why two retirees with identical pots, identical drawdowns and identical average growth rates can end up with very different outcomes. A 20% market fall in year one, followed by recovery, hurts far more than the same fall in year twenty, because the pot supporting your future income is permanently smaller. Using this calculator to test conservative growth assumptions (3-4%) alongside your central case helps you understand the worst-case scenario before you commit.
Example: £500,000 pot, age 60, £25,000 drawdown
- 25% tax-free lump sum: £125,000
- Remaining drawdown pot: £375,000
- 5% annual growth, 2.5% inflation
- Pot lasts approximately 23 years (to age 83)
- With state pension of £11,500 added to drawdown income, marginal tax rate stays in basic-rate band
Drawdown vs Annuity vs Mixed Strategy
Drawdown gives you control and inheritability — anything left in the pot can be passed to beneficiaries (often free of inheritance tax under current rules, although planned changes are due in April 2027). The downsides are investment risk, the risk of outliving your money, and the responsibility of managing a portfolio in retirement. Annuities are the opposite: predictable, protected from market falls, but inflexible and usually with no value left for heirs. Many UK retirees combine both — buying a small annuity to cover essential bills and using drawdown for the rest. This calculator focuses on the drawdown side; pair it with our pension annual allowance calculator to plan contributions in your final working years.
Last updated: 2026/27 tax year. Figures are estimates based on the inputs you enter. This calculator does not constitute financial advice — consult a qualified UK financial adviser for personalised guidance.