The State Pension in 2026/27
The full new State Pension is £241.30 a week, £12,547.60 a year, for people who reached State Pension age after April 2016. You need 35 qualifying years of National Insurance for the full amount and at least 10 for any, with each year worth 1/35 of the full rate. Years can come from work, from NI credits while caring or claiming certain benefits, or from voluntary contributions to fill gaps. The State Pension rises every April by the highest of earnings growth, inflation or 2.5% (the triple lock).
| Born | State Pension age |
|---|---|
| Before 6 April 1960 | 66 |
| 6 April 1960 to 5 March 1961 | 66 and 1 to 11 months |
| 6 March 1961 to 5 April 1977 | 67 |
| 6 April 1977 to 5 April 1978 | between 67 and 68 |
| After 5 April 1978 | 68 (under current law) |
The rise to 68 is set in law for 2044 to 2046, and a third government review of the timetable is under way, so younger savers should plan for a date that may move. The calculator works out your State Pension age from your month of birth; for people born in 1977 and early 1978 it uses an approximation.
Tax relief and what saving really costs
Contributions get income tax relief at your highest rate. Through a workplace scheme using net pay or salary sacrifice, they come out before tax; in a relief-at-source scheme or personal pension, the provider adds 20% and higher-rate taxpayers claim the rest. Salary sacrifice also saves National Insurance. For a basic-rate taxpayer, £100 in the pot costs £80; for a higher-rate taxpayer, £60. You can pay in up to the annual allowance of £60,000 a year (or 100% of earnings if lower), reduced for incomes over £260,000. Once you start taking flexible income from a pension, the money purchase annual allowance cuts that to £10,000.
Under automatic enrolment the legal minimum is 8% of qualifying earnings, £6,240 to £50,270: 5% from you, including tax relief, and 3% from your employer. On a £40,000 salary that is £2,700 a year, much less than 8% of the full salary. Many employers match more if you pay more.
A worked example
Born in June 1986, earning £40,000 with £30,000 already saved, paying the minimum 8% of qualifying earnings, with 4% growth after inflation less 0.5% charges and pay rising 1% a year above inflation. By 68 the pot is about £223,800 in today's money, of which £118,400 was paid in. Taking 25% tax-free (£55,956) and spreading the rest to 90 gives about £10,690 a year. With the full State Pension of £12,547.60, gross income is £23,241 and income tax is (£23,241 − £12,570) × 20% = £2,134, leaving £21,107 a year, about £1,759 a month.
Taking your pension
You can usually access a private pension from 55, rising to 57 from 6 April 2028. Up to 25% can be taken tax-free, capped at the lump sum allowance of £268,275; the rest is taxed as income when you draw it. You can take the tax-free cash at the start and leave the rest invested (drawdown), take 25% of each withdrawal tax-free, buy an annuity for a guaranteed income, or mix them. Drawdown keeps your money invested, so the income is not guaranteed and can run out if markets fall early or you draw too much. An annuity removes that risk in exchange for giving up the capital.