Pension Gap Calculator
Calculate whether your current pension savings are on track for your target retirement income and find your pension gap.
Reviewed by Richard Ross · Last updated April 2026
How Pension Gap Calculator works
How the pension gap is calculated
Step 1: Project your pension pot at retirement using current contributions and growth. Step 2: Calculate the annual income from the pot at a 4% withdrawal rate. Step 3: Add the state pension. Step 4: Compare to target income. The gap is the shortfall in annual income.
Target retirement income benchmarks
The PLSA Retirement Living Standards (2025) suggest: Minimum standard (basic needs covered) = £14,400/year single, £22,400/year couple. Moderate standard (some extras) = £31,300/year single, £43,100/year couple. Comfortable standard = £43,100/year single, £59,000/year couple.
Closing the gap
Options: increase contributions, extend your working life, reduce target income, invest more aggressively (higher risk/return), use salary sacrifice to boost contributions tax-efficiently, or explore other income sources (rental income, inheritance).
Annual allowance carry-forward to close large gaps
If you have a significant pension gap, HMRC's carry-forward rules allow you to contribute more than the standard £60,000 annual allowance in a single year by using unused allowances from the previous three tax years. This can be especially useful for high earners who receive a bonus or come into money unexpectedly. You must have been a member of a registered pension scheme in each year you are carrying forward from, and you must use the current year's full £60,000 allowance first.
Auto-enrolment as a starting point
Auto-enrolment minimum contributions (8% of qualifying earnings) rarely close a pension gap on their own. For a median earner on £35,000, 8% contributions of approximately £186/month over 35 years at 5% growth yields around £200,000 — sufficient for a modest income of £8,000/year from the pot. Adding the full state pension of £11,502/year still leaves a shortfall against the £31,300 PLSA moderate standard. The calculator helps you see exactly how much extra you need to contribute.
Source: PLSA Retirement Living Standards 2025 (plsa.co.uk). DWP — Automatic enrolment review (gov.uk). MoneyHelper — Check if your pension is on track (moneyhelper.org.uk).
Frequently asked questions
How much do I need to retire in the UK?
The PLSA Retirement Living Standards suggest £14,400/year for a basic retirement, £31,300 for moderate, and £43,100 for comfortable (2025 figures, single person). Add state pension (£11,502/year) and you need a pot generating approximately £20,000–32,000/year from private savings for moderate-comfortable.
What is the 4% withdrawal rule?
Withdraw 4% of your pension pot in year one of retirement and adjust for inflation each year. Historically this allows the pot to last 30+ years. At 4%, £500,000 generates £20,000/year. The rule is a guideline — actual safe withdrawal rates depend on asset allocation and sequence of returns.
Can I retire at 60 with £500,000?
At 4% withdrawal: £20,000/year from the pot. Plus state pension from age 66: £11,502/year. Total at 66+: £31,502/year, below the PLSA moderate standard of £31,300. Retiring at 60 means drawing down for 6 years before state pension starts — the pot will be smaller by then. Whether this is sufficient depends on your lifestyle.
How do I close my pension gap quickly?
The most powerful levers are increasing contributions (especially via salary sacrifice to save NI), extending your working life by even 2–3 years (more contributions and fewer years of drawdown), and reducing your target income. Using HMRC carry-forward rules, you may be able to contribute up to £240,000 in a single tax year if you have unused allowances from the past three years.
Does my employer have to contribute to my pension?
Under auto-enrolment, employers must contribute at least 3% of qualifying earnings (between £6,240 and £50,270) for eligible workers. Some employers contribute significantly more, especially in the public sector or through salary sacrifice arrangements. Check your employment contract and scheme rules — employer contributions are effectively tax-free pay, so maximising them first is usually the best strategy.
What is a comfortable retirement income in the UK?
The Pensions and Lifetime Savings Association (PLSA) Retirement Living Standards provide useful benchmarks. For 2025, a single person needs approximately £14,400/year for a minimum standard, £31,300/year for a moderate standard, and £43,100/year for a comfortable standard. A couple needs roughly £22,400, £43,100, and £59,000 respectively. These figures include State Pension income.
How much should I be saving in my pension each month?
A common rule of thumb is to save half your age as a percentage of income — so a 30-year-old should save 15% of salary. Another approach is to target a pot of 20-25x your desired annual retirement income (using the 4% drawdown rule). Auto-enrolment minimum is 8% total (employee + employer), but this is generally insufficient for a comfortable retirement unless you start early.
Can I bridge a pension gap by working part-time in retirement?
Yes. Many people phase into retirement by working part-time, which reduces their reliance on pension income in the early retirement years and allows their pension pot to continue growing. Phased retirement can significantly reduce the gap — even 2-3 years of part-time work can make a meaningful difference to the sustainability of a drawdown strategy.
What if I cannot afford to close my pension gap now?
Even small increases in contributions make a significant difference over time due to compound growth. Adding an extra £50/month from age 40 to 67 (27 years) at 5% real growth adds approximately £30,000 to your pot. Also consider: making use of carry-forward rules to contribute past pension earnings limits from prior years, consolidating old pension pots to reduce charges, and reviewing your investment allocation to ensure it is appropriate for your time horizon.
How does the pension gap calculator use the 4% rule?
The 4% rule (also called the safe withdrawal rate) estimates how much you can sustainably withdraw from a drawdown portfolio each year. Based on historical data, withdrawing 4% of the initial pot and increasing with inflation has historically lasted 30+ years in most market scenarios. The calculator uses this as a planning guide — your actual sustainable income will depend on investment returns, charges, and longevity.
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This calculator provides estimates for informational purposes only. It is not a substitute for personalised pension or financial advice. Speak to a regulated financial adviser before making pension decisions.