UK pension guide · Last reviewed 25 July 2026

Pension growth: contributions, returns, fees and inflation

A defined-contribution pension pot can grow through payments from you and your employer, tax relief and investment returns. Charges reduce the pot, while inflation affects what its future value may buy. A projection brings these factors together, but it cannot predict the eventual result.

What a pension-pot projection covers

A projection starts with the current value of one or more defined-contribution pensions and estimates how the pot could change until a selected retirement age. It is an illustration of invested savings, not a forecast of guaranteed income.

Defined-benefit pensions promise benefits under scheme rules and need a different calculation. The State Pension is also separate. Neither is included in the Pension Pot Projection Calculator.

Contributions build the starting point for growth

Employee and employer contributions add new money to the pot. A percentage contribution may be based on full salary, qualifying earnings or another definition of pensionable pay, so the percentage alone does not reveal the amount invested.

Tax relief can affect the employee cost of a personal contribution. Relief at source, net pay and salary sacrifice work differently, and contribution limits and eligibility still apply. Check payslips and scheme documents rather than assuming the calculator’s contribution basis matches the workplace scheme.

Investment growth is uncertain

Pension money is normally invested, so its value can fall as well as rise. Returns do not arrive at a steady rate: two investments with the same average annual return can follow very different paths and produce different outcomes when money is added or withdrawn along the way.

The calculator applies the annual growth assumption monthly. Its lower, central and higher illustrations change that assumption by two percentage points. They are scenarios for testing sensitivity, not confidence ranges, guarantees or best- and worst-case outcomes.

Fees also compound over time

Provider, platform, administration and investment charges may all affect a pension. Even a small annual percentage charge can have a material long-term effect because the deducted money can no longer earn future returns.

The calculator deducts an entered percentage fee and fixed fee monthly. Real schemes can use tiered rates, fund-specific charges, transaction costs or different deduction dates, so compare the assumptions with the latest provider statement.

Nominal value and today’s money

The nominal projection is the number of pounds estimated at retirement. The “today’s money” figure discounts that result using the chosen inflation rate to illustrate its purchasing power in current terms.

This adjustment does not mean future prices will rise smoothly or exactly at the entered rate. Use both figures: the nominal amount helps describe the future pot, while today’s money makes it easier to compare with present-day spending.

Worked example

Consider someone aged 35 with a £50,000 pension pot and £50,000 salary. They contribute 5% of full salary, their employer contributes 3%, and they plan to retire at 67. Assume salary grows by 2% a year, investments grow by 5% a year before fees, the annual percentage fee is 0.5% and inflation is 2%.

Using the calculator’s monthly model, the projected pot is about £562,793 at age 67, or about £298,637 in today’s money. Gross employee contributions total about £110,568 and employer contributions about £66,341. Modelled investment growth adds about £374,422, while fees deduct about £38,537.

An illustrative 25% tax-free amount would be about £140,698 under the calculator’s current standard-limit assumption. This is not a promise of the amount available under the rules or personal allowances that apply at retirement.

Try your assumptions in the Pension Pot Projection Calculator

Retirement age and contribution changes

Starting earlier gives contributions and returns more time to compound. Retiring later can add both investment time and further contributions, while increasing a regular contribution can affect the result throughout the remaining projection.

Actual working patterns may include career breaks, part-time work, transfers or changes to employer funding. Model more than one scenario and revisit the projection when pay, contributions, charges or retirement plans change.

Pension allowances still apply

The Annual Allowance limits tax-relieved pension saving across relevant arrangements. A lower tapered Annual Allowance or Money Purchase Annual Allowance can apply, while carry forward may be available in some circumstances.

The projection does not calculate pension input for an allowance test, defined-benefit growth, an Annual Allowance charge or whether every personal contribution qualifies for tax relief. Consider all pension arrangements together and use current official rules.

Tax-free cash and retirement income are separate questions

People can usually take up to 25% of pension benefits tax free, subject to their available allowances. The standard Lump Sum Allowance is currently £268,275, but previous use, protections and individual circumstances can change the amount available.

A projected pot is not the same as retirement income. The calculator does not model annuity rates, drawdown withdrawals, investment returns during retirement, longevity, Income Tax on withdrawals or the sustainability of an income plan.

Projection checklist

Use the latest combined value of all defined-contribution pots you intend to include.
Check whether contribution percentages use full salary, qualifying earnings or another pensionable-pay definition.
Separate employee contributions, employer contributions and any tax-relief assumptions.
Use cautious growth and inflation scenarios rather than relying on one headline result.
Copy percentage and fixed charges from current scheme or fund documents.
Review the result after contribution, employment, charge or retirement-age changes.
Keep defined-benefit pensions, the State Pension and retirement-income planning separate.

Related calculators and guides

Official and independent information

This guide is educational information, not pension, tax, investment or financial advice. Check current scheme terms and official rules before making a decision.