How our calculators work

Every figure on PensionCalc comes from a published official source, and every calculation follows a formula you can check by hand. This page sets out those formulas, shows worked examples produced by the same code that powers the calculators, and links the sources for each input. If you find a figure that doesn't match an official source, please tell us at info@pensioncalc.co.uk.

Our principles

• One source of truth per rate. Each tax-year figure (State Pension rate, NI contribution cost, tax band) lives in exactly one data file, so an update flows through every calculator consistently.
• Official sources only. Rates come from GOV.UK publications, scheme administrators (NHSBSA, Teachers' Pensions, Civil Service Pensions), and the ONS.
• Reviewed each April. After each UK uprating we review every constant. Each calculator page shows its tax year and last-reviewed date.
• Estimates, not statements. Our tools simplify. Your scheme's own statement and the government's official forecasts always take precedence.

Career-average pensions (NHS, Teachers', Civil Service alpha)

Each scheme year, the calculator applies two steps:

1. Revalue the pension already earned: multiply by 1 + CPI + active bonus, where CPI is the previous September's rate (published ONS figures for past years; your chosen assumption, default 2.5%, for future years).
2. Accrue new pension: add pensionable pay × accrual rate.

Worked example you can check by hand

An NHS worker on a flat £40,000 pensionable pay joins in 2023. Each year adds £40,000 ÷ 54 = £740.74; existing pension is revalued by that year's CPI + 1.5% (September CPI figures: 10.1% applied 2023, 6.7% applied 2024, 1.7% applied 2025):

Running our NHS calculator code for the same inputs returns £2,332.31 — the examples on this page are generated by the same functions that power the calculators, not written separately.

Early retirement reductions

Taking a 2015-scheme pension before Normal Pension Age (your State Pension age) applies a permanent reduction. We use this factor table, consistent with the published actuarial factors (approximately 5% per year early):

Example: a member born in 1990 (Normal Pension Age 68) who joined in 2015 on a flat £40,000 and retires at 68 would have a nominal pension of about £88,425/year (about £40,125 in today's money at 2.5% assumed inflation — the nominal figure is large because it includes ~40 years of future inflation). Retiring at 60 instead cuts accrual years and applies the 35.8% reduction for 8 years early, giving about £38,279 nominal.

Lump sum exchange

All three schemes let you exchange pension for a tax-free lump sum at £12 lump sum per £1 pension given up. The calculators cap the lump sum at 30/7 (≈4.29×) of the annual pension.

State Pension

State Pension age is read directly from the legislated timetable (Pensions Acts 1995–2014): 66 today, rising to 67 between 6 May 2026 and 6 March 2028, and to 68 currently legislated for 2044–46. We map your exact date of birth to the month-by-month transition tables.

Amount: the standard new State Pension fraction — qualifying years ÷ 35 × full rate, minimum 10 years. This is the same method GOV.UK describes: each qualifying year adds 1/35th of the full rate.

Example (2026/27 rates): 23 qualifying years → 23 ÷ 35 × £241.30 = £158.57/week (£8,245.57/year).

Voluntary NI top-ups

One qualifying year adds £241.30 ÷ 35 = £6.89/week (£358.50/year) to your State Pension at 2026/27 rates. A Class 3 year costs £956.80, so the gross payback period is £956.80 ÷ £358.50 ≈ 2.7 years of pension receipt. The calculator then adjusts for income tax at your marginal rate in retirement, years you'll still earn by working, and your life expectancy, and compares the same outlay invested in a SIPP.

Pension tax relief and the 60% trap

Income tax is computed on the 2026/27 rUK bands (personal allowance £12,570, basic 20% to £50,270, higher 40% to £125,140, additional 45%), including the personal allowance taper: £1 of allowance lost per £2 of adjusted net income over £100,000.

Example: on £110,000 income you've lost £5,000 of allowance. A £10,000 gross pension contribution restores it: you save £4,000 (40% relief) plus £2,000 (allowance back at 40%) = £6,000 on a £10,000 contribution — an effective 60% rate. Relief at Source contributions are grossed up by 100/80; salary sacrifice additionally saves employee NI.

Lump Sum Allowance (LSA/LSDBA)

Standard allowances are £268,275 (LSA) and £1,073,100 (LSDBA), or the higher protected amounts if you hold LTA protection. For benefits crystallised before 6 April 2024 the default transitional deduction is 25% × LTA percentage used × £1,073,100. Example: if you used 40% of the LTA, your LSA is reduced by £107,310, leaving £160,965 — unless a Transitional Tax-Free Amount Certificate from your scheme certifies a different figure.

FIRE / early retirement

The calculator works backwards through three phases, all in today's money:

1. From State Pension age: capital needed = (spending − pension income) × 25 (the 4% guideline).
2. Pension access age → State Pension age: pot needed to bridge at 6% drawdown, since it only has to last until phase 1.
3. Retirement → pension access age (57 from 2028): accessible (ISA/GIA) savings to bridge at 6% drawdown.

Growth compounds at your chosen real return (default 5%).

Check our figures yourself

Every calculator can be cross-checked against an official tool:

• State Pension — your official GOV.UK forecast
• NHS — NHSBSA member hub and annual statement (TRS/ESR)
• Teachers' — Teachers' Pensions benefit statement
• Civil Service — your Annual Benefit Statement
• Tax — HMRC income tax estimator

Where our estimate differs from an official statement, the official figure is right — schemes hold data (part-time service, breaks, transfers, McCloud remedy) that a general calculator cannot know. Tell us about systematic discrepancies: info@pensioncalc.co.uk.

See also: our editorial policy · about PensionCalc