Pension Projection Calculator
Estimate defined benefit pension payments in retirement.
What this calculator does
This calculator handles both sides of a UK retirement that mixes a defined benefit pension with a defined contribution pot. It projects the DC pot forward at your expected return, and converts your expected monthly DB pension into an equivalent capital value so the two can be read on a common scale.
That conversion is the point. A scheme pension of £1,200 a month looks unimpressive next to a pot with a six-figure balance, but at a 4 percent withdrawal rate it represents £360,000 of capital, guaranteed, usually inflation-linked and impossible to outlive. Members routinely undervalue what they already hold.
When to use it
Use it if you are a member of a final salary or career average scheme and want to know how much extra saving is actually needed. Public sector employees in particular often either over-save into AVCs or assume the scheme covers everything, and this puts a number on which of those is true.
It is also the sensible first step before responding to a transfer value offer, and before deciding at what age to take the scheme pension. Most schemes reduce the benefit for each year taken early, often by around 4 to 5 percent, and seeing that as a change in capital terms makes the trade-off tangible.
Understanding the inputs
Take the expected DB pension per month from your annual benefit statement rather than estimating it, and check whether the quoted figure assumes your normal scheme pension age or the age you actually intend to retire. Note too whether it is before or after taking any tax-free lump sum, since commuting pension for cash reduces the ongoing income.
Monthly DC contribution should include your contribution, the tax relief added, and your employer's payment. Expected return should be net of platform and fund charges and should become more cautious as retirement approaches, since only the DC side is exposed to markets at all.
How is this calculated?
Annual Pension = Final Salary × Years of Service × Accrual Rate (e.g., 1/60).
A worked example
Someone paying £450 a month into a DC pot for 25 years at 6 percent builds roughly £312,000. Alongside it, a scheme pension of £1,200 a month is £14,400 a year, which at a 4 percent withdrawal rate is equivalent to about £360,000 of capital.
So the pension nobody sees a balance for outweighs 25 years of DC saving. And because most DB pensions in payment rise with inflation subject to a cap, the comparison actually flatters the DC pot: replicating an inflation-linked income safely usually requires a withdrawal rate nearer 3.5 percent, which would value the same pension above £410,000.
Limitations and assumptions
These figures are projections under assumptions rather than predictions. The DC side applies a single flat return with no volatility, so sequence-of-returns risk is invisible, and the pot you actually reach could differ considerably even if the average return is right.
The DB side is capitalised with a simple withdrawal rate, which ignores indexation caps, spouse and dependant benefits, early or late retirement factors, commutation rates, and income tax on both streams. It also ignores the State Pension. Your scheme's own benefit statement and, for any transfer, regulated advice are the authoritative sources.
Common Questions
- How is a defined benefit pension calculated?
- Final salary schemes multiply pensionable salary by years of service and an accrual rate, commonly 1/60 or 1/80. Twenty-five years at 1/60 on a £60,000 final salary gives £25,000 a year. Career average schemes instead bank a slice of each year's salary, revalued to retirement, which is how the LGPS at 1/49 and the NHS scheme now work.
- Why convert the pension into a capital figure?
- Because a guaranteed income and an invested pot cannot otherwise be compared. Dividing the annual pension by a withdrawal rate gives the pot you would need to produce the same income. At 4 percent, a £14,400 pension equates to £360,000 of savings, and most scheme members underestimate that by a wide margin.
- Is a defined benefit pension really that valuable?
- Yes, and often more valuable than the capital equivalent suggests, because it carries no investment risk, cannot be outlived, and usually rises with inflation. Most private sector DB pensions in payment increase with CPI or RPI subject to a cap, typically between 2.5 and 5 percent, which is a guarantee no drawdown pot can offer.
- Why are DB schemes so rare now?
- Because the risk and cost sit with the employer. Longevity improvements, lower gilt yields and stricter funding rules made open schemes prohibitively expensive, and almost all private sector schemes have closed to new members and then to future accrual. Meaningful DB provision now sits mainly in the public sector.
- Should I transfer my DB pension to a SIPP?
- Almost always no. You would be giving up a guaranteed, inflation-linked, spouse-protected income for market risk. Transfers from safeguarded benefits worth more than £30,000 legally require advice from an FCA-authorised specialist, and the regulator's starting assumption is that transferring is unsuitable for most members.
- What is a cash equivalent transfer value?
- The lump sum a scheme offers to release you from your entitlement. Multiples of 20 to 30 times the annual pension have been common, so a £20,000 pension might attract £500,000. That looks generous until you consider it must fund an inflation-linked income for both you and a surviving spouse for life.
- What happens if my employer fails?
- The Pension Protection Fund steps in. Members already at scheme pension age generally receive 100 percent of their pension; those below it receive 90 percent subject to a cap, with more limited indexation. It is meaningful protection, though not identical to the original promise.
- Does the State Pension come on top?
- Yes, and it is a separate entitlement based on your National Insurance record, currently around £230 a week with 35 qualifying years needed for the full amount. If you were contracted out of the additional State Pension while in a DB scheme, your State Pension may be reduced, so check your forecast.
- What should I put in the DC contribution field?
- Everything going into a defined contribution pot each month: your own contribution, tax relief, and the employer's share. Many people with a DB pension also hold a small DC pot from an earlier job or an AVC arrangement, and those are easy to forget when they are not the main scheme.
Related calculators
- Retirement Gap CalculatorIdentify the gap between your projected retirement savings and your income goal.
- DB vs DC Plan CalculatorCompare a defined benefit pension vs a defined contribution plan.
- Inflation-Adjusted Income CalculatorCalculate how much retirement income you need accounting for inflation.