Pension vs ISA Calculator 2026/27

Compare how much you end up with through a pension versus an ISA, factoring in tax relief, employer contributions and tax at withdrawal.

Better Option for You
Pension
Calculating...
Pension Gross Pot
£0
Pension After-Tax Value
£0
ISA Final Value
£0
Your Monthly Cost
£0
Total Employer Bonus
£0
Pension Advantage
£0
Enter your details to compare pension vs ISA.
Pension vs ISA Comparison
How It Works

Pension: Your stated monthly amount is what you actually pay. HMRC adds tax relief on top, so more money goes into your pension than you put in. A basic rate taxpayer paying £400/month has £500 going in. A higher rate taxpayer paying £300/month has £500 going in, and can claim a further £100 back via self-assessment.

Employer contributions are an additional bonus on top · essentially free money that boosts your pension significantly.

At withdrawal, 25% of your pension pot is tax-free (up to £268,275 for 2026/27). The remaining 75% is drawn as taxable income.

ISA: You invest your stated amount from your take-home pay · no tax relief, no employer contributions. But all growth and withdrawals are completely tax-free with no restrictions on when you access the money.

For most people with employer contributions or higher rate tax relief, the pension wins comfortably. ISAs shine for flexibility and when you need access before age 57.

Pension vs ISA · £500/month over 25 years at 5% growth

Assuming 3% employer contribution, 20% basic withdrawal tax. Your monthly cost is £500 in each scenario.

Tax Band Gross into Pension/mo Pension After-Tax ISA Value Pension Advantage
Basic (20%)£625 + £18.75 employer~£317,000~£245,000+£72,000
Higher (40%)£833 + £25 employer~£407,000~£245,000+£162,000
Additional (45%)£909 + £27.27 employer~£441,000~£245,000+£196,000
Basic (20%) · no employer£625~£300,000~£245,000+£55,000

Explore More Tools

📉 Pension Drawdown 🎯 Pension Calculator 💼 ISA Calculator 💷 Income Tax 🌅 Retirement Planner 🏛️ State Pension 💵 Savings Calculator 🛡️ Emergency Fund 📈 Compound Interest 📋 Inheritance Tax

Pension vs ISA FAQs

Is a pension or ISA better for retirement saving?
For most people, especially higher and additional rate taxpayers, a pension wins due to upfront tax relief and employer contributions. A basic rate taxpayer paying £400/month has £500 going into their pension · the same £400 into an ISA stays at £400. However, ISAs offer more flexibility as you can access them at any age without income tax on withdrawal.
How does pension tax relief work in 2026/27?
Basic rate taxpayers receive 20% tax relief, meaning an £80 contribution becomes £100 in their pension. Higher rate taxpayers can claim a further 20% via self-assessment, making the effective cost £60 for every £100 invested. Additional rate taxpayers can reclaim 25% more on top, reducing the cost to £55 for each £100 in their pension. This relief makes pensions exceptionally tax-efficient during the accumulation phase.
What is the 25% pension tax-free lump sum for 2026/27?
When you access your pension from age 57 (rising from 55 in 2028), you can take up to 25% of your fund as a tax-free lump sum · up to a maximum of £268,275 for 2026/27. The remaining 75% is drawn as taxable income at your marginal rate. This means even a pension with a high withdrawal tax rate retains a significant tax-free element, maintaining its edge over ISAs for higher earners.
Can I contribute to both a pension and an ISA?
Yes, and many financial planners recommend it. You can contribute up to £20,000 to ISAs each tax year and up to £60,000 (or 100% of earnings) to pensions. A common strategy is to maximise employer pension matching first · this is free money you should never leave on the table · then direct any additional savings into a Stocks and Shares ISA for flexible, tax-free access.
When does an ISA beat a pension?
An ISA can beat a pension if you have no employer contributions, are a basic rate taxpayer now and expect to be a higher rate taxpayer at retirement, or if you need flexible access to your money before age 57. ISAs are also better for passing wealth to family as the ISA allowance is inherited by a spouse · pension funds fall outside your estate for inheritance tax purposes but will face income tax when drawn by non-spouse beneficiaries.

For informational purposes only · Not financial advice · Tax rates shown are for 2026/27 · Employer contribution rules vary by scheme