How long will your pension pot last?
Pension drawdown lets you keep your pot invested and take income flexibly, rather than buying an annuity. The trade-off is sustainability: draw too much and the pot can run out while you still need it. As a starting point, many use a 3–4% sustainable withdrawal rate — the well-known "4% rule" came from US research (Bengen, 1994), but UK and global studies often suggest 3–3.5% is more durable here, partly because of fees and lower expected real returns. Your own sustainable figure depends on growth, inflation, fees, your other income and how long you need the money to last.
Pension Drawdown Sustainability Table (UK)
To help you visualize how long your pension pot might last, the table below shows estimated lifespans for different starting pot sizes at various target net incomes. These figures assume you retire at age 65, take a 25% tax-free lump sum up front, select flexi-access drawdown, and exclude the State Pension. Calculations assume 5.0% investment growth, 2.5% inflation, and 0.5% annual fees (a net real return of 2.0%).
| Target Net Income | £100,000 Pot | £200,000 Pot | £300,000 Pot | £500,000 Pot | £1,000,000 Pot |
|---|---|---|---|---|---|
| £10,000/yr | 8 yrs (age 73) | 17 yrs (age 82) | 28 yrs (age 93) | 40+ yrs (105+) | 40+ yrs (105+) |
| £15,000/yr | 4 yrs (age 69) | 10 yrs (age 75) | 16 yrs (age 81) | 29 yrs (age 94) | 40+ yrs (105+) |
| £20,000/yr | 3 yrs (age 68) | 7 yrs (age 72) | 11 yrs (age 76) | 19 yrs (age 84) | 40+ yrs (105+) |
| £25,000/yr | 2 yrs (age 67) | 5 yrs (age 70) | 8 yrs (age 73) | 14 yrs (age 79) | 34 yrs (age 99) |
| £30,000/yr | 2 yrs (age 67) | 4 yrs (age 69) | 6 yrs (age 71) | 11 yrs (age 76) | 26 yrs (age 91) |
| £40,000/yr | 1 yr (age 66) | 3 yrs (age 68) | 4 yrs (age 69) | 8 yrs (age 73) | 17 yrs (age 82) |
| £50,000/yr | 1 yr (age 66) | 2 yrs (age 67) | 3 yrs (age 68) | 6 yrs (age 71) | 12 yrs (age 77) |
Case Study: Decumulating a £250,000 UK Pension Pot
To understand the mechanics of flexi-access drawdown and tax under 2026/27 rules, let's look at a case study of a retiree, Sarah, who starts drawing income at age 65 with a £250,000 defined-contribution pension pot. Her target net income is £20,000 a year (in today's money), rising with inflation.
Year 1: Taking Tax-Free Cash
Sarah chooses to take her full 25% tax-free lump sum up front, which amounts to £62,500. She puts this cash into a high-yield savings account or ISA to draw from over time. The remaining 75% of her pot (£187,500) is moved into a flexi-access drawdown account to generate her ongoing income.
Year 2 to 6: Drawing Taxable Income (Before State Pension)
To receive £20,000 net, Sarah's withdrawals from the drawdown account must be grossed up to cover UK income tax. Because she does not yet receive the State Pension, her only taxable income is her drawdown withdrawals:
- The first £12,570 is tax-free under the UK Personal Allowance.
- The next portion is taxed at the basic rate of 20%.
- To achieve a net income of £20,000, she must make a gross withdrawal of approximately £21,858, paying £1,858 in income tax.
Year 7 onwards: State Pension Kicks In
At age 67, Sarah begins receiving the full UK New State Pension of £12,548 a year (2026/27 rate, adjusted for inflation). This changes the tax and withdrawal dynamics dramatically:
- Her State Pension uses up almost her entire £12,570 Personal Allowance, leaving only £22 of allowance remaining.
- To meet her £20,000 net income target, she now only needs to draw a net amount of £7,452 from her drawdown pot.
- Almost the entire drawdown withdrawal is now taxed at 20%. Her gross drawdown withdrawal drops to £9,315, paying £1,863 in tax.
- Because the strain on her drawdown pot drops from over £21,800 a year to under £9,400 a year, her remaining capital lasts significantly longer, benefiting from compound growth.
Understanding the UK Pension Tax Structure
Navigating UK pension drawdown requires understanding how the tax system treats different parts of your retirement wealth. The UK system relies on three distinct tax buckets:
- 1. 25% Tax-Free Lump Sum (PCLS): Under UK tax rules, you can typically take up to 25% of your defined-contribution pension pot tax-free, capped at the Lump Sum Allowance of £268,275.
- 2. Flexi-Access Drawdown (Taxable Income): The remaining 75% stays invested. Any income drawn from this portion is added to your other taxable income and subject to UK Income Tax rates (Basic 20%, Higher 40%, Additional 45%).
- 3. UK State Pension: The New State Pension (£11,541.40/yr in 2026/27) is paid gross but counts towards your £12,570 Personal Allowance, reducing the tax-free buffer available for your drawdown withdrawals.
Flexi-access drawdown vs UFPLS
Flexi-access drawdown (FAD)
You take up to 25% of your pot as tax-free cash (the Pension Commencement Lump Sum), capped at the Lump Sum Allowance of £268,275. The rest moves into drawdown, where every later withdrawal is taxed as income.
Uncrystallised Funds Pension Lump Sum (UFPLS)
There's no separate tax-free lump sum. Instead, each withdrawal is 25% tax-free and 75% taxable. This can suit people who want to spread tax-free cash across several years. Switch the calculator's drawdown type to compare the two.
How drawdown is taxed (2026/27)
Taxable pension income uses the standard rates: nothing on the first £12,570 (the Personal Allowance), 20% to £50,270, 40% to £125,140, then 45%. Two things catch people out:
- Emergency tax on a first withdrawal if your provider doesn't hold the right tax code — usually reclaimable from HMRC.
- The Money Purchase Annual Allowance (MPAA) of £10,000 — once you take taxable income flexibly, the most you can keep contributing to a DC pension with tax relief drops sharply.
Drawdown vs annuity
Drawdown keeps your money invested and flexible, but you carry the investment and longevity risk. An annuity swaps your pot for a guaranteed income for life. Many retirees blend the two — covering essential spending with guaranteed income and keeping the rest in drawdown for flexibility.
Frequently asked questions
How long will £300,000 last in drawdown?
It depends on your income, growth, fees and whether you also receive the State Pension. A 3–4% rate on £300,000 is roughly £9,000–£12,000 a year before tax — but use the calculator above with your own figures.
Is the 4% rule safe in the UK?
It's a useful starting point, not a guarantee. UK research often points to 3–3.5% as more durable. Markets, inflation and your spending pattern all matter.
Can I take 25% tax-free and still use drawdown?
Yes — under flexi-access drawdown you take up to 25% tax-free (capped at £268,275) and move the rest into drawdown.
What age can I access my pension?
Currently 55, rising to 57 from 6 April 2028. The State Pension is separate and paid from your State Pension age.
Assumptions & methodology
This tool models a defined-contribution pot year by year to your "plan to" age. Each year your target income rises with inflation; the State Pension (if included) is uplifted by inflation as a triple-lock proxy. We work out the gross withdrawal needed so your net income, after UK income tax, meets your target, then grow the remaining pot at your chosen rate net of fees. Figures use 2026/27 rates and are illustrations only — real returns, inflation, tax rules and your circumstances will differ.