Pension vs ISA Calculator

Compare pension and ISA over time. See which gives you more after tax relief and withdrawal tax.

Last updated: April 2026 · Source: GOV.UK

£

Pension

£218,361.64

Pot: £256,896.04

Better by £12,844.80

ISA

£205,516.83

All tax-free

Pension: tax relief boosts contributions, but withdrawals are taxed (except 25% lump sum). ISA: no tax relief going in, but all withdrawals are tax-free. Pension usually wins for higher-rate taxpayers who'll be basic rate in retirement.

Disclaimer

This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.

How It Works

Pensions receive income tax relief on contributions (20/40/45%) but withdrawals are taxed as income after the 25% tax-free lump sum. ISAs receive no tax relief on contributions (money goes in from post-tax income) but all growth and withdrawals are completely tax-free. The comparison depends on your tax rate when contributing versus your expected tax rate in retirement, plus the value of the 25% PCLS.

For a 40% taxpayer contributing £100 gross, a pension costs £60 after relief and the full £100 is invested. An ISA receives £60 (post-tax) for investment. If the pension fund grows to £200, you get £50 tax-free (25%) plus £150 taxed at 20% in retirement = £170 net. The ISA £60 grows proportionally to £120, all tax-free. Pension wins when your retirement tax rate is lower than your contribution tax rate.

Additional factors tilt the comparison: employer pension contributions are free money an ISA cannot match. Pensions are shielded from creditors and inheritance tax (passed tax-free if you die before 75). ISAs offer flexible access at any age, no lifetime limit on withdrawals, and no impact on State Pension or benefits. The optimal strategy for most people combines both: maximise employer pension matching first, then use ISAs for additional savings.

Pension vs ISA for a 40% taxpayer investing £10,000 gross over 20 years

  1. Pension: £10,000 gross invested (costs £6,000 after 40% tax relief). At 5% growth for 20 years = £26,533
  2. After 25% tax-free (£6,633) + 75% taxed at 20% (£19,900 x 0.80 = £15,920): net pension = £22,553
  3. ISA: £6,000 post-tax invested. At 5% growth for 20 years = £15,920. All tax-free: net ISA = £15,920
  4. Pension advantage: £22,553 - £15,920 = £6,633 more from the pension
  5. If retirement tax rate were 40% instead of 20%, pension net drops to £18,566 — advantage shrinks to £2,646

Source: GOV.UK

Frequently Asked Questions

What does the Pension vs ISA Calculator do?
Compare pension and ISA over time. See which gives you more after tax relief and withdrawal tax. All calculations are performed in your browser using official UK rates and thresholds.
Are these figures guaranteed?
No. Pension projections are estimates based on assumed growth rates and current contribution levels. Actual returns depend on investment performance, fees and future policy changes.
What is the pension annual allowance?
The pension annual allowance for 2025/26 is £60,000. This is the maximum you can contribute (including employer contributions) and receive tax relief. The allowance is tapered for high earners.