ISA vs pension calculator

See what the same monthly cost leaves you in a pension and in a Stocks and Shares ISA, once tax relief on the way in and tax on the way out are counted. This is an illustration, not a forecast: real returns will differ, and you may get back less than you put in.

How much it costs you each month

From your take-home pay. The ISA gets exactly this.

Years until you take the money

Your Income Tax rate now

England, Wales and Northern Ireland rates. Scottish rates differ.

Income Tax rate you expect when you take the pension

Choose 0% if your pension income would fall within your Personal Allowance.

Illustrative growth

Yearly charges of 0.40% are taken off, so these grow at 1.60%, 4.60% or 7.60% a year. Check what your provider charges.

Your age now

Used only to check when you could take a pension.

What each could leave you after tax

Pension, after tax

£118,053

Pot of £138,886 before tax

Stocks and Shares ISA

£111,109

Tax-free when you take it out

The pension leaves you £6,944 more (6.25%).

Costs you £200 a month either way, £60,000 over 25 years. Growth of 5% a year before 0.40% yearly charges, so 4.60% a year for both. With investments your capital is at risk. Growth is illustrative, not a forecast.

How the pension figure works

Each month you pay £200 and the provider adds £50 of basic rate relief, so £250 goes in for a cost of £200.

Pension pot: £138,886
Tax-free lump sum, 25%: £34,722
Tax on the rest, at 20%: £20,833
Pension, after tax: £118,053

After tax, after 25 years at 4.60% a year

How the comparison works

Same cost to you. The ISA gets exactly what you enter each month. The same cost buys more in a pension, because of tax relief: the provider adds 20% of the total going in, and at 40% or 45% you claim the rest back through Self Assessment. So £100 of cost buys £125 in a pension at 20%, £166.67 at 40% and £181.82 at 45%.
Same growth. Both grow at the same illustrative rate: 2%, 5% or 8% a year before 0.40% yearly charges. Each payment goes in at the start of the month, and growth compounds monthly, as in our other calculators. These are illustrations, not forecasts: investments can fall as well as rise, and you may get back less than you put in.
The pension, when you take it. 25% of the pot comes out tax-free, up to £268,275, and the rest is taxed at the Income Tax rate you choose.
The ISA, when you take it. Growth and withdrawals are tax-free, so the figure shown is what you keep.
Totals are rounded to the nearest pound.

Why your tax rate decides it

A pension gives you tax relief on the way in and charges Income Tax on most of what comes out. An ISA does neither: you pay in from money that has already been taxed, and nothing is taken when you withdraw. So the comparison comes down to the rate you get relief at now against the rate you expect to pay when you take the money.

With the same rate both ways, the pension comes out ahead, because 25% of it is tax-free. At basic rate, £100 of cost becomes £125 in the pension and £106.25 after tax, before growth, against £100 in the ISA.

Change either rate and the gap moves. For every £100 of cost, before growth:

Relief at 40% now and 20% tax later: £166.67 in the pension and £141.67 after tax, against £100 in the ISA.
Relief at 20% now and 40% tax later: £125 in the pension but only £87.50 after tax, against £100 in the ISA.

When an ISA can come out ahead

A pension has the edge when the tax rate later is the same as the rate now, or lower. An ISA can still come out ahead, or suit you better, when:

You expect a much higher tax rate in retirement than the relief you get now. In the 20% now and 40% later example above, the ISA leaves £12.50 more for every £100 of cost.
You may need the money before 57. A pension usually cannot be taken before the normal minimum pension age, which rises from 55 to 57 on 6 April 2028. An ISA can be taken at any time.
You want flexibility. You can usually take money out of an ISA whenever you like, in any amount, and pay no tax on it. Money taken from a pension beyond the tax-free part counts as income and is taxed.

What this calculator leaves out

It compares one cost and one tax rate each way, which keeps it simple. It leaves out:

Employer contributions. A workplace pension often includes money from your employer. This calculator does not include it, and it can add a lot. An ISA has no equivalent.
Salary sacrifice. Giving up part of your pay for a pension contribution can also save National Insurance.
The annual allowance taper. The £60,000 yearly allowance is reduced for very high earners. The calculator only warns you when the pension would take in more than £60,000 a year.
The limit on tax relief. Relief is limited to 100% of your yearly earnings.
The Personal Allowance in retirement. Everything above the tax-free part is taxed at the one rate you choose. If your pension income would fall within your Personal Allowance, choose 0%.
The State Pension. It counts as income, so it can use up your Personal Allowance and change the tax on the rest.
Inheritance. What is left after you die is treated differently for ISAs and pensions, and the rules for unused pensions change on 6 April 2027. Our ISA vs pension comparison covers it.
The Lifetime ISA. It adds a 25% government bonus on up to £4,000 a year, which this calculator does not model. See how the Lifetime ISA works.

To compare platforms and their published charges, see our Stocks and Shares ISA comparison, or use the Stocks and Shares ISA calculator for growth after your own fees.

Tax treatment depends on your circumstances and may change. This is not financial advice.

Questions people ask

Is a pension better than an ISA?

Not always. With the same cost to you and the same growth, a pension comes out ahead when the tax rate you pay in retirement is the same as the rate you get relief at now, or lower, because 25% of it is tax-free. An ISA can come out ahead if you expect to pay a much higher rate in retirement, and it can be used at any age. Employer contributions to a workplace pension, which this calculator leaves out, can put a pension further ahead.

How does pension tax relief work?

With a personal pension, your provider claims basic rate tax relief of 20% from the government and adds it to your pot, so £80 you pay becomes £100. If you pay Income Tax at 40% or 45%, you claim the extra back through Self Assessment: a further 20% or 25% of the gross amount in England, Wales and Northern Ireland, with different rates in Scotland. Tax relief is limited to 100% of your yearly earnings.

How much of a pension is tax-free?

Usually up to 25% of the amount built up, with a limit of £268,275 for most people. The rest counts as income and is taxed at your Income Tax rates in the year you take it. Some people have a higher limit because of a protected allowance.

When can I take my pension?

A private pension usually cannot be taken before the normal minimum pension age, which is 55 now and rises to 57 on 6 April 2028. Some people have a protected pension age, so check with your provider if you are close to 55. A Stocks and Shares ISA can be cashed in at any time, but investments can fall in value, so you may get back less than you put in.

ISA or pension for retirement savings?

Many people use both. A pension adds tax relief, and a workplace pension often adds money from your employer too, but the money is locked away until at least the minimum pension age and most of it is taxed when you take it. An ISA gets no relief on the way in, but you can take money out at any time and pay no tax on it. What suits you depends on your tax rates, how soon you might need the money and what your employer adds. This is information, not personal advice.