Question 1

How do pensions and ISAs compare for retirement savings?

Accepted Answer

Different factors affect the comparison, including tax rate and retirement timeline. Higher rate taxpayers (40-60% tax) typically see larger benefits from pensions due to tax relief, while ISAs offer flexibility for early retirement access (before age 55/57). The calculator shows how both strategies could work in different scenarios.

Question 2

What is the contribution priority order?

Accepted Answer

The priority order determines which account gets filled first with your monthly contributions. Common strategies: 'Max Tax Relief' prioritizes pension until hitting the annual allowance, then ISA. 'Max Flexibility' prioritizes ISA for early access, then pension. 'Balanced' splits 60/40 between pension and ISA.

Question 3

How does Director Mode work?

Accepted Answer

Director Mode is for company directors who can use salary sacrifice. When enabled, employer National Insurance savings (13.8%) are added to your pension contributions, significantly boosting retirement wealth. You can enter your director salary and dividends to model this scenario.

Question 4

How does salary sacrifice work?

Accepted Answer

Salary sacrifice converts part of salary into employer pension contributions, potentially saving both employee and employer National Insurance (up to 13.8%). This represents one of the more tax-efficient saving approaches. Many company directors can implement this arrangement—exploring this option with an accountant can help understand whether it applies to a particular situation.

Question 5

How is tax relief on pension contributions calculated?

Accepted Answer

Basic rate relief (20%) is added automatically by your pension provider. Higher/additional rate taxpayers claim extra relief through self-assessment: 40% rate = 40% total relief, 45% rate = 45% total relief. Those in the £100k-£125k personal allowance taper zone get 60% effective relief.

Question 6

What happens when I hit my pension annual allowance?

Accepted Answer

Once you reach the £60,000 annual allowance (or lower if tapered), excess contributions don't receive tax relief and may incur tax charges. The calculator automatically redirects excess contributions to your ISA based on your priority order.

Question 7

What's a GIA and how does it compare to pensions and ISAs?

Accepted Answer

A General Investment Account (GIA) is a taxable brokerage account. GIAs are typically considered after pension and ISA allowances are used, as profits may be subject to dividend tax and capital gains tax. A 'bed and ISA' strategy allows transferring assets from GIA to ISA each tax year to gradually move them into tax-efficient wrappers.

Question 8

Why does the effective tax rate seem high?

Accepted Answer

The effective tax rate shows total tax benefits (tax relief + employer match + NI savings - taxes paid) as a percentage of your net contributions. For higher rate taxpayers using salary sacrifice, rates of 40-50% are realistic, meaning you effectively get £1.40-£1.50 in your pension for every £1 you contribute.

Account	Monthly	Annual	% of Total
🏦 Pension	£1,563	£18,750	100.0%
Total	£1,563	£18,750	100%

We use cookies

Retirement Savings and Investment Modeller

Before You Begin

Personal Details

Current Account Balances

Monthly Contributions

💰 Budget & Strategy

🏦 Pension Settings

Director Mode (Optional)

Growth & Fees (Advanced)

Tax Allowances (Advanced)

Strategy Analysis

Tax-Efficient Growth Focus

📊 Monthly Allocation Breakdown

Wealth Growth Projection

Total Projected Outcomes

Year-by-Year Projection

Save to Your Financial Plan

Method & Assumptions

What's Next?

Retirement Savings Hub

Pension Calculator

ISA vs Pension Calculator

About the author

Frequently Asked Questions

Feedback