Pension vs ISA Calculator: Which Is Better for You?
Enter how much take-home pay you could put away and see which route leaves you with more after tax.
| Pension | ISA | |
|---|---|---|
| Paid in a year | £3,000 | £2,400 |
| Value after 25 years | £148,877 | £119,102 |
| Tax-free lump sum (25%) | £37,219 | n/a |
| Income tax when you take it out (20% on the rest) | £22,332 | £0 |
| What you keep after tax | £126,546 | £119,102 |
The pension is paid from your pay before tax, so the same take-home cost buys a larger contribution. This ignores employer contributions, which usually make a workplace pension the better choice first, and assumes steady growth after charges. Pensions cannot be accessed until the minimum pension age (55, rising to 57 in 2028), but an ISA can be used at any time.
How the two compare
| Pension | Stocks and shares ISA | |
|---|---|---|
| Paid in from | Pay before income tax (tax relief) | Pay after tax |
| Growth | Tax-free | Tax-free |
| Taking money out | 25% tax-free (up to £268,275), the rest taxed as income | Tax-free |
| Access | From age 55 (57 from 2028) | Any time |
| Yearly limit | Up to your earnings, subject to the annual allowance (£60,000) | £20,000 |
Example: a £45,000 earner putting away £200 a month of take-home pay for 25 years at 5% growth could keep £126,546 from a pension (after tax on the withdrawals) against £119,102 from an ISA.
Why a pension often wins
Tax relief means each £1 of take-home pay you give up becomes more than £1 in the pension, and the 25% tax-free lump sum softens the tax later. If you get an employer contribution, the pension has an even bigger advantage, because that is extra money an ISA does not receive.
When an ISA is better
- You may need the money before you are 55, such as for a house deposit or an emergency.
- You expect to pay a high rate of tax in retirement.
- You have already used your pension allowances, or want flexibility about when and how you take the money.
Many people use both: enough in a workplace pension to get the full employer match, then an ISA for money they may want sooner.
What this calculator assumes
Steady growth, contributions through a net pay arrangement (income tax relief, no National Insurance saving), and the withdrawal tax rate you choose. Pension rules can change. Not advice.
Sources: GOV.UK: Tax relief on pension contributions, GOV.UK: Individual Savings Accounts (ISAs). Figures last checked on 8 October 2026.
Frequently asked questions
Is a pension better than an ISA?
For long-term saving, usually yes, because of income tax relief and employer contributions. An ISA is more flexible because you can take the money out at any time.
How much tax-free cash can I take from a pension?
25% of the pension can usually be taken tax-free, up to a limit of £268,275 across all your pensions. The rest is taxed as income.
How much can I put in an ISA?
Up to £20,000 a year across all your ISAs in 2026/27. Interest, dividends and gains in an ISA are tax-free.
Should I do both?
Many people do. A common approach is to pay in enough to get the full employer pension contribution, then use an ISA for savings they may need before retirement.
More from UK Answers
Figures are for the 2026/27 tax year from official sources and are estimates for guidance only, not financial or legal advice. Printed from ukanswers.co.uk.