Defined Benefit Pension Valuation Calculator 2026
Calculate the pension input amount for a defined benefit pension for Annual Allowance purposes. DB pensions are valued at 16 times the increase in annual pension, adjusted for inflation.
DB Pension Input Amount — Annual Allowance Calculator
For Annual Allowance purposes, defined benefit (DB) pension growth is measured as the increase in accrued pension × 16, minus any member contributions.
Frequently Asked Questions
How is a DB pension valued for Annual Allowance?
The DB pension input amount = (increase in accrued pension above inflation × 16) + member contributions. The inflation adjustment uses September CPI for that tax year. The 16× multiplier converts annual pension increase to an estimated capital value.
What is the Annual Allowance for DB pensions?
£60,000/year (2025/26) for both DB and DC pensions combined. For very high earners, the Tapered Annual Allowance may reduce this further. Exceeding the Annual Allowance results in an Annual Allowance charge (taxed at your marginal rate).
What is Scheme Pays?
If you breach the Annual Allowance, you can ask your DB scheme to pay the charge on your behalf in exchange for a reduction in your future pension. This is called 'Scheme Pays'. It avoids you having to find cash to pay the charge immediately.
Does the Tapered Annual Allowance affect DB pensions?
Yes — the Tapered Annual Allowance (TAA) reduces the Annual Allowance for those with threshold income over £200,000. At £260,000+ adjusted income, the AA reduces to £10,000 minimum. DB pensions with large accrual can easily breach this.
What is the NHS pension Annual Allowance issue?
NHS pension members (especially doctors) on the career average scheme accrued large pension inputs in high-earnings years, routinely breaching the Annual Allowance. The 2023 abolition of the Lifetime Allowance and Scheme Pays changes helped but tapering remains an issue for high earners.
Can I carry forward unused Annual Allowance?
Yes — DB and DC pensions can both use carry forward (unused allowance from the last 3 years). This can significantly increase what you can contribute in a year with a large DB pension input — useful if you receive a large pay increase or promotion.
What is 'pensionable earnings' in a DB scheme?
Pensionable earnings is the portion of salary on which your pension accrual is calculated. Some schemes include salary only, others include bonus. The pensionable earnings definition affects how quickly pension increases with pay rises.
How does the 16× multiplier affect DB annual allowance compared to DC?
A DC pension charge is simply the cash contributions made. A DB pension charge can be much larger — for every £1/year increase in pension, the pension input is £16. A £5,000/year pension increase from a promotion = £80,000 pension input, potentially breaching the £60,000 Annual Allowance.