PCLS & Drawdown Calculator
Frequently Asked Questions
What is the maximum pension tax-free cash (PCLS) I can take?
From April 2024 the maximum pension commencement lump sum (PCLS) is 25% of your pension pot, capped at £268,275 (the Lump Sum Allowance). If you have enhanced or fixed LTA protection from before April 2024 your limit may be higher. Any PCLS you take reduces your remaining pot for drawdown income.
Should I take the maximum tax-free cash from my pension?
It depends on your circumstances. Taking the full PCLS gives you a large tax-free sum but reduces future taxable drawdown income. If you are a basic rate taxpayer, the tax saving may not justify the lost growth on the withdrawn capital. Higher and additional rate taxpayers usually benefit more from maximising PCLS. Consider investment growth, inheritance plans, and your tax position before deciding.
How long will my pension pot last in drawdown?
Your pot duration depends on your annual withdrawal amount, investment returns, and charges. As a rough guide: at a 4% annual withdrawal rate a pot typically lasts 25+ years in moderate growth funds. This calculator shows you the years remaining based on your chosen withdrawal rate and a conservative 4% annual growth assumption.
Can I take tax-free cash from a final salary pension?
Yes. Most defined benefit (final salary) schemes allow you to commute part of your pension for a tax-free cash lump sum. The commutation factor varies by scheme (typically £12–£20 of lump sum per £1 of annual pension given up). This calculator focuses on defined contribution (money purchase) pensions.
What happens if I have already used some of my Lump Sum Allowance?
The £268,275 Lump Sum Allowance is a lifetime limit across all your pensions. If you have previously taken tax-free cash from another pension, you must subtract that amount from your remaining allowance. Enter your used allowance in the calculator to see your true remaining entitlement.