Pensions Lab
Adjust how Britain saves, pays and invests for retirement — then follow the effects through households, government finances and the economy.
Where things stand before you change anything
Rules and rates are for 2026/27. This is not a pension calculator — it is a tool for seeing what a policy change does. Move one lever and follow what happens next: the direct effect, the second-order consequences, who is affected, how long it takes, and how confident we actually are in each step.
Read this first — what else changes the meaning of the headline
- Total UK workplace pension saving, per year
- £166.1bn
Employee (44.8bn) + employer (101.3bn) + tax relief (19.9bn), across 22.6m eligible savers.
DWP, "Workplace pension participation and savings trends of employees, 2009 to 2025"
- Automatic enrolment participation
- 90%
Of eligible employees, up from 55% in 2012, before automatic enrolment began. The legal minimum contribution is still 8% of qualifying earnings.
Workplace pension participation and savings trends: 2009 to 2025
- Pension tax relief, cost to the Exchequer
- £59.1bn
2025/26 (forecast) — Income Tax and NIC relief combined.
- State Pension expenditure
- £146.1bn
Spending in 2025/26. The full new State Pension is £241.30 a week in 2026/27.
DWP, Benefit and pension rates 2026/27; DWP, Benefit expenditure and caseload tables 2026
Every figure below is labelled
The simulator
Can a penny of tax fix it?
Can a penny of Income Tax fix it?
A tightly constrained example, not a general tax model. HMRC publishes an official estimate of what 1p on the basic rate of Income Tax raises — this scales that figure and compares it with what the State Pension actually costs.
£6.9bn
per year, 2026/27
4.7%
of £146.1bn (2025/26)
£575
a year, if shared equally
The revenue figure (2026/27) and the State Pension expenditure figure (2025/26) are ADJACENT but DIFFERENT fiscal years — each is simply the most recent confirmed figure available for that series. The ratio below is an illustrative size comparison, not a same-year fiscal calculation.
Source: HMRC, "Direct effects of illustrative tax changes" — £6.9bn/year per penny on the basic rate, 24 June 2025 edition. HMRC published this figure for exactly 1 penny on the basic rate. Scaling it to 2p, 3p etc. below is OUR linear extrapolation, disclosed as such — HMRC itself does not guarantee the relationship stays exactly proportional at larger changes, though it is a reasonable first-order approximation over this small range.
“Per pensioner” uses the ONS population above State Pension age (12m, 2022) as the best available proxy — not an exact State Pension claimant count, and a different reference year to the tax and expenditure figures above. Treat this figure as illustrative, not precise.
This does not model who actually pays the extra tax, behavioural responses beyond HMRC’s own ready-reckoner modelling, or any other use the revenue might be put to. It answers one narrow question: how does this specific, real revenue-raiser compare in SIZE with State Pension spending — not whether it should be used to fund it.
How this is built
▸Model inputs, evidence and known limitations
Model year. Rules and rates are for 2026/27, checked against GOV.UK and The Pensions Regulator on 4 October 2026. National totals are the latest published figures and are labelled with their own period: workplace pension saving for calendar year 2025, State Pension spending for 2025/26.
What the employee 5% means.The legal minimum is 8% of qualifying earnings in total: at least 3% from the employer and 5% in the employee’s name. That 5% already includes tax relief — it is not 5% plus a further government top-up. For a basic-rate taxpayer about 4% comes out of take-home pay and 1% is tax relief. Worked example: on a £35,000 salary, qualifying earnings are £28,760; moving the employee rate from 5% to 5.5% adds £143.80 a year to the pot and takes about £9.59 a month from take-home pay.
Changes and totals.Cards labelled “Change in…” show the difference from today’s rules and read “No change” until a slider moves; the totals are shown beside them. Pension income figures come from the workplace pension pot only. The State Pension (full new State Pension £241.30 a week in 2026/27) is not added in.
Contribution lever. Applies the current auto-enrolment structure (employee 5% including tax relief, employer 3%, on qualifying earnings between £6,240 and £50,270) and assumes basic-rate (20%) tax relief throughout — see the Assumptions drawer inside the simulator for the full list, each one sourced and most editable.
National scaling.Scales the per-worker calculation to a national total using an implied qualifying-earnings base solved from DWP’s published £44.8bn employee-contribution figure — this assumes that base stays constant as the rate changes, a first-order approximation rather than a distributional microsimulation, which is why national figures are classed Modelled rather than Calculated.
Pot and income projections.Compound the marginal (extra) contribution at an assumed real investment return (FRC AS TM1’s prescribed illustration rates), then illustrate retirement income as a simple level drawdown over an assumed number of years — not a priced annuity, because no current, verified annuity conversion rate was found in research.
Deliberately not quantified.How many people move out of risk of inadequate retirement income (depends on individual circumstances this scenario doesn’t capture); any effect on GDP, wages or productivity from more pension assets (depends on asset allocation, a separate lever this version doesn’t model, and on causal relationships not reliably estimable from allocation alone).
Model inputs
This is the first domain of a reusable UK Facts Policy Simulator — the second is Tax Lab. Explore the wider pensions picture: Pensions & an ageing Britain, workplace pensions and the 8% problem, or where the money is invested.