Hundred SummersISA vs pension: where should the next pound of pay go?
The same slice of gross salary, two routes: into a pension by salary sacrifice (the full amount goes in; taxed on the way out, with 25% tax-free), or taken as pay, taxed and NI'd on this year's actual bands, and saved into an ISA (tax-free forever after). Your figures never leave your browser.
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Worked example
Computed when this page was built by the same engine that runs the calculator above, so the figures below and the live tool can never disagree. Change any input above to see your own.
| Inputs | |
|---|---|
| Salary | £60,000 |
| Gross pay to commit | £5,000 |
| Tax rate in retirement | 20% |
| Years invested | 20 |
| Growth | 5.0% |
| Results | |
|---|---|
| Into an ISA after tax and NI | £2,900 |
| Into a pension by salary sacrifice | £5,000 |
| ISA after 20 years | £7,695 |
| Pension after 20 years, net of retirement tax (25% tax-free) | £11,277 |
| Pension advantage | 47% |
The next question
What will my pension be worth at retirement? →Pension projection calculator
Or answer it with everything else: the full Hundred Summers plan connects your pay, pensions, savings, property, tax and spending year by year, and stress-tests them across 500 simulated market histories.
Read the guides
- Optimising your plan: every lever, which ones apply to you, and how they fit together →The overview of every way a UK retirement plan can be improved (tax while you work, where your savings go, how you draw it down and what your estate pays) with a decision tree that finds the levers relevant to you, the combinations that pull against each other, and how to test them in Hundred Summers. Each lever links to the guide that goes deeper. Education, not advice.
- ISA or pension? Where long-term money should go, and the Lifetime ISA's place →The same gross pay by two routes (pension with relief and a tax-free quarter, or ISA after tax and NI) compared on your rate now and in retirement, why the pension usually wins on tax and the ISA on access, and where the Lifetime ISA's 25% bonus fits.
The trade-off in plain English
The pension's edge is arithmetic: sacrifice puts the whole gross pound to work, a quarter comes back tax-free, and most people pay a lower tax rate in retirement than they saved at while working. A higher-rate earner who retires as a basic-rate taxpayer keeps roughly 85p of every gross pound via the pension against about 58p via the ISA route: before any employer NI pass-on sweetens it further.
The ISA's edge is everything that is not arithmetic: your money at any age (pensions are locked until at least 55, rising to 57 in 2028), no tax to think about on the way out, no interaction with allowances, and no risk that a future government changes pension tax rules between now and your retirement. Contributions are capped at £20,000 a year.
The honest answer for many people is both: pension at least to any employer match, ISA for money you may need before 57. The full Hundred Summers plan runs this on your real lifetime tax position (including the year-by-year tax on drawdown, the personal allowance in retirement, and the lump-sum allowance) rather than two single rates.