Money Purchase Annual Allowance (MPAA)
The standard amount that may be contributed to a pension each year and upon which tax relief is granted is £40,000. This can be reduced by a range of factors; see Contribution.
One such factor is whether an individual has drawn pension benefits. When a policy holder of a Defined Contribution (DC) Pension starts to draw on their pension, any future tax relievable contributions will be limited to £4,000 pa; this is the Money Purchase Annual Allowance (MPAA).
The table below summarises key pension actions and indicates whether or not the MPAA is trigerred for each.
Flexi access drawdown
Uncrystalised funds pension lump sum (UFPLS)
2 November 2022, 08:25:05
This glossary definition has been deliberately kept as simple as possible to give a brief outline of the term to assist with general financial knowledge. It is not intended to give a detailed explanation. Please refer to our Legal Declarations.