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.



See also:

Tax free cash

Flexi access drawdown

Capped drawdown

Uncrystalised funds pension lump sum (UFPLS)

Annuity

Small pot

Last updated:

2 November 2022, 08:25:05

Disclaimer

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.