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Annual Allowance

Money Purchase Annual Allowance drops to £4,000 after flexibly accessing benefits

Where an individual has flexibly accessed pension income (see our separate guide as to what triggers this reduction) their Money Purchase Annual Allowance (MPAA) will reduce to £4,000.

The reduction happens from the day after the trigger event occurs e.g. the day after drawing an income from a Flexi Access Drawdown. In addition to the MPAA limit being reduced to £4,000, the client is also no longer able to use Carry Forward in relation to money purchase pension contributions.

Reduced MPAA & Effect on Alternative (DB) Annual Allowance

It is important to appreciate that the MPAA of £4,000 does not apply to the pension input amounts accrued within a defined benefit scheme.

As such, a client who is an active member of the NHS scheme for example, would still have a £36,000 alternative DB Annual Allowance.

 

FOR INVESTMENT ADVICE REGARDING YOUR PENSION OR OTHER INVESTMENTS PLEASE CONTACT Elliott Wilson ACSI DipPFS AF3

 

While we keep information on the website as up to date and as accurate as possible, the information on this website does not form part of our advice process. Cambridge Pensions Ltd cannot accept any liability for any decisions made by a client or member of the general public based on any information contained on this website. The value of your investments can go down as well as up and you may get back less than has been paid in.

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