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What is the Money Purchase Annual Allowance?

Once you begin taking taxable money out of your pension pot using pension freedoms, you may be subject to the money purchase annual allowance (MPAA).

The MPAA reduces your yearly pension contribution allowance from £60,000 to just £10,000 in the tax year in which you trigger it and ongoing. It applies to all the money purchase pensions you may have not just your workplace pension with Fidelity.

If your first taxable withdrawal is part way through the tax year, the reduced allowance only applies from this date onwards. Contributions before the first withdrawal would be measured against the standard annual allowance of £60,000. Contributions from that date to the end of the tax year would be measured at the reduced rate. From the beginning of the next tax year, the reduced allowance (£10,000) applies for the whole tax year.

Pension providers are required to notify you when you’ve taken benefits that result in a reduced allowance, so it’s a good idea to check this with them.

Watch our video and download our guide to understand how the Money Purchase Annual Allowance might affect you if you start taking taxable benefits from your pension before you have finished paying in to it.

Who gets caught by the MPAA

Watch our video for a quick tour of how you could be affected by the MPAA.

Watch time: 2 mins 30 seconds

Person holding camera

Download our money purchase annual allowance (MPAA) guide

Read our MPAA factsheet to help you work out how legislation may impact your pension pot.

Download the guide

The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028.