Comparison · Pension · 2026/27
Annual Allowance vs Money Purchase Annual Allowance UK 2026/27: What Triggers the Cut?
Taking a flexible income from your pension can permanently cut how much you are allowed to contribute each year — from the standard £60,000 Annual Allowance down to just £10,000 under the Money Purchase Annual Allowance. Here is exactly what triggers it and what it means for 2026/27.
TL;DR - 30-Second Summary
- - Annual Allowance: £60,000/year, carry forward from 3 prior years available
- - MPAA: £10,000/year, triggered by flexibly accessing a defined contribution pension, no carry forward
- - Trigger events: UFPLS, flexi-access drawdown income, flexible annuity — but not just taking the 25% tax-free lump sum alone
Side by Side: Annual Allowance vs MPAA
| Feature | Standard Annual Allowance | Money Purchase Annual Allowance |
|---|---|---|
| Annual limit 2026/27 | £60,000 | £10,000 |
| Carry forward from prior 3 years | Yes | No |
| What triggers it | Applies by default to everyone | Flexibly accessing a DC pension (UFPLS, drawdown income, flexible annuity) |
| Reversible once triggered? | N/A | No, permanent for the rest of your pension saving |
| Defined benefit accrual | Counts fully against the £60,000 allowance | Measured separately against remaining alternative allowance |
Worked Example: Before and After Triggering the MPAA
Suppose someone wants to contribute £40,000 into their defined contribution pension this tax year. Before triggering the MPAA, this is comfortably within the £60,000 standard Annual Allowance. If they had already taken flexible drawdown income earlier in the same tax year, the MPAA would cap their contribution at just £10,000— the remaining £30,000 would be an excess contribution, triggering an Annual Allowance charge on that amount.
That is a £50,000 reduction in contribution capacity, with no carry forward available to soften it — which is why anyone considering flexibly accessing even a small part of their pension, while still wanting to make large contributions elsewhere (for example from a new job or inheritance), should think carefully before triggering it.