Glossary · UK
What is MPAA (Money Purchase Annual Allowance)?
Reduced £10k pension allowance after flexibly accessing a pension.
Full Definition
The MPAA (Money Purchase Annual Allowance) is a reduced annual pension contribution allowance triggered when you flexibly access a defined contribution pension beyond the 25% tax-free lump sum. From April 2023, MPAA is £10,000/year (down from £4,000) — replaces the standard £60,000 Annual Allowance for DC pensions. Does NOT apply to defined benefit pensions (you can still accrue DB without triggering MPAA). Common trap: people take a small flexible withdrawal then can't rebuild their pension. Take just the 25% tax-free lump sum to avoid triggering MPAA.
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Disclaimer: Definitions are for guidance only. For decisions about your tax, savings, property or pension situation, always consult a qualified professional or refer to gov.uk.