Pension tax guide
What is the Money Purchase Annual Allowance?
The Money Purchase Annual Allowance — usually shortened to MPAA — can restrict how much can be paid into defined contribution pensions after you flexibly access taxable pension money.
The basic rule
The MPAA is a lower annual allowance for money-purchase pension saving.
For 2026/27, the Money Purchase Annual Allowance is £10,000. It applies after certain types of flexible access to defined contribution pension benefits.
The MPAA applies to money-purchase pension input from all relevant sources, including contributions made by you and your employer.
Trigger events
What can trigger the MPAA?
MoneyHelper and GOV.UK explain that taking flexible taxable money from a defined contribution pension can trigger the MPAA.
Taxable drawdown income
Taking taxable income from a flexi-access drawdown fund normally triggers the MPAA.
UFPLS
Taking an uncrystallised funds pension lump sum normally triggers the MPAA.
Certain flexible annuities
Some flexible annuity payments can also trigger the allowance.
Other flexible-access events
There are additional technical trigger events under the pension tax rules.
What normally does not trigger it?
Not every pension withdrawal reduces future pension saving.
Taking only a pension commencement lump sum — commonly called tax-free cash — and leaving the remainder in flexi-access drawdown without taking taxable income does not normally trigger the MPAA.
Buying a conventional lifetime annuity that is not flexible, or taking income from a defined benefit pension, also does not normally trigger the MPAA.
Two people taking the same cash amount from pensions can end up with different future pension allowances depending on how the money was accessed.
After the MPAA is triggered
Your provider must normally tell you.
MoneyHelper states that your pension provider must issue a flexible-access statement after the MPAA is triggered.
If you are still paying into other active defined contribution schemes, you normally need to tell those providers that the MPAA applies within the required time limit.
Money purchase pension inputs made before the trigger during the same tax year are treated differently from those made after it.
Carry forward
Carry forward cannot increase the £10,000 MPAA.
Unused annual allowance from previous tax years cannot be added to the Money Purchase Annual Allowance itself.
Where someone has both money-purchase and other pension savings, an alternative annual allowance can also become relevant. For 2026/27, the standard alternative annual allowance is generally £50,000, subject to the individual's wider annual allowance position.
Before taking taxable pension money
The order of decisions can matter.
Still working?
If you expect to keep making significant pension contributions, check whether the planned withdrawal will trigger the MPAA first.
Employer contributions?
Employer contributions also count towards the £10,000 money-purchase limit once the MPAA applies.
Large contribution planned?
Making a planned pension contribution before triggering the MPAA can produce a very different outcome from taking taxable pension income first.
Multiple pensions?
The MPAA applies across relevant defined contribution pension saving, not separately to each provider.
Defined benefit accrual?
If you also build DB benefits, the alternative annual allowance rules can become relevant.
Unsure if triggered?
Check the flexible-access statement and ask the provider what specific event was recorded.
Personal pension planning
Still contributing and considering taking pension income?
Checking whether a withdrawal triggers the MPAA before acting can prevent an unexpected restriction on future pension saving.
Book a conversationThis guide is for general information only and is not personal financial or tax advice. MPAA rules can be technical and pension and tax rules can change. Content checked against current HMRC/GOV.UK and MoneyHelper guidance for 2026/27 on 15 September 2026.