What’s the money purchase annual allowance (MPAA)?


This term refers to the reduced annual allowance for contributing to your pensions savings.

For the 2020/2021 tax year, the annual allowance comes down to £4,000 (compared with the full allowance of £40,000) – the MPAA – if you take money out of your pension pot as cash (in one go or as smaller lump sums). The MPAA doesn’t apply if you’ve only used some or all of your pension pot to buy a lifetime annuity or if you’re taking all your money out of your pot under the small pots rules. Once your annual allowance is reduced to £4,000, you won’t be able to carry forward any allowances from previous tax years.




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