Pension annual allowance

Contributing to a pension — after taking flexible income.

Taking flexible income from a DC pension triggers the MPAA permanently. You can still contribute — but DC pension inputs are capped at £10,000 per year, employer contributions count towards that cap, and carry forward provides no relief.

By Pension Bible editorial team·Last reviewed 9 April 2026·5 min read

Yes — but the MPAA of £10,000 applies to DC contributions

Taking flexible income from a defined contribution pension triggers the MPAA — the Money Purchase Annual Allowance. This is £10,000 per year in 2025/26, and it applies for life from the moment of the trigger event.

The MPAA is not a prohibition on pension saving. It is a restriction on the tax-efficient pension input permitted into money purchase arrangements. DC contributions — from all sources — can continue, but if combined DC inputs exceed £10,000 in any tax year, the excess triggers an annual allowance charge in the same way as exceeding the standard annual allowance. The charge is an income tax charge on the excess at the individual's marginal rate.

This restriction has a significant practical impact for anyone who continues to work after accessing a pension flexibly — whether through choice or necessity. Employer auto-enrolment contributions, salary sacrifice amounts, and any additional voluntary contributions all count against the £10,000 cap. It is possible to breach the MPAA without making a single voluntary personal contribution, if employer contributions alone exceed £10,000.

The MPAA calculator shows whether a given combination of employer and employee DC contributions would breach the cap.

DB pension accrual: the alternative annual allowance

The MPAA applies only to money purchase (DC) pension inputs. If someone continues to accrue benefits in a defined benefit scheme — a final salary or career average scheme — that accrual is subject to the alternative annual allowance, not the MPAA.

The alternative annual allowance for DB accrual after the MPAA is triggered is £50,000 for 2025/26. This is substantially more generous than the £10,000 MPAA, and it can be supplemented by carry forward of unused allowance from prior years (subject to the usual scheme membership requirements).

The practical consequence is that public sector workers, NHS staff, teachers, and others in DB schemes who access a separate DC pension flexibly continue to accrue DB benefits largely unimpeded. The £50,000 DB limit is rarely reached through ordinary salary progression. A DB pension growing at a rate of 1/49th of salary per year on a career average scheme would need a salary above £2.45 million to generate £50,000 of annual DB pension input.

What counts as DC contributions for MPAA purposes

The £10,000 MPAA covers all inputs into money purchase pension arrangements. This includes:

• Employee contributions to a DC workplace pension
• Employer contributions (including minimum auto-enrolment contributions)
• Salary sacrifice amounts treated as employer contributions
• Contributions to a personal pension or SIPP
• Contributions from a third party (for example, a family member contributing to someone else's pension)

What it does not cover is defined benefit pension accrual. DB pension inputs are measured differently and fall under the alternative annual allowance, not the MPAA.

If an individual has both a DC workplace pension (from their current employer) and a SIPP, contributions to both count towards the single £10,000 MPAA. There is no separate £10,000 allowance per pension scheme.

Carry forward does not apply to the MPAA

One of the most important distinctions between the MPAA and the standard annual allowance is that carry forward cannot be used to increase the MPAA. Even if an individual had £50,000 of unused annual allowance from prior years, that carry forward is of no use against the DC side of the ledger once the MPAA is triggered.

Carry forward can still be used against the DB alternative annual allowance. If a member has a DB accrual spike in a given year — for example, from a promotion causing a large retrospective pension recalculation — unused carry forward from prior years can be deployed against the £50,000 DB limit in the usual way.

Practical implications for someone still employed

For a worker who has accessed a DC pension flexibly and remains in employment, the key risk is inadvertent breach of the MPAA through auto-enrolment or workplace contributions.

Auto-enrolment minimum contributions in 2025/26 are 8% of qualifying earnings (3% employer, 5% employee). On a salary of £125,000, qualifying earnings above the lower earnings threshold generate an employer contribution of roughly £3,500. That leaves approximately £6,500 of headroom before the £10,000 MPAA is reached. Any additional voluntary contributions — AVCs, extra salary sacrifice — directly eat into that headroom.

For workers with generous employer contribution rates — common in senior professional roles or financial services — the employer contribution alone may be close to or above £10,000 on a modest salary. Someone earning £150,000 with a 10% employer contribution is already contributing £15,000 per year on the employer side alone, which would breach the MPAA with nothing left for personal contributions.

The notification duty also matters: when the MPAA is triggered, the pension provider that triggered it must issue a "flexible access statement" to the individual, and the individual in turn must notify all other pension providers they are contributing to. Failure to notify other pension providers does not reduce the liability, but it can lead to charges being applied without warning.

This is factual information, not financial advice. For complex situations, speak to an FCA-regulated financial adviser.