What is the MPAA — and what triggers it?
The Money Purchase Annual Allowance is a permanent £10,000 cap on DC pension contributions that kicks in the moment you take flexible income from any defined contribution pension. Here is what counts as a trigger and what does not.
- ▸The MPAA is £10,000 per year — for life — and applies to all money purchase (DC) pension contributions once triggered.
- ▸It is triggered the moment you take any flexible income from a DC pension: flexi-access drawdown income, an UFPLS, or a flexible annuity with increases above RPI.
- ▸Taking a tax-free cash lump sum (PCLS) alone does not trigger it. DB pension accrual after the MPAA is triggered has a separate £50,000 alternative annual allowance.
The MPAA: £10,000 per year for DC pension contributions
The MPAA — Money Purchase Annual Allowance — is a reduced annual allowance that applies permanently to money purchase (defined contribution) pension contributions once it has been triggered. The MPAA for 2025/26 is £10,000.
Under the standard annual allowance, an individual can contribute up to £60,000 per year to pensions across both DC and DB schemes combined. Once the MPAA is triggered, that structure changes: DC contributions from all sources (employer and employee combined) are capped at £10,000, and DB accrual is subject to a separate alternative allowance (see below).
The MPAA cannot be supplemented by carry forward. Unused DC allowance from prior years cannot be added to the £10,000 limit. The cap is fixed at £10,000 regardless of what happened in previous years.
The MPAA calculator shows how the limit applies given a combination of DC contributions and DB accrual.
What triggers the MPAA
The MPAA is triggered by taking flexible income from a defined contribution pension. Specifically, the following actions trigger it:
Flexi-access drawdown income. Simply designating funds to a flexi-access drawdown arrangement does not trigger the MPAA. The trigger occurs when income is actually drawn from that arrangement — the first £1 of drawdown income from a flexi-access pot creates a trigger event. Income payments from a capped drawdown arrangement converted to flexi-access are also triggers.
An uncrystallised funds pension lump sum (UFPLS). Taking an UFPLS — a lump sum paid directly from an uncrystallised pension pot, with 25% tax-free and 75% taxed as income — triggers the MPAA on the date of payment.
A flexible annuity with increases above RPI. An annuity that allows income to decrease or to increase by more than the retail prices index constitutes flexible income and triggers the MPAA.
The key point is that the trigger is permanent. There is no mechanism to un-trigger the MPAA. Once triggered, it applies for all remaining tax years, to all DC pension contributions.
What does NOT trigger the MPAA
Several common pension actions are frequently assumed to trigger the MPAA but do not:
Taking a pension commencement lump sum (PCLS) only. Taking your 25% tax-free cash entitlement from a DC pension, while simultaneously designating the remaining 75% into a flexi-access drawdown arrangement but drawing no income from it, does not trigger the MPAA. The trigger is the drawing of income, not the designation.
Leaving funds uncrystallised. A DC pension pot that has not been accessed at all — uncrystallised funds — does not trigger the MPAA simply by existing.
Purchasing a standard lifetime annuity. Buying a level or RPI-linked annuity from an insurance company with no flexibility or decreasing payments does not trigger the MPAA. The income is guaranteed and fixed or linked to inflation in a conventional way.
Taking income from a DB pension. Drawing a defined benefit pension, whether at normal pension age or early retirement, does not trigger the MPAA. The MPAA is specific to money purchase arrangements.
Small pots. Taking a lump sum from a small pension pot of £10,000 or less under the small pots rules does not trigger the MPAA, provided the scheme is not a flexible arrangement and the payment meets HMRC's conditions.
DB and the alternative annual allowance
Once the MPAA is triggered, the individual's overall annual allowance framework splits into two parts:
- DC contributions: capped at £10,000 (the MPAA), with no carry forward available.
- DB accrual: subject to the alternative annual allowance, which is £50,000 for 2025/26.
The £50,000 DB alternative annual allowance can be supplemented by carry forward in the normal way (subject to scheme membership requirements), giving a potential DB pension input ceiling significantly above £50,000 for those with unused prior-year allowance.
The combined structure reflects the policy intent: individuals who have already accessed DC savings flexibly retain access to generous DB pension accrual, but the DC route is substantially restricted to prevent double-dipping on tax relief while drawing down savings simultaneously.
- •The MPAA is triggered permanently by even a £1 flexible withdrawal from a DC pension — this cannot be undone.
- •Always check your MPAA status before making contributions if you have ever accessed a pension flexibly.
This is factual information, not financial advice. For complex situations, speak to an FCA-regulated financial adviser.