Guide

Money Purchase Annual Allowance (MPAA) 2026/27

Written by James Whitfield·Updated August 2026·Checked against 2026/27 HMRC rates

Once you start taking flexible income from a defined contribution pension, how much you can keep paying into money purchase pensions drops sharply. The Money Purchase Annual Allowance (MPAA) for 2026/27 is £10,000. 1 Knowing what trips it — and what doesn't — matters a lot if you plan to keep saving after you've dipped into your pot.

Quick answer · 2026/27

The Money Purchase Annual Allowance for 2026/27 is £10,000. It replaces your standard £60,000 annual allowance for future defined contribution (money purchase) pension savings once you flexibly access a pension — for example taking drawdown income or an UFPLS lump sum. Taking only your 25% tax-free cash does not trigger it. The MPAA is permanent, cannot be reversed, and carry forward cannot be used to increase it.

£10,000 MPAA limit replaces the £60,000 annual allowance no carry forward once triggered
Key takeaways
  • The MPAA caps money purchase contributions at £10,000 a year, replacing the £60,000 annual allowance for those savings. 1
  • Drawdown income or a UFPLS lump sum triggers it; taking only your 25% tax-free cash does not. 2
  • It's permanent and can't be undone — and carry forward can't lift it. 1
  • Defined benefit accrual keeps a separate allowance, so a final-salary pension can carry on. 1
  • Tell every other pension provider within 91 days of the trigger, or risk a penalty. 2

What is the MPAA?

The MPAA is a reduced annual allowance that applies to defined contribution (money purchase) pension contributions after you have "flexibly accessed" your pension savings. It replaces the standard £60,000 annual allowance for your money purchase contributions, capping them at £10,000 per tax year. Unlike the standard annual allowance, carry forward cannot be used to increase the MPAA.

The rationale is to prevent people from recycling pension money — taking pension income, receiving tax relief on it, and then putting it straight back into a pension to claim further relief.

What triggers the MPAA?

The MPAA is triggered when you flexibly access a defined contribution pension. Triggers include:

  • Taking income from a flexi-access drawdown fund (even a small amount).
  • Taking an uncrystallised funds pension lump sum (UFPLS) — a lump sum that combines tax-free cash and taxable income in one payment.
  • Buying a flexible annuity that allows income to reduce in future.

The MPAA does not apply if you:

  • Take only your tax-free cash lump sum (25% of your pension) and do not enter drawdown.
  • Buy a level or escalating guaranteed annuity (the income cannot decrease).
  • Simply reach age 75 — this alone does not trigger the MPAA.

MPAA and defined benefit pensions

The MPAA only restricts money purchase (defined contribution) contributions. If you are also accruing benefits in a defined benefit (final salary) pension, the full £60,000 annual allowance still applies to your defined benefit inputs. More precisely, an "alternative annual allowance" applies to defined benefit accrual alongside the MPAA.

This means someone who has triggered the MPAA can still make significant defined benefit pension accrual — for example, continuing to build up a public sector final salary pension — without breaching the MPAA rules.

Notification obligations

When you trigger the MPAA, your pension provider must issue you a flexible access statement confirming the date the MPAA was triggered. You are then legally obliged to notify any other pension providers you contribute to within 91 days of that trigger date. Failure to notify can result in a penalty charge.

If you are an employee with ongoing workplace pension contributions, you must also inform your employer so that contributions can be kept within the £10,000 MPAA.

Worked example

David retires at 60 and starts taking income from his DC pension through flexi-access drawdown. Five years on he takes a part-time job and is auto-enrolled into a workplace pension. Here's where he stands:

David · MPAA triggered at 60 · back in a workplace pension at 65
MPAA triggered when he first drew drawdown incomeage 60
Cap on his money purchase contributions (employee + employer)£10,000/yr
Deadline to tell the new workplace provider91 days
Any defined benefit accrual he hasnot capped by MPAA

If David's employer's contributions alone push past £10,000, he'll face an annual allowance charge on the excess — so a generous employer scheme can quietly be a problem once the MPAA is in play. 1

Calculate your pension tax relief

Use our pension tax relief calculator to see how much relief you could receive on contributions within the annual allowance.

Open the calculator

Frequently asked questions

What triggers the MPAA?

The MPAA is triggered by flexibly accessing a defined contribution pension — specifically by taking income from a flexi-access drawdown fund, taking an uncrystallised funds pension lump sum (UFPLS), or buying a flexible annuity. Taking only a tax-free cash lump sum without drawing any income does not trigger the MPAA.

Does the MPAA apply to defined benefit pensions?

No. The MPAA only restricts money purchase (defined contribution) contributions. Defined benefit pension accrual is subject to a separate "alternative annual allowance" which operates alongside the MPAA. Someone with an active final salary pension can continue to accrue defined benefit benefits even after triggering the MPAA.

Can I carry forward the MPAA?

No. Carry forward cannot be used to increase the MPAA above £10,000. This is a hard limit on money purchase contributions once you have flexibly accessed your pension. Carry forward only applies to the standard annual allowance.

What happens if I exceed the MPAA?

Contributions to money purchase schemes in excess of £10,000 trigger an annual allowance charge, calculated at your marginal income tax rate on the excess. You report this on your Self Assessment return. Your pension scheme may also be able to pay the charge on your behalf via a "scheme pays" election, though this reduces your pension fund.

Can I avoid triggering the MPAA if I only take tax-free cash?

Yes, if you take only your tax-free cash (typically 25% of the pension pot) and place the remainder into a drawdown fund without drawing any income from it, the MPAA is not triggered. The moment you draw even £1 of income from the drawdown fund, the MPAA is triggered from that date.

Sources & references

  1. Pension annual allowance — GOV.UK
  2. Tax on your private pension contributions — GOV.UK
  3. Pension schemes rates and allowances — HMRC (GOV.UK)

Every headline figure above is checked against the official GOV.UK / HMRC guidance listed here for the 2026/27 tax year. Links open on GOV.UK.

Disclaimer: This guide is for general information only and does not constitute financial or tax advice. Pension tax rules are complex and individual circumstances vary. Figures shown are for England, Wales and Northern Ireland unless stated. Consult a qualified financial adviser or HMRC for personalised guidance.