Guide
Money Purchase Annual Allowance (MPAA) 2026/27
Published by the UK Money Calculators editorial team. Last updated for the 2026/27 tax year.
Once you start taking flexible income from a defined contribution pension, the amount you can subsequently contribute to money purchase pensions is significantly restricted. The Money Purchase Annual Allowance (MPAA) for 2026/27 is £10,000. Understanding what triggers it — and what does not — is essential if you plan to continue saving into a pension after accessing your retirement pot.
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 age 60 and starts taking income from his defined contribution pension via flexi-access drawdown. Five years later he returns to part-time work, and his new employer auto-enrols him in a workplace pension.
- The MPAA was triggered when David first took drawdown income at age 60.
- His total money purchase contributions (employee plus employer) must not exceed £10,000 per year.
- David must inform his new employer and the workplace pension provider about the MPAA trigger within 91 days of starting contributions.
- If David is also in a defined benefit scheme, those accruals are not subject to the MPAA.
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.
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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.
Official sources
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.