Money Purchase Annual Allowance

WYSPECIAL

I have a deferred DB pension that I can access at 55 and currently contribute to my employers DC scheme and a SIPP and also have a DC scheme from a previous employer.

If I take my DB scheme from age 55 will the money purchase annual allowance kick in and limit what I can pay into the SIPP and DC scheme to £4000 pa or does this just apply if I start to take benefits from a DC scheme?

Paul_Herring

Short answer: Taking the DB scheme won't make the MPAA kick in, and you can still contribute up to £40,000 to your DC pension and SIPP.

Longer answer:
MPAA kicks in if you take more than a penny more than your 25% PCLS from a defined contribution scheme.

Anything taken from a defined benefit scheme is not considered, and can be basically ignored, as far as the MPAA goes.

https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance

WYSPECIAL

Paul_Herring wrote: »

Short answer: Taking the DB scheme won't make the MPAA kick in, and you can still contribute up to £40,000 to your DC pension and SIPP.

Longer answer:
MPAA kicks in if you take more than a penny more than your 25% PCLS from a defined contribution scheme.

Anything taken from a defined benefit scheme is not considered, and can be basically ignored, as far as the MPAA goes.

https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance

Thanks. So I could actually take my DB pension (lump sum and monthly income) PLUS 25% tax free from the DC scheme and still be able to pay as much as I wanted (up to 100% of earnings max £40k) into my current DC scheme?

Paul_Herring

up to 100% of earnings max £40k

That "£40K" has a few (of the usual) caveats attached to it, but yes.