The MPAA won’t normally be triggered if:

Privilege435

Just about to take out a Lifetime Annuity and some tax free cash (less than 25%) from my Defined Contribution scheme. I'm continuing to work part time and my plan was to put most if not all of my earnings (less than £40k) into a SIPP. However, I went for a Pension Wise appointment and was told that the lower MPAA limit of £4k would apply. I didn't think this was the case and reading the Money Advice Service literature I still don't think it is the case but wonder if the word 'normally' in this section...

The MPAA won’t normally be triggered if:

You take a tax-free cash lump sum and buy a lifetime annuity that provides a guaranteed income for life that either stays level or increases

means there are some defined circumstances in which the lower limit might apply?

david78

Pensionwise are not being very helpful here.

The MPAA is triggered when:

• Using flexi-access drawdown to take tax-free cash and income.
• Take a UFPLS payment.
• Exceeding GAD in capped drawdown.

It is not triggered when:

• Using flex-access drawdown to take tax free cash only.
• Taking an annuity (where amount payable doesn't reduce, ).
• Taking a small pot.
• Taking benefits from a defined benefits pension.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm056520

For annuity-specific guidance see:

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062400

campbell19925

Unless you NEED the income I would avoid getting an annuity as a general rule of thumb, however, everyones situation is different.

You won't trigger the MPAA if you're buying a lifetime annuity with TFC. The MPAA is only triggered if you access benefits flexibily. There are different types of annuities - If you buy an investment-linked or flexible annuity where your income could go down then it will trigger the MPAA.

Before any decision I recommend you take financial advice from a qualified adviser. Pensionwise can give information but they can't give advice.

Privilege435

Campbell19925.. I have a Guaranteed Annuity Rate of over 11%. I'm guessing that might change your opinion in this case:)

campbell19925

Privilege435 wrote: »

Campbell19925.. I have a Guaranteed Annuity Rate of over 11%. I'm guessing that might change your opinion in this case:)

I assume the GAR will increase every year you don' take it?

Privilege435

I assume the GAR will increase every year you don' take it?

No. A one time only offer at 65. Take it or lose it.

campbell19925

Privilege435 wrote: »

No. A one time only offer at 65. Take it or lose it.

Sounds unusual. Is the MPAA relevant for you at this age anyway? Are you still working and will your relevant contributions be over that limit?

Privilege435

Yes I will still be working part time. As I don't immediately need those earnings to live off I'm hoping to pay them all (perhaps £20k) into a SIPP hence the concern with the MPAA