Small Pot Conundrum

ffacoffipawb

I thought that when you took a small pot it did not use LTA or invoke the MPAA.

I asked AJ Bell and they state “I can confirm that accessing your pension in any way will go against your LTA even though it will not trigger the MPAA in this case”

I questioned this, and they came back with “I have checked with a number of colleagues and they have all confirmed that accessing any pension funds, no matter the size, will trigger a calculation against your LTA. Where did you hear otherwise?”

I am right and they are wrong, aren’t they?

Confused to say the least

xylophone

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/money-purchase-annual-allowance-mpaa/

Small Pots or defined benefits triviality payment
The small pots rules were amended following the Budget to allow three pots of up to £10,000 to be withdrawn from non-occupational DC pension funds, for occupational DC pension pots there is no limit on the number of small pots that can be taken. This is paid 25% tax free and 75% subject to marginal rate income tax in the same way as an UFPLS. However, a small pots payment does not trigger the MPAA.

https://www.pensionsadvisoryservice.org.uk/content/spotlights-files/uploads/End_of_Tax_Year_Planning_SPOT024_V1.4.pdf

You won’t trigger the MPAA:
• If you cash in your pension as a small pot of £10,000 or less

ffacoffipawb

xylophone wrote: »

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/money-purchase-annual-allowance-mpaa/

Small Pots or defined benefits triviality payment
The small pots rules were amended following the Budget to allow three pots of up to £10,000 to be withdrawn from non-occupational DC pension funds, for occupational DC pension pots there is no limit on the number of small pots that can be taken. This is paid 25% tax free and 75% subject to marginal rate income tax in the same way as an UFPLS. However, a small pots payment does not trigger the MPAA.

https://www.pensionsadvisoryservice.org.uk/content/spotlights-files/uploads/End_of_Tax_Year_Planning_SPOT024_V1.4.pdf

You won’t trigger the MPAA:
• If you cash in your pension as a small pot of £10,000 or less

I was querying the LTA aspect.

They say a small pot will use x% of LTA whereas I believe it uses nil of your LTA (assuming you have some LTA left).

This confirms no LTA used up I think ...

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/small-pots-and-triv-qna/