MPPA not triggered

36 Posts

So if you buy a lifetime annuity and it not set to increase you can take pension payments and still pay up to £40k (or your annual salary) in your other pension fund going forward? Why is that a different rule to the standard drawdown rules?
0
Latest MSE News and Guides
Replies
The MPAA is triggered when you take taxable and “flexible” benefits from your pension which usually means drawdown or UFPLS as far as I understood.
The MPAA is a pretty crude way of preventing people continuously avoiding paying tax by circulating the same large sum of money through the pension process. I assume annuities aren't included as you can't pass a large lump sum through an annuity so it does not provide an opportunity for serious recycling.
HMRC have the problem that they want to prevent large scale recycling but do not want to make normal financial management difficult so the options they have are somewhat limited.
See
https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa
https://www.mandg.com/pru/adviser/en-gb/insights-events/insights-library/money-purchase-annual-allowance-mpaa