Money Purchase Annual Allowance

workinggirl32

Dear all, would be grateful for any help.  Background: 65 yo. In receipt of final salary pension from working at a university in the Midlands for around 25 yrs up to when left in 2015; began receiving this pension May 24 - approx £860 p m net.  Also self employed from 2015 to date, although cut this right back in March 24 but continuing til Feb 2026. Minimal earnings with this, poss £5K ish per year via teaching occ.  This May 25, began receiving a small pension via a fixed term (10 yrs) annuity, at present £126 pm gross (I have only had one payment so far - total invested £17K).  Today I received a letter from the fixed term annuity provider to say that I am now restricted by the MPAA instead of the normal AA.  This was not anticipated; not that I understand precisely what this all means but understanding pensions .....phew.  I found the fixed term annuity set up quite complicated to understand and pensions generally.  I gather I need to let the final salary scheme provider know but not sure what this all means for me generally.   I would be so grateful for any advice.  I do my own tax returns and these were quite simple for me up to 23/24 as just income from self employment but for 24/25 onwards, in receipt of pensions also now means I don't really know what I am doing with tax returns, frankly. Thank you.

molerat

Simply put you are restricted by the MPAA to contributing a maximum of £10K (or your relevant income if lower or £3600 if no relevant income) pa into a money purchase pension scheme. I suspect this will not really be of any concern to you.

El_Torro

The issue with the MPAA is that you are now restricted to paying no more than £10k each financial year into your pension. Normally it's either £60k or your full earnings for the year, however because you bought an annuity this £60k figure has now reduced to £10k. 

If you are currently earning roughly £5k a year then you can't put £10k a year into a pension anyway. 

The MPAA doesn't affect what you are currently receiving from your final salary pension. 

Dazed_and_C0nfused

workinggirl32 said:

Dear all, would be grateful for any help.  Background: 65 yo. In receipt of final salary pension from working at a university in the Midlands for around 25 yrs up to when left in 2015; began receiving this pension May 24 - approx £860 p m net.  Also self employed from 2015 to date, although cut this right back in March 24 but continuing til Feb 2026. Minimal earnings with this, poss £5K ish per year via teaching occ.  This May 25, began receiving a small pension via a fixed term (10 yrs) annuity, at present £126 pm gross (I have only had one payment so far - total invested £17K).  Today I received a letter from the fixed term annuity provider to say that I am now restricted by the MPAA instead of the normal AA.  This was not anticipated; not that I understand precisely what this all means but understanding pensions .....phew.  I found the fixed term annuity set up quite complicated to understand and pensions generally.  I gather I need to let the final salary scheme provider know but not sure what this all means for me generally.   I would be so grateful for any advice.  I do my own tax returns and these were quite simple for me up to 23/24 as just income from self employment but for 24/25 onwards, in receipt of pensions also now means I don't really know what I am doing with tax returns, frankly. Thank you.

You just need to enter details of the taxable pension income and any tax deducted.

If you look on gov.uk you can see the relevant boxes on the paper tax return (SA100).  Really isn't difficult.

If your only earnings for pension contribution purposes is £5k self employment profit* then does triggering MPAA actually cause you any problems 🤔
*you haven't said what your profit is expected to be so I've assumed it's the £5k you refer to.

Marcon

El_Torro said:

The issue with the MPAA is that you are now restricted to paying no more than £10k each financial year into your pension. Normally it's either £60k or your full earnings for the year, however because you bought an annuity this £60k figure has now reduced to £10k. 

I

No - it's because OP bought a fixed term annuity, which counts as 'flexibly accessing' their DC pension.

Had they bought a lifetime annuity, the MPAA wouldn't have been triggered.

workinggirl32

Dazed_and_C0nfused said:

workinggirl32 said:

Dear all, would be grateful for any help.  Background: 65 yo. In receipt of final salary pension from working at a university in the Midlands for around 25 yrs up to when left in 2015; began receiving this pension May 24 - approx £860 p m net.  Also self employed from 2015 to date, although cut this right back in March 24 but continuing til Feb 2026. Minimal earnings with this, poss £5K ish per year via teaching occ.  This May 25, began receiving a small pension via a fixed term (10 yrs) annuity, at present £126 pm gross (I have only had one payment so far - total invested £17K).  Today I received a letter from the fixed term annuity provider to say that I am now restricted by the MPAA instead of the normal AA.  This was not anticipated; not that I understand precisely what this all means but understanding pensions .....phew.  I found the fixed term annuity set up quite complicated to understand and pensions generally.  I gather I need to let the final salary scheme provider know but not sure what this all means for me generally.   I would be so grateful for any advice.  I do my own tax returns and these were quite simple for me up to 23/24 as just income from self employment but for 24/25 onwards, in receipt of pensions also now means I don't really know what I am doing with tax returns, frankly. Thank you.

You just need to enter details of the taxable pension income and any tax deducted.

If you look on gov.uk you can see the relevant boxes on the paper tax return (SA100).  Really isn't difficult.

If your only earnings for pension contribution purposes is £5k self employment profit* then does triggering MPAA actually cause you any problems 🤔
*you haven't said what your profit is expected to be so I've assumed it's the £5k you refer to.

Thank you for the tax return notes.  Yes, that would be the profit approx for 25/26, when I began to receive this fixed term annuity. 

workinggirl32

All, thank you so much for taking time to add your comments.  If I am to understand that molerat said:

Simply put you are restricted by the MPAA to contributing a maximum of £10K (or your relevant income if lower or £3600 if no relevant income) pa into a money purchase pension scheme. I suspect this will not really be of any concern to you.

Does this mean any further funds into a money purchase pension scheme ie other than the two I have mentioned in my original post.  If so, I am indeed not concerned.  Sorry if this sounds thick, but I am making sure I absolutely understand.  Thanks

Marcon

workinggirl32 said:

All, thank you so much for taking time to add your comments.  If I am to understand that molerat said:

Simply put you are restricted by the MPAA to contributing a maximum of £10K (or your relevant income if lower or £3600 if no relevant income) pa into a money purchase pension scheme. I suspect this will not really be of any concern to you.

Does this mean any further funds into a money purchase pension scheme ie other than the two I have mentioned in my original post.  If so, I am indeed not concerned.  Sorry if this sounds thick, but I am making sure I absolutely understand.  Thanks

It means any and all funds paid into money purchase (defined contribution) schemes, either schemes you already have or those you might open in future.