Pension contributions in retirement

236dave

Hi,
I took early retirement 15 months ago, using a Prudential flexi access drawdown scheme.  I withdraw taxable income upto my tax threshold so I dont pay tax, and top this up with tax free income to give me enough to live on.  I think this has triggered the MPAA, limiting the amount I can contibute back into my pension.

I also have other pensions which are frozen, one is an Aegon SIPP, the other a final salary scheme.
My final salary scheme will start paying me in a couple of years time, and I plan on transferring the frozen SIPP into my flexi access drawdown scheme at around the same time.

In the 2024-25 tax year, I had my final months of employment where I salary sacrificed most of my earnings into my now frozen Aegon SIPP, this amount was £11,500.

Will this affect how much I can contibute? and to which pension scheme?

What amount am I allowed to contribute?

Will the amount recieve tax relief?

If I make a contribution to one of my pension schemes will I need to notify the others of the amount?

Any help and advice is much appreciated.
Dave

JoeCrystal

Are you aware of MPAA, or Money Purchase Annual Allowance? It kicks in if you have flexibly accessed your pension savings, like taking a flexible drawdown income or Uncrystallised Funds Pension Lump Sum (UFPLS). 

It’s a yearly limit on how much can be paid into your pension(s) and still be eligible for tax relief. The MPAA means: 

• your contributions must be less than (or equal to) the amount you earn and 
• contributions from you and your employer must be less than £10,000. 

Have a look at this website for example. Worth reading it especially what you are expected to do.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/tax-and-pensions/money-purchase-annual-allowance-mpaa

PS: I hope your employer didn't break the minimum wage laws if they sacrificed most of your salary. 

Dazed_and_C0nfused

236dave said:

Hi,
I took early retirement 15 months ago, using a Prudential flexi access drawdown scheme.  I withdraw taxable income upto my tax threshold so I dont pay tax, and top this up with tax free income to give me enough to live on.  I think this has triggered the MPAA, limiting the amount I can contibute back into my pension.

I also have other pensions which are frozen, one is an Aegon SIPP, the other a final salary scheme.
My final salary scheme will start paying me in a couple of years time, and I plan on transferring the frozen SIPP into my flexi access drawdown scheme at around the same time.

In the 2024-25 tax year, I had my final months of employment where I salary sacrificed most of my earnings into my now frozen Aegon SIPP, this amount was £11,500.

Will this affect how much I can contibute? and to which pension scheme?

What amount am I allowed to contribute?

Will the amount recieve tax relief?

If I make a contribution to one of my pension schemes will I need to notify the others of the amount?

Any help and advice is much appreciated.
Dave

From what you have posted you will be limited to contributing £3,600 each tax year.

£2,880 that you pay and the pension company will add £720 in basic rate tax relief.  Whether you pay £720 in tax in the same tax year isn't relevant.

DRS1

What you contributed last tax year does not affect what you can contribute this tax year.

It may be relevant if you are looking at recycling rules but it doesn't sound like you would be.

You don't need to tell other pension schemes what you contribute to a pension.

But if you have triggered the MPAA then I think you do need to tell the other pension schemes about that. (Well maybe not the final salary one)

The MPAA may be irrelevant now if you are not working and are limited to the 2880 figure mentioned above but it is always possible you may start a new job or self employment later.