Avoiding triggering MPAA

DE_612183

My wife is considering taking about £4000 per year - but on a monthly basis.

The MPAA rule I think we want to utilise is:

• Small Pots (Under £10,000): You can take up to three "small pots" of £10,000 or less (from non-occupational/SIPP schemes) in their entirety without triggering the MPAA.

Does this mean she should take the £4k up front rather than the £333 per month?

dunstonh

The "small pot lump sum" rules mean that they are taken as a single lump sum. They are not available as monthly payments as it would not be a lump sum on that basis.

Doing it on drip monthly would not utilise the small pots lump sum rule and trigger the MPAA.

squirrelpie

You can simulate a monthly drawdown by opening a new savings? account, paying the £4000 into it and then withdrawing/transferring monthly amounts to her main account.

DRS1

What is the value of her pension? If it is more than £10k then she is going to have to hive off the bit she wants to take into a small pot and take that small pot in one go. HL do this if she is with them.

Marcon

https://forums.moneysavingexpert.com/discussion/6655559/avoiding-triggering-mpaa

Looking at her plans when you posted four days ago, I wonder if it matters?

https://forums.moneysavingexpert.com/discussion/6655000/drawdown-and-tax

If she has had no earnings in this tax year, is she likely to have sufficient earnings to worry about breaching the £10K per annum contribution limit which would apply if she triggers the MPAA? I think she'd do well to ponder the possibility of falling foul of recycling rules if she takes a £17K lump sum and then tries to pay in £10K+ sometime in the next couple of years.

DE_612183

https://forums.moneysavingexpert.com/discussion/comment/81886817#Comment_81886817

Thanks, yes things are a bit fluid at the moment so what she is doing changes depending on the scenario we're looking - hence different questions that seem contradictory.

Albermarle

Also note that some pension providers do not offer the facility to withdraw under the Small Pots rule.

For those that do, you need to request it specifically, rather than just withdraw it.

DE_612183

So, reviewing this info - the small pots rule actually applies to the value of the overall pot - NOT the value of the amount taken from the pot?

Is that correct?

So if I broke up the bigger pot into small ones I'd be ok, for example if I transferred £9k out from say Next to L&G, I could then access the L&G amount without triggering MPAA?

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81891064#Comment_81891064

Is that correct? Yes

So if I broke up the bigger pot into small ones I'd be ok, for example if I transferred £9k out from say Next to L&G, I could then access the L&G amount without triggering MPAA?

I think that should be OK, but not 100% sure. One thing you would definitely need to check is that L&G actually offer a Small Pot Withdrawal facility. Quite a few pension providers do not offer it.

MallyGirl

you can definitely do this by transferring to HL and asking for a small pot withdrawal