Money Purchase Annual Allowance (MPAA) 

What is the MPAA?

The MPAA is a variation of the annual allowance rules which was introduced in April 2015. If you want to learn more about the annual allowance rules, please read our Annual Allowance fact sheet.

People affected by the MPAA still have to test all of their pension savings for the year against their annual allowance as normal. However, they also have to test the value of their money purchase contributions against the MPAA.

What does money purchase mean?

The term money purchase describes a type of pension scheme where each member builds up their own individual pension fund, and the pension benefits available at retirement depend on the value of that person’s fund. They are sometimes called ‘defined contribution’ pensions.

Useful information and FAQs


There are ways of accessing pension benefits which don’t trigger the MPAA. These include:

  • Taking a tax free cash payment (also known as a pension commencement lump sum, or PCLS)
  • Taking income from a traditional annuity (where the payment amounts can’t normally decrease)
  • Taking income in capped drawdown (you would have needed to be in capped drawdown by 5 April 2015).

Again, there are a few more unusual types of payments which you can read about by searching “payments that do not trigger the money purchase annual allowance” (including the quotation marks) on www.gov.uk.