The Money Purchase Annual Allowance and Its Trigger
Written and reviewed by the Pension Tax Accountants editorial team. Last reviewed 29 July 2026.
The money purchase annual allowance, or MPAA, is a reduced allowance for contributions to defined contribution pensions. For 2026/27 it is £10,000. It applies once you have flexibly accessed a defined contribution pension.
The point of the rule is to stop income being recycled back into a pension for fresh relief once it has started to be drawn flexibly. Knowing exactly what counts as flexible access is the whole game, because some ways of taking money leave the full allowance intact and others do not.
This guide covers only the tax mechanics. Whether and how to access a pension is a regulated financial advice decision for an FCA authorised adviser, not something we advise on.
What the £10,000 Limit Is
Once triggered, the MPAA replaces the standard annual allowance for your defined contribution savings, capping them at £10,000 for 2026/27. Contributions to a defined benefit scheme keep a separate allowance, but the money purchase side is held to the lower figure.
HMRC covers the limit in its Pensions Tax Manual at PTM056510.
What Triggers the Allowance
The MPAA is triggered by flexibly accessing a defined contribution pension. The common triggers are taking taxable income through flexi-access drawdown, or taking an uncrystallised funds pension lump sum, known as a UFPLS.
The trigger is about taking taxable income, not tax-free cash on its own. The statutory rules for money purchase pensions sit within the Finance Act 2004.
Life After the Trigger
Once the MPAA has been triggered, it cannot be undone, and unused MPAA cannot be carried forward for money purchase contributions. That is a key difference from the standard allowance, where carry forward is available.
From the trigger date onward, money purchase contributions above £10,000 in a year attract an annual allowance charge on the excess, worked out in the same way as for the standard allowance.
The Difference From Taking Tax Free Cash
Taking only the tax-free lump sum from a pension, without drawing any taxable income, does not usually trigger the MPAA. It is the taxable income element of flexible access that flips the allowance on.
Because the line between what triggers the MPAA and what does not turns on the type of withdrawal, the tax outcome can differ sharply between two apparently similar choices. The choice itself remains one for a regulated adviser. We deal with the allowance and any charge that follows.