What is the Money Purchase Annual Allowance (MPAA)?
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In short: A reduced pension annual allowance of £10,000 that applies once you have flexibly accessed a defined-contribution pension — for example through drawdown or a UFPLS lump sum.
The MPAA cuts your annual allowance for further defined-contribution contributions from the standard £60,000 down to £10,000. It was raised from £4,000 to £10,000 on 6 April 2023.
It is triggered by taking taxable income from drawdown, taking a UFPLS (uncrystallised funds pension lump sum), exceeding the cap on a capped-drawdown plan, or buying certain flexible annuities. Taking only the 25% tax-free element does not trigger it.
Once triggered, the MPAA cannot be reversed. If you might want to keep contributing meaningfully, take regulated advice before flexibly accessing your pension.
Primary source: gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm056510