From 6 April 2015, a reduced money purchase annual allowance (MPAA) of £10,000 has applied in respect of money purchase pension contributions where individuals have flexibly accessed their pension benefits.
From April 2017, the government will reduce the MPAA from £10,000 to £4,000. The aim is to limit the extent to which pension savings can be recycled to take advantage of tax relief. The limit of £10,000 was introduced in April 2015 to stop people claiming further tax relief on any new contributions.
The Government believes it would be fair and reasonable to allow individuals who need to access their pension savings to rebuild them if they subsequently have the opportunity to do so but not where this is done to increase tax relief by re-investing the withdrawal.
Any unused MPAA cannot be carried forward to later years.
This will impact all individuals who have accessed their pension savings and wish to make further contributions.