The money purchase annual allowance: what sets off the £10,000 limit
Updated 19 October 2026. Figures checked against official sources on 19 October 2026.
Once you take taxable money from a pension flexibly, the most you and your employer can pay into pension pots with tax relief drops from £60,000 to £10,000 a year. This is the money purchase annual allowance.
Worked example
Your money lasts to 95, with £88,795 left.
- Age now
- 58
- Retire at
- 62
- Pots
- £300,000
- Take-home wanted
- £26,000 a year
- Plan until
- 95
What sets it off
- Taking taxable money from drawdown.
- Taking a lump sum where a quarter is tax-free and the rest is taxed.
What doesn't
- Taking only your tax-free lump sum and leaving the rest invested.
- Building up a final salary pension: the limit is on payments into pension pots.
A worked example
Someone cuts down to part-time work at 62, tops up their income from an old pension, and keeps paying £14,000 a year into their workplace pension. From 64, when you first take taxable money from Old personal pension, your pension payments are limited to £10,000 a year, including any employer payments (the money purchase annual allowance). This plan pays in £14,000 that year and carries on until 66. Taking only the tax-free lump sum doesn't trigger the limit.
Paying in more than the limit means a tax charge on the excess, through Self Assessment.
In the calculator
The calculator warns when a plan takes taxable pension money while still paying in more than £10,000 a year. Try the calculator with your own figures.
Questions people ask
What triggers the money purchase annual allowance?
Taking taxable money from a pension flexibly, such as income from drawdown or a lump sum that's part tax-free and part taxed.
Does taking my 25% tax-free cash trigger the MPAA?
No, not on its own. Taking only the tax-free lump sum and leaving the rest invested doesn't set off the limit.
How much can I pay into a pension after taking money out?
£10,000 a year into pension pots, including employer payments, once the limit applies. Before that, the annual allowance is £60,000.
Sources
Rates and rules were checked against these on 19 October 2026. Worked-example figures come from the calculator, using 2026/27 tax rules.