For many individuals, starting to draw income and lump sums from their pensions coincides with them ceasing to make contributions and so the imposition of the MPAA has no impact.

For others, the relevant MPAA plus the ISA allowance is more than sufficient to meet any tax efficient savings needs they may have. However, for some the MPAA will restrict the level of tax relievable contributions they plan to make to money purchase pension. For these individuals, some sensible planning can avoid this issue.

• PCLS & Flexi-Access Drawdown –

– As long as funds are only designed to drawdown and not taken, this will not trigger MPAA.

– As they’re only taking the PCLS as a result, careful not to be caught under the PCLS recycling rules

– Any PCLS will be part of the client’s estate for IHT if not spent.

• Capped Drawdown

– Gives the client greater flexibility as an income can be taken from the capped drawdown as long as it is within the 150% of the basis amount, so not to trigger MPAA

• Small Pots & trivial commutation

– They do not trigger MPAA rules or assessed against LTA

– For non-occupational money purchase pensions, a pension can be split as many times to take advantage of the small pot rules, up to the limit of 3

• Annuity Income

– Flexible’ annuities were available prior to 2015 and included investment-linked annuities, which allow income to be varied between lower and upper limits.

– They are reviewed every three years in a way similar to capped drawdown. These types of annuities can still be sold by providers and offer some flexibility of payment and the potential for investment growth.

– However, they do not trigger the MPAA because they comply with the pre-2015 rules, and are not a ‘flexible annuity’ as set out in the Taxation of Pensions Act 2014.