If you start taking money from your pension pot while also contributing to your pension, you may trigger your Money Purchase Annual Allowance. This means that the amount that can be contributed to your pension while still getting tax relief might reduce.
From 6th April 2023, your annual allowance for contributions while withdrawing your pension will be set at the lower of 100% of earnings or £10,000.
Note that carry forward cannot be used to increase the MPAA, i.e. you can’t use unused allowance from previous years to contribute more once the MPAA has been triggered.
See also our retirement planning and tax benefits of a pension blog posts.
