Money purchase annual allowance (MPAA) – this only applies if you are over age 55 and you have chosen to take your pension, from a money purchase pension scheme like the DC section of the RS Group Pension Scheme, using the new flexibilities introduced from April 2015. In these circumstances the standard AA of £40,000 will be replaced by the MPAA.

The MPAA is £10,000 and will apply from the day after an individual takes their pension account using the new flexibilities i.e. taking your account through flexi-access drawdown, a series of lump sums, as a single lump sum, or as a mixture. So as soon as you take any benefits from your Electrocomponents pension or other similar money purchase arrangement ‘flexibly’, your AA will reduce to £10,000.

From April 2017 the MPAA will reduce further to £4,000.

You can find out more information about the AA and tax limits on pension savings by visiting the government website at https://www.gov.uk/tax-on-your-private-pension/overview.