Pensions - Articles - Over a million people at risk of falling foul of MPAA

 Steven Cameron, Pensions Director at Aegon, comments: “Today’s figures shows the popularity of the pension freedoms continues to grow with the number of individuals accessing their pensions flexibly, and the number of withdrawals, at record levels for the quarter. However, it also highlights that almost 1.3 million individuals have taken flexible payments since the introduction of the pension freedoms and are at risk of inadvertently falling foul of the little known £4,000 Money Purchase Annual Allowance (MPAA)*. Anyone who flexibly accesses pension benefits is restricted in future from paying in more than £4,000 a year in total to all defined contribution pensions unless prepared to pay a tax charge. This could severely derail individuals’ ability to continue saving for retirement and we would urge a future Government of whatever persuasion to increase this to at least £10,000.

 “The pension freedoms have changed the retirement landscape for many individuals enabling a more flexible transition into retirement whereby they can access some of their pension savings to help support reduced working patterns. However, this freedom comes with great responsibility and it is crucial that people understand the risks associated with drawing down their retirement savings which for many need to last a lifetime. Anyone concerned about running out of money should seek financial advice.”

 Flexible payments from pensions