Soon to take UFPLS from SIPP - MPAA question

[deanobeano]

Sorry about all the abbreviations in the title. Hopefully my question is an easy one...

I have been retired for approx 9 years or so and have not had any employment income for approx this time and have been living off my savings.


I will reach 55 later this year and want to access my SIPP using uncrystallised funds pension lump sum. Not a massive amount, approx 16k PA.


Regarding MPAA, ii (my platform) states:

An UFPLS does trigger the MPAA (Money Purchase Annual Allowance). This reduces your annual allowance for pension contributions to £4,000.

For the last few years (with no employment income) I have been contributing £2880 (net) to my SIPP.

So, when I commence UFPLS does this mean I can increase my contributions to £3200 (net), ie now put more into my SIPP than before?

[Mr Pointy]

No, the two aren't linked. The maximum you can invest is £2880/£3200 if you don't have any qualifying income - that doesn't change. Once you trigger the MPAA you are limited to £4000 even if you do have qualifying income & income from pensions & investments doesn't qualify.

I'm in exactly this position - it triggered the MPAA because I thought I wouldn't work again & then two years later was offered a substantial contract & now I cannot contribute more than £4000 a year.

[deanobeano]

Thanks for that.

I've got no intentions to start working, so being able to add 4k gross to my pot from my unwrapped assets each year is a small bonus!

[DoubleSix]

Mr Pointy said:

I'm in exactly this position - it triggered the MPAA because I thought I wouldn't work again & then two years later was offered a substantial contract & now I cannot contribute more than £4000 a year.

I run retirement and career transition seminars for big companies. This little trap is something I highlight and underline.

[PistonHead007]

deanobeano said:

Thanks for that.

I've got no intentions to start working, so being able to add 4k gross to my pot from my unwrapped assets each year is a small bonus!

You can't add £4,000 without £4,000 of earnings. You will simply be able to continue adding £3,600 gross per annum, which is within the MPAA.