FAQ
Will taking an income trigger the money purchase annual allowance?
Flexible drawdown usually cuts future tax-relieved contributions to £10,000 a year. Taking only tax-free cash may not. Oakspan does not decide which side you are on.
Often, yes — and the distinction matters if you are still paying into a pension. Once you flexibly access defined-contribution savings, the money purchase annual allowance usually replaces the standard £60,000 annual allowance for future DC contributions. For 2026/27 the MPAA is £10,000 a year. Contributions above it can create an annual-allowance tax charge.
Flexible access generally includes taking an income from flexi-access drawdown, or taking an uncrystallised funds pension lump sum. Taking only the tax-free lump sum and leaving the rest in a flexi-access arrangement, without drawing taxable income, does not by itself trigger the MPAA. There are further exceptions — some small-pot payments, a scheme pension, and certain annuities — and the detail is easy to get wrong.
What Oakspan will and will not flag
The calculator compares this year’s combined personal and employer contributions with the standard annual allowance of £60,000. If you are over that line, it warns you. It does not test contributions against the £10,000 MPAA, and it does not decide whether your button-presses would trigger it. A pot that looks fine against £60,000 can still be a problem if the MPAA already applies.
If you expect to keep contributing after you start drawing — a common pattern for someone who takes tax-free cash but stays in work — check the trigger with your scheme or with MoneyHelper before you rely on the contribution room in this model. The allowance figures are listed with the other 2026/27 rates.
Keep reading
- Previous: Is this financial advice?
- Try the numbers on the private pension calculator.
- Read the pension guide and the 2026/27 rates.