If you’ve flexibly accessed your pension benefits, the Money Purchase Annual Allowance (MPAA) is the annual amount that can be paid to your money purchase arrangements without a tax change. This is a reduction from £10,000 to £4,000.
However, in the Autumn Statement 2016, Chancellor Phillip Hammond announced that MPAA would be cut from £10,000 to only £4,000 with effect from 6th April 2017. He justified this measure by advising that it was felt that earners of fifty five years of age and over should not be able to enjoy double pension tax relief, such as relief on pensions savings.
The Government is now under increasing pressure from pension providers to reverse his unpopular decision to make this cut.
Peter Anstee from Anstee & Co said-
“The government cannot stop tinkering with these pension allowance. Now that the Chancellor has a income deficit in his budget after his U-turn on National Insurance contribution for the self-employed. I can only see that pension allowance will be coming under his spot light again. I would urge anyone who is coming up to retirement age to take professional advise. Not doing so could prove very expensive. The goal post are constantly being moved. A little bit of financial planning now could pay dividends in the future to your retirement”.
If you’re interested in learning more about Money Purchase Annual Allowance and how it might affect you, call one of our expert advisers today. Anstee & Co Limited have offices in Kettering, Stamford and London. We also have meeting rooms in Bedford and Warwick. Meetings can also be arranged at your home at a time convenient to you. Anstee & Co also have a dedicated team that specialise in the financial issue of later life.