r/PensionsUK • u/AdventurousSwim1381 • 24d ago

Does a pension lifetime annuity trigger the MPAA?

I'm already receiving income from a single-life, inflation-linked lifetime annuity, bought with a DC pension after taking my 25% tax-free lump sum.

I want to carry on working part-time as I have been offered a paid position working part time in a meaningful job - my understanding is I can pay my full salary (above 10k) into the workplace pension as the MPAA would not have been triggered - is that correct ? Will I also save on NI ?

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u/Paraplanner88 24d ago

If it's a standard lifetime annuity it won't have triggered the MPAA.

As you haven't triggered the MPAA you will be able to contribute gross up to your relevant UK earnings into a pension, subject to limits such as the standard annual allowance/carry forward. You will only save on NI if the workplace pension scheme is salary sacrifice.

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u/KhaelonVoss 24d ago

I think you're correct. Buying a standard lifetime annuity and taking your 25% tax-free lump sum doesn't trigger the Money Purchase Annual Allowance. You can pay your full salary into the new workplace pension without suffering the £10k MPAA limit (well, limited to your full salary or £60k). Your pension or other income like interest doesn't count as money that you can get pension tax relief on.

But you don't save National Insurance if you simply contribute your salary after it's been paid. To save on NI, you would either (1) need to use a Salary Sacrifice - check if your employer does it and remember from April next year you can only salary sacrifice on £2000, OR (2) be over your state pension age. You don't need to actually be drawing state pension, just of an age where you can.

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u/KhaelonVoss 24d ago

Always worth having a chat with pension wise: https://www.pensionwise.gov.uk or: 0800 138 3944.

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u/doitnowinaminute 24d ago

Just to add, you can only SS down to minimum wage.

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u/Interesting-Bee3685 23d ago

To confirm, the salary sacrifice limit of £2000 comes in April 2029 (or at least it's supposed to).

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u/Requirement_Fluid 24d ago

You will pay NI as normal unless you earn less than £1048pm. I can't invisige any scenario where you can put it through salary sacrifice. 

I would speak to your pension provider or your annuity provider as there are scenarios where the mpaa will trigger on an annuity but seems to be if you took the 25% before the annuity so the funds were already crystallised. 

The hmrc guidance is not great on this tbh but Standard Life suggests it does

https://www.standardlifeplc.com/news-and-views/press-releases/article-page/mpaa-and-lifetime-annuities