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Money Purchase and the Alternative Annual Allowance

Where benefits have been flexibly accessed members are required to notify any other pensions scheme provider that they may have within 91 days. A flexible access statement will have been provided by your money purchase scheme.

Flexible access triggers a money purchase annual allowance test which will apply for the tax year in which the event occurs and for each subsequent year.

Where members have flexibly accessed benefits from April 2015 members are required to notify any other pensions scheme provider that they may have within 91 days. A flexible access statement will have been provided by your money purchase scheme.

For 2015/16 and 2016/17 if you have flexibly accessed benefits and your money purchase Annual Allowance is less than £10,000.00 this must be added to the pension input from the SPPA to give a total for the tax year. A charge is payable on any amount over the annual allowance for that tax year (currently £40,000).

SPPA issue a pension savings statement if growth in your registered, NHS Teachers, Fire and Police scheme benefits exceeds the Annual Allowance of £40,000. You are responsible for calculating whether you are subject to the alternative Annual Allowance. If you think you may be affected by the money purchase Annual Allowance and alternative Annual Allowance and your NHS pension growth may exceed £30,000 but not £40,000 you should consider requesting an 'On Demand' pension savings statement from SPPA.

Important Note: if you are subject to the money purchase Annual Allowance the Finance Bill September 2017 introduces a reduction to the money purchase Annual Allowance from £10,000 to £4,000 for the tax-year 2017/18 and subsequent tax years.

For more information, please see: https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm056500

Where you are subject to the tapered annual allowance (see our Tapered Annual Allowance) and they are also subject to the money purchase Annual Allowance, the taper is applied to their alternative annual allowance amount. The alternative annual allowance amount is the standard annual allowance less the money purchase Annual Allowance

Link to Scottish Government Website