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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).

However, if you have flexibly accessed benefits and your money purchase Annual Allowance is more than £10,000.00 this will result in the implementation of the alternative annual allowance of £30,000.00. Your SPPA held benefits will be tested against £30,000 for any year that your money purchase Annual Allowance exceeds £10,000. Any main scheme benefits in excess of £30,000.00 may be subject to a tax charge (the normal carry forward rules apply). Any money purchased contributions made in excess of £10,000 will be subject to a tax charge.

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.

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