The money purchase annual allowance (MPAA) must increase by at least £6,000 to ensure savers who dipped into their pension for short-term financial relief during the pandemic will not face contribution restrictions, Aegon says.
Aegon said the MPAA continued to pose a "hidden risk" to pension savers over 55 who may have accessed their funds early due to hardship caused by the coronavirus pandemic. The MPAA - initially introduced alongside pension freedoms to prevent people drawing money from a pension and then returning it back into a pension scheme to claim further tax relief - has faced continued scrutiny on its limitations. Aegon analysis found that an individual on a ‘moderate' £30,000 a year income would trigger the £4,000 MPAA limit with pension contribution rates over 13.4%. This falls just 8% for some...
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