Govt decision on MPAA cut sparks criticism

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Advisers and providers say they are disappointed the Government has decided to press ahead with plans to reduce the money purchase annual allowance.

A consultation on the move, which will see the MPAA fall from £10,000 to £4,000, was launched following the Autumn Statement last year.

The £4,000 MPAA will come into effect next month, and will apply to all individuals who have accessed their pension flexibly, regardless of when they accessed it.

The Government will publish its full response to the consultation on 20 March.

LEBC director of public policy Kay Ingram says: “We will continue to press the case for flexibility to be given to vulnerable groups who, through no fault of their own, have needed to top up their income with pension savings but may wish to rebuild their pension pots later if their circumstances change.

“The retrospective aspect is especially unwelcome.”

Nucleus product technical manager Rachel Vahey says: “It’s disappointing the Government has gone ahead with the reduction in the MPAA. This move sits at odds with the key government policy of encouraging people to work for  longer. It shows on pensions freedom the Government is talking the talk but not walking the walk.

“Other actions, such as tightening the pension recycling rules, would have been a fairer solution.”