Most over-50s unaware of pension rule that cuts annual contribution to £10,000 – Standard Life

According to Standard Life, 80% of over-50s in the UK are unaware of the Money Purchase Annual Allowance (MPAA), a rule that can significantly impact their pension contributions.

Withdrawing cash lump sums or drawing down from a pension pot to supplement income can activate the MPAA, limiting the ability to top up pensions during retirement.

Triggering the MPAA reduces the annual amount individuals can contribute to their pension with tax relief from £60,000 to just £10,000.

Standard Life said a lack of awareness could have serious repercussions for those transitioning into retirement, particularly for those planning to gradually reduce their working hours while drawing on their pension savings.

This gradual transition was found to be the preferred retirement strategy for nearly half (46%) of the UK population.

Only 5% of over-50s were familiar with the MPAA and understood when it would be triggered, while a further 9% had heard of the term but lacked detailed knowledge.

There was a gender disparity in terms of awareness, with 86% of women and 75% of men reporting they have never heard of the MPAA.

Standard Life noted that a lifetime annuity could provide a guaranteed income for life, starting any time after age 55, without triggering the MPAA.