City Trustees - part of Mattioli Woods

News and Media

20 March 2015

Pensions Perspective: How does a scheme know a member is subject to the new money purchase annual allowance?

What sort of controls will be put in place to ensure that other pension schemes are aware that a member has taken benefits under the new flexibilities from April 2015 and is now subject to the new money purchase allowance rules?

Any member who has a flexible drawdown pot and is accruing rights under any registered pension scheme, has a responsibility to make a report to all their pension providers that they have flexibly accessed their pension arrangements.

When a member accesses pension benefits post April 2015 under the new flexi-access rules, the scheme administrator has to notify the member within 31 days that they have accessed their benefits flexibly. The notification will also cover the fact that the member now falls under the new money purchase annual allowance (MPAA) rules for all future defined contribution pension contributions.

Once the member has received this notification they have 91 days to inform all other schemes that they are subject to the MPAA. This covers schemes where pension contributions are being paid on a money purchase basis either personally or by another party, or a scheme where they are accruing benefits under a cash balance or hybrid scheme.

If the member later joins or starts to accrue benefits in a new scheme, they have 91 days from the date of benefits accruing to notify all other schemes that they are subject to the MPAA rules.

When a member transfers out, the scheme administrator is required to notify the receiving scheme if they believe that the member has ever flexibly accessed pension rights (either in the transferring scheme or in another scheme). This must be completed within 31 days. The scheme does not need to provide evidence, as it will still be the member's responsibility to notify the new scheme within 91 days of any accrual.

Any scheme that includes a member who is subject to the new MPAA rules will need to provide an annual allowance pension savings statement for that member after each tax year in which the member's pension accrual exceeds £10,000 in the pension input period.

Anyone who is currently in flexible drawdown will automatically be deemed to have a flexi-access fund with effect from 6 April 2015. Therefore, with effect from 6 April 2015, these clients will be able to utilise the new MPAA of £10,000 per annum if required. Providers are likely to notify all current members who are in flexible drawdown shortly after 6 April 2015 that they are now subject to the new requirements.

There are penalties for non-compliance with these reporting requirements. Charges start at £300, plus £60 per day for late information. If the information is incorrect, the penalty for fraudulent or negligent information can be up to £3,000.


Pension Perspective is a weekly feature from City Trustees, covering questions that our experienced sales and technical teams have received from advisers. The Q&A covers a range of subjects including property, pension contributions, protection, auto-enrolment and more.

City Trustees operates a free technical helpline for advisers for support with pension challenges. Tel: 0116 240 8731 or email:


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