Do you or a dependant want to keep your full annual allowance? Then be aware that – even if you don’t exceed the cap under your existing capped drawdown – you can do it in other ways.
That means that if you access another part of your pension pot flexibly – either using pension drawdown or by taking some or all of it as cash or by taking income from a ‘flexible annuity’ – you’ll still trigger the lower Money Purchase Annual Allowance for all future defined contribution pension savings. This is unless you’re withdrawing a small pot of £10,000 or less in full and in one go.
You can opt to convert from capped drawdown to flexi-access drawdown by notifying your scheme – rather than by exceeding the cap.
In this case, the Money Purchase Annual Allowance is only triggered when your first income payment is taken from flexi-access drawdown.
The Money Purchase Annual Allowance won’t apply to a dependant who converts their dependants’ capped drawdown to a dependant’s pension drawdown.
The allowance would only be triggered if they accessed another pension pot valued at £10,000 or more flexibly.