Over 55s caught by pensions tax trap

The money purchase annual allowance (MPAA) has caught almost one million over-55s, who must now live with a permanent reduction to the amount they can put into their pension tax free. Data from HM Revenue & Customs has revealed 980,000 over-55s who used the pension freedoms between 2015 and2019 have been caught by the MPAA, The Financial Times reports. As a result, their annual allowance has been cut from £40,000 to £4,000. The figures were released following a freedom of information request by Just Group. Speaking to the paper, Just Group director Stephen Lowe called on the regulator to ensure people are able to receive independent and impartial guidance to prevent people from making uninformed, irrevocable choices that can cause harm. The MPAA was set at £10,000 in April 2015, when the freedoms first came into force. However, this was cut to £4,000 by chancellor Philip Hammond in 2017.