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Press release: Be wary of MPAA if tapping into pension


Don’t call an emergency event – think twice before tapping into your pension

Quilter is urging pensioners with cashflow issues because of the current lockdown to think carefully about how they withdraw money from their pension and avoid triggering a tax event.

Pension freedoms mean those aged 55 and over have flexibility to access their pensions when they need it, but short- term withdrawals need to be considered carefully as triggering the Money Purchase Annual Allowance (MPAA) will severely limit the contribution you can make in the future.

The MPAA restricts subsequent pension contributions after withdrawal to just £4,000 a year.

However, if you take money out of a small pension pot of under £10,000 you do not trigger the MPAA. Some providers have designed their pension products to facilitate this exemption. For example, Old Mutual Wealth, Quilter’s UK platform, has an option that allows advisers to create up to three small pots from one big pot.

Ian Browne, retirement expert at Quilter:

The MPAA is an absurd tax which jars terribly with pension freedoms. One would think that the current environment is exactly the right time to make use of the flexibility that freedoms has introduced. However, thanks to this quirk within the tax system they need to be careful how they tap into the money that is rightly theirs.

The Association of British Insurers has warned that those aged 55 and over need to be very cautious about utilizing pension freedoms in this time. Many of this group will be tempted as research from Populus for Quilter has shown that one in four 55-64s are worried about their long term family finances and one in five are worried about their finances in the short term.

There are ways to access your pension without triggering the MPAA such as small pots. However, it is not for everyone and in fact tapping into your pension may not be the best choice, so it is vital to seek professional financial advice.”

For more information contact

Kathleen Gallagher023 8072 629307990
Alex Berry023 8072 626007741

Notes to Editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £95.3 billion in customer investments (as at 31 March 2020).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.

The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.

Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.

Wealth Platforms includes Old Mutual Wealth UK platform and Quilter International, including AAM Advisory in Singapore.

The Old Mutual Wealth Heritage life assurance business was acquired by ReAssure Group Plc on 2 January 2020.

Since its IPO in June 2018, Quilter plc’s businesses have progressively rebranded to Quilter, as follows: 

  • Quilter Financial Planning (previously Intrinsic)
  • Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
  • Quilter Financial Advisers (previously Charles Derby Group)
  • Quilter Financial Adviser School
  • Quilter Cheviot
  • Quilter Investors
  • Old Mutual Wealth (becoming Quilter Investment Platform)
  • Quilter International (previously Old Mutual International)

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.