Someone who needs to access their pension this year to continue paying their mortgage could quite well be planning to top up their pension in their later years once the mortgage is paid off.
And this thinking also ignores the impact of inflation on the £4,000.
There has been no hint the government plans to inflation-link the limit.
In fact the 2017 reduction of the MPAA from £10,000 to £4,000 would suggest the opposite, and £4,000 in 20 years is going to look like a significantly less generous limit than it does now.
A key problem for those asking for a relaxation in the MPAA rules is the volume of number it could benefit, and so the potential cost to the Treasury.
The change to the Lisa withdrawal charge is a small saving for a limited number of people.
The FCA’s pension freedom statistics show hundreds of thousands of savers are accessing their pensions for the first time each year.
So any MPAA would potentially benefit huge numbers of savers and, because it has such an effect, cost an awful lot in additional tax relief.
So while a precedent has been set with the Lisa announcement, if we do see any movement on the MPAA we should expect it to be similarly limited in scope.
Gareth James is head of technical at AJ Bell
