Compass Compliance Consulting
Consumer Duty 1 November 2026 · 8 min

The 31-Day MPAA Trap: Monitoring Statutory Trigger Disclosures in Flexi-Access Drawdown

Part of the Consumer Duty cornerstone

The 31-day MPAA disclosure clock

The payment that changes the allowance

A withdrawal is often processed as administration: check the bank details, sell units, deduct PAYE, pay the net amount. The legal event is different. Once a member takes taxable income under the pension freedoms, the Money Purchase Annual Allowance can be triggered.

That trigger cuts the annual allowance for future defined-contribution funding from £60,000 to £10,000, and unused carry-forward is lost. For the scheme administrator, the operational consequence is a hard deadline. Regulation 14BA of the Registered Pension Schemes (Provision of Information) Regulations 2006 (SI 2006/567) requires a flexible-access statement within 31 days of the triggering payment.

A missed or buried statement leaves the member unlikely to meet their own duty to tell other schemes. Section 98 of the Taxes Management Act 1970 is the penalty regime for that failure. It is also a PRIN 2A.5 question: did the firm equip the customer to understand what had just happened?

Two clocks

The administrator’s clock and the member’s clock are not the same, and the second does not start properly until the first has been met.

The statutory trigger is the date the taxable payment arises. It is not the date the member signed the form, and it is not the date the sale settled into the platform’s cash account.

The payment

Gross taxable income, or an uncrystallised funds pension lump sum, is paid through the scheme payroll.

31 days

The statement

Regulation 14BA. The administrator tells the member the trigger date and what the allowance now means.

91 days from receipt

The member's notices

The member must pass the statement to every other scheme still receiving defined-contribution payments, including employer contributions.

If the statement is late, or if it is filed in a portal with no email or letter, the member can miss the 91-day window without knowing it existed. Section 98 allows HMRC to charge an initial penalty of £300 and further daily penalties of up to £60 while the failure continues. When that penalty arrives, the Financial Ombudsman Service and the Pensions Ombudsman look at which firm in the chain failed to give the notice.

What actually triggers the allowance

Front line teams often treat a tax-free lump sum as the trigger, and miss the first pound of taxable income. The check is mechanical.

Event MPAA? Why
Pension commencement lump sum only No Designating funds to flexi-access drawdown and taking only the 25% tax-free lump sum does not trigger the allowance. It stays at £60,000 until £1 of taxable income is paid.
First taxable payment from flexi-access drawdown Yes Section 227E of the Finance Act 2004 applies when the taxable income is paid. The 31-day clock runs from that payment date.
Uncrystallised funds pension lump sum Yes An UFPLS pays tax-free cash and taxable income together. The allowance is triggered on the payment date.
Capped drawdown inside the GAD limit No Income from a pre-April 2015 capped arrangement, kept within 150% of the Government Actuary's Department maximum, does not trigger the allowance.
Capped drawdown over the GAD limit Yes Crossing the cap converts the arrangement to flexi-access. The allowance is triggered when that payment is made.
Small-pot commutation No A lump sum of up to £10,000 under the small-pot rules (sections 632 and 633 of the Finance Act 2004, as they apply) is not flexible access.

Foreseeable harm, before and after the payment

PRIN 2A.5 is not satisfied because a PDF exists on a portal. The communication has to leave the member able to understand the tax consequence. PRIN 2A.2 requires the firm to avoid foreseeable harm, not to discover it when HMRC writes.

Before the payment, the harm is a warning buried on page 14 of an application pack. A member who takes £2,000 of taxable income for a short-term need can permanently cut future tax-relievable funding from £60,000 a year to £10,000 without having been told, in plain terms, that this is what the withdrawal does.

After the payment, the harm is invisibility. A statement generated and stored, with no email, letter or other alert, does not start a 91-day period the member knows about. The section 98 penalty is then a consequence of the firm’s silence.

A figure the board can challenge

“MPAA disclosures are available on the portal” is an activity line. The outcome rate is the volume of Regulation 14BA statements issued within 31 calendar days, divided by the number of flexi-access and UFPLS events that triggered the allowance.

A workable tolerance, agreed by the board rather than implied by a checklist:

  • Green. Issued within 20 calendar days, which leaves an operating buffer inside the statutory 31.
  • Amber. Issued on days 21 to 28. The process is late enough to be a key risk indicator.
  • Red. Still outstanding on day 29. That is an escalation to the senior manager before the statutory day is missed, not after a complaint.

Controls that match the clock

  • Generate the statement from the payment, not from a manual ticket. The payroll or disinvestment batch should queue the Regulation 14BA statement when taxable drawdown or an UFPLS clears.
  • Send it, and be able to show it was sent. A portal copy needs an email or letter. Acknowledged receipt is what makes the 91-day period defensible.
  • Separate the tax-free lump sum from taxable income on the journey. The member should have to acknowledge the difference before a taxable payment is submitted. That is PRIN 2A.5 applied at the point of decision, not in an archive.

An SMF16 holder who can show the 31-day rate, the amber cases, and the channel the statement used has contemporaneous evidence. A folder of unsent PDFs does not.

This note sits inside the Consumer Duty governance cornerstone.

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