The Annual Allowance applies to all savings you make into a registered pension arrangement, which restricts the amount that you (and your employer) can save each tax year without incurring a tax charge. The standard Annual Allowance for the current tax year can be found here (please note this reduces if you have a ‘high’ income).
A separate Money Purchase Annual Allowance will apply to you, irrespective of your income, if you access your pension savings flexibly and take a taxable income. This includes taking taxable income from a Drawdown fund, as well as the taxable part of a cash lump sum, known as an Uncrystallised Funds Pension Lump Sum or UFPLS. It doesn’t apply if you buy an annuity. Once the Money Purchase Annual Allowance is triggered, this restricts the amount that you (and your employer) can save into a money purchase (defined contribution) pension arrangement each tax year without incurring a tax charge. The Money Purchase Annual Allowance for 2021/2022 is £4,000.
Therefore, if you are planning to continue working and/or saving into a pension arrangement after taking your pension savings, you should take the Money Purchase Annual Allowance into account when deciding which option to take.