As many as 15,000 British savers could be hit by a new lifetime allowance on pension contributions in Australia.
Last week the Australian government installed a limit of $500,000 (£254,000) on non-concessional contributions, sometimes known as ‘after tax’ contributions, that can be made to Australian pension accounts.
Under previous rules, Britons moving to Australia simply had to comply with an annual cap of $180,000 (£91,500).
Global QROPS director Paul Davies says: “I think we are looking at about 30,000 people that migrate to Australia every year, so it’s quite a big destination, and at least half of them will take some of their pension over there.
“It’s important for advisers to establish what people have already in their Australian savings in non-concessional contributions, but we still don’t really know how over-contributions will be handled. They could be returned to the member or returns to the scheme, or taxed, or it could even be a combination of all three.”
Meanwhile, AJ Bell head of technical resources Gareth James plays down the prospect of the UK following suit.
He says: “The system is too different and there’s a distinction between contributions and transfers over here and I think it would be a step too far to rebuild the UK’s rules in the search for an equivalent system.”
“We have already got that because the lifetime allowance has already been reduced as far as £1m, but I don’t see that being reduced, certainly as far as the Australian numbers.”