Fears an overhaul of Australia’s superannuation pension system will harm wealthy British expats could be unfounded, as the rules may be scrapped in the July general election, an expert has told FTAdviser.
If the opposition – which is currently leading in the polls and has criticised the policy – wins the election, the move will likely be overturned,
The new rules introduce a $500,000 (£255,000) lifetime cap on superannuation contributions, prompting fears wealthy British expats would be unable to transfer the full value of their pensions down under.
But Andrew Hains, senior client adviser of IFA Montfort International, who specialises in advising British expats moving to Australia, said fears were premature.
Mr Hains said while the regulation is currently in place, it has not yet been put on the statute books.
“No draft legislation has been released yet and with an election coming up, it may not go ahead,” he said.
This week Australia’s parliament was dissolved ahead of a “double dissolution” election, meaning no laws can be made before the election.
The Labour party opposes the government’s policy, and polls currently give it a slight edge over the incumbent Liberal party.
There is also widespread opposition to the new cap among Liberals.
Current prime minister Malcolm Turnbull’s deposed predecessor Tony Abbott and his allies were vehemently against making any changes to superannuation tax concessions.
But if the changes do go ahead, Mr Hains said British expats with more than £255,000 in their pension pots have two good options: leave the remainder in the UK, or move it into a qualified overseas pension scheme (Qrops) in a third jurisdiction.
One positive side to the new rules, he said, is that they would prevent people transferring money to Australia when it is not beneficial to do so.
“We’ve seen so many transfers from the UK to Australia that should really never have happened, particularly of final salary pensions,” he told FTAdviser.
While Mr Hains said the rules will only affect a fraction of the tens of thousands of British citizens who move to Australia every year, he said they will affect about 30 to 40 per cent of his clients.
This, he said, “might put people off moving to Australia”.
However, he said he hoped the changes, should they come about, will encourage more people to get advice before transferring all their funds overseas, as it is often not in their interest to do so.
This article has been amended since first publication.
