British expats living in Australia or New Zealand could face a substantial charge as a result of 55pc due to the pension freedoms that were introduced from April 6.
The new rules allow savers to take their whole pension pot as cash however such schemes prohibit members from accessing their savings before the age of 55 unless the member is retiring early due to ill-health.
Unlike the UK, however, similar schemes in Australia and New Zealand do not have this restriction in place but rather allow under-55s to access their funds early if needed due to financial hardship. This in turn affects the thousands of expats who move to either Australia or New Zealand every year.
This effectively means that unless individuals meet the new requirements brought in the UK they will face charges of 55pc.
Potential Exemption
Although some of the agencies in Australia and New Zealand have applied for exemptions, it is unlikely according to experts that the UK will change their requirements.
James McLeod, of international financial advice firm AES International, said anyone who has transferred their pension should have their pension scheme halted if possible. He said: “It usually takes three or four months to process transfers to a qualifying recognised overseas pension schemes (QROPS) so even if you initiated the transfer in early April there is still plenty of time to stop it until we know whether schemes abroad will comply with HMRC’s rules.
He added: “Savers have a responsibility to transfer their money to a qualifying scheme – the onus is on them to do their homework.
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