Financial advisers looking to assist concerned UK expats in Australia looking for assurances over how proposed lifetime allowance changes will affect their savings, have been left in “complete limbo”, according to a commentator.
Geraint Davies, managing director at pensions specialist Montfort International, has hit out at the timing of the Australian government’s announcement of a AUS$500,000 (£254,000) limit on non-concessional contributions, often referred to as after tax contributions, that can be made into Australian pension accounts.
Previously those moving from the UK to Australian were restricted to an annual cap of $180,000 (£91,500). As a result of the changes thousands of Britons living in Australia could be affected.
Davies said: “When one country changes its rules so drastically as Australia has done, then leaves the legislation in complete limbo because of a general election – it makes life extremely difficult for advisers in that country.
“However when you are trying to dovetail one countries retirement planning regime which also has undergone serious change, i.e. UK with Australia, then any advisor worth his salt is going to stop and think.
‘Untold and irreparable damage’
Davies is concerned that advisers will continue to advise their Australian born clients in the UK, the dual nationals of UK and Australia and the migrants and could cause “untold and irreparable damage” as a result.
This week the Australian parliament was dissolved before a ‘double dissolution’ election – which means that no laws can be set in stone before the election, which is set for July. As a result, advisers could face an increasingly complex “minefield” of tax implications.
“When you fail to integrate the international tax and retirement regimes of the countries your clients have rights of abode in – you have left yourself wide open and a sitting target,” warned Davies.
“This is seriously, seriously complex and is a total minefield. If you don’t know what you don’t know how on earth do you treat the customer fairly?”
Stephen Lowe, group communications director at Just Retirement, was less concerned and pointed that in some regards Australia and the UK are moving closer together, for example by capping tax concessions and focusing them on those who need most incentive to save for the long term.
“Even some of the language used by the Australian treasurer Scott Morrison – enhancing ‘flexibility and choice’ for example – is the same as here which reflects the fact that work patterns in both Australia and the UK are changing and more responsibility is being placed on savers with less reliance on the State.
“In many ways Australia is years ahead of us in terms of auto-enrolment into pensions which means pension pots tend to be much bigger than here. Yet the Australian government is still worried people are missing out on income and are vulnerable to running out of money in old age.”