Pensions capped for Brits living in Oz

British expats in Australia face a reduction in their pensions following legislation brought in by the Australian government.

Last week, the Australian government introduced a lifetime cap of AUS$500,000 (approximately £250,000) on contributions made into Australian pension accounts for British expats.

The cap is roughly a quarter of the current UK lifetime allowance of £1m, and will be calculated retrospectively back to July 1 2007.

Previously, it had been possible for a British expat to pay in AUS$180,000 (approx. £92,000) annually or bring forward a three-year contribution and pay an AUS$540,000 (approx. £275,000) contribution.

Anyone who exceeds the new £250,000 limit could be asked to get rid of the excess or suffer a penalty of up to 45 per cent on the excess.

The new contribution cap took effect from 3 May 2016, immediately following the Australian Budget announcement.

According to a report in the Telegraph, British expat pensioners already have to return to the UK due to Australia’s increasing health premiums costs.

Unlike permanent residents, temporary residents in Australia do not get access to Medicare, the publicly funded national health care scheme, which covers many health-based costs.

The=is recent reduction in pensions is likely to only further increase the financial pressure on retired expats living in Oz, and could see more return to the UK.

Article by David Fuller