British retirees who move use to Australia or New Zealand and shift their savings through pension transfers face a 55% tax shock thanks to freedom and choice which came into force on 6 April.
Pensions freedom means savers can access their whole pension pot as cash subject to taxation.
Pension schemes in the UK must still bar members from accessing their savings before age 55 – unless the member is retiring due to ill-health.
However, the Telegraph, reports schemes in Australia and New Zealand, which attract thousands of retirees each year, do not have this restriction in their rules. Their rules permit under-55s access if they are in financial hardship.
HM Revenue & Customs has written to all these schemes, known as qualifying recognised overseas pension schemes, and warned them that unless they meet the new requirements they will no longer be able to receive UK transfers without tax penalties.