For both national and international taxation of pensions, the actual taxation approaches are characterized by a high level of diversity, complexity, and inconsistency within and across countries that risk harming labor mobility and creating fiscal unfairness.
The proposed taxation approach for internationally portable pensions mixes notional front-loaded taxation (as the tax due on contributions/savings is deferred) with actual back-loaded taxation as the taxes are due when the benefits are disbursed (in source or residency country) or when accumulated savings effectively leave the country. This approach promises to broadly establish neutrality for international labor mobility decisions, fiscal fairness of tax revenue around retirement provisions between source and residency countries, and bureaucratic efficiency, including consistency with European Union regulations and most double-taxation treaties.