“If a husband has already passed the $1.6 million transfer cap test and that pension is subsequently transferred to their spouse, there shouldn’t be any reason to retest that pension a second time under the cap,” Mr Hallinan said.

“The argument for why it shouldn’t be a problem is that you’re not actually transferring money into starting a new pension. It’s a continuation of an existing pension, but the nevertheless, we will have to wait for the legislation to really know.”

Julie Hartley from Townsends Business and Corporate Lawyers also agreed that the government is unlikely to restrict this given that the value of pension account can increase above $1.6 million once the pension has already been commenced.

“It similar to what the government has said about growth, once it’s been transferred it doesn’t matter, even if the value doubles or triples,” Ms Hartley said.

Meanwhile, Verante Financial Planning’s Liam Shorte said it would only apply to reversionary pensions because they are already in the pension phase, adding that if it is legislated, practitioners may want to revaluate their clients’ estate planning.

“It is definitely a good idea to look at anything that’s just a binding nomination instead of a reversionary pension,” he said.