Splitting Military Superannuation
Splitting military superannuation (such as MSBS, DFRDB, or ADF Super) is significantly more complex than splitting a standard retail or industry fund. Because these are “Defined Benefit” schemes, they require a specialized legal and actuarial approach to ensure the split is valid and fair.
The Process of Splitting Military Super
Formalising a split through Consent Orders follows a strict multi-step path:
- Information Request (Form 6): You or your spouse must lodge a “Form 6” with the Commonwealth Superannuation Corporation (CSC). This compels the fund to provide a Superannuation Information Form (SIF) containing the raw data needed for valuation.
- Actuarial Valuation: Because military funds don’t have a simple “cash balance,” an actuary uses the SIF data to calculate the Family Law Value. This converts the future pension promise into a present-day dollar figure.
- Drafting the Orders: Specialist lawyers draft the Minute of Order using precise “splitting clauses.” For example, MSBS requires orders to address both “Associate A” (taxed) and “Associate B” (untaxed) components.
- Procedural Fairness: Before filing with the Court, you must send the draft orders to CSC. They have 28 days to review the wording and provide a “Letter of Procedural Fairness” confirming they can implement the split.
- Court Approval: The Application for Consent Orders and the Minute of Order are filed in the Federal Circuit and Family Court. A Registrar reviews them to ensure the split is “just and equitable.”
- Implementation: Once the Court “seals” (approves) the orders, a certified copy is served on CSC. They then create a separate account for the non-member spouse (the “Associate”).
Why Use a Specialist Family Lawyer to Splitting military Superannuation?
Military superannuation is governed by both the Family Law Act 1975 and specific military legislation. A specialist ensures:
- Fund Compliance: CSC is notorious for rejecting orders that use “standard” wording. A specialist knows the exact phrases required for MSBS vs. DFRDB.
- The “Dual Split” Requirement: For DFRDB members, the Productivity Benefit Scheme (PBS) is a separate legal interest. If your lawyer forgets to include the PBS in the orders, you could miss out on a significant portion of the settlement.
- Speed: Firms like Kate Austin Family Law specialize in 24-hour drafting, preventing the “negotiation fatigue” that often causes amicable deals to fall apart
Common DIY Mistakes
People who attempt this without specialist advice often encounter these “deal-breakers”:
- Using the Annual Statement Value: The value on your annual member statement is usually the “resignation value.” The Family Law Value (calculated by an actuary) is often much higher. Using the wrong number can result in one spouse unknowingly giving away hundreds of thousands of dollars in future value.
- Forgetting Procedural Fairness: Filing with the Court without the CSC “Letter of Procedural Fairness” is an automatic rejection.
- Incorrect Splitting Methods: Trying to split a pension in payment (where the member is already retired) using “growth phase” wording. These require two completely different legal formulas.
- Tax Ignorance: Failing to account for how “Associate B” benefits are taxed when eventually accessed, which can lead to an unfair net-wealth distribution.
How Actuaries Assist in Splitting military Superannuation
In a military split, the actuary is the “financial valuer.” They are necessary because:
- Formula Calculation: They apply the Family Law (Superannuation) Regulations 2025 to determine the present value of a lifetime pension.
- Fairness: They provide the Court with the “true” value of the asset so the judge can determine if the overall property split is fair.
- Pension Projections: They can model how much a member’s future pension will be reduced by a $100,000 or 50% split, allowing for informed negotiations.
Frequently Asked Questions
Can I get my share of the military super as cash now?
No. Superannuation remains “preserved.” It will be moved into a separate account for the non-member spouse, but it cannot be accessed until they reach their own preservation age (usually 60) or meet another condition of release.
Does a split stop the member’s pension?
If the member is already receiving a pension, a “payment split” will reduce their fortnightly payment by the ordered percentage, and that portion will be paid directly to the ex-spouse. It does not stop the pension; it reroutes a portion of it.
What is the difference between MSBS and DFRDB Splitting military Superannuation?
MSBS is usually split as a base amount (a specific dollar figure), which creates a new “Associate” account. DFRDB is almost always split as a percentage of each pension payment because of its unique structure as a defined benefit pension scheme.
What are the types of military superannuation schemes in Australia
