What is a Superannuation Split?

A superannuation split enables separating couples to split one party’s superannuation following a breakdown in their relationship. Sometimes, one party has accumulated a lot more superannuation than the other, typically when one party has taken a large period of time out of the workforce to raise children. A superannuation split can have the effect of evening up their superannuation entitlements, so that they both end up with a similar amount. Or it can just work as an adjustment of however much money the parties decide upon.

Does Superannuation have to Be a 50/50 Split?

No. There are no rules regarding how much the superannuation split equates to. Sometimes it is a monetary figure, say $30,000, and sometimes a percentage split is used. Your solicitor will advise if there is a good reason why you’d use a percentage split rather than a set figure.

When Can You Arrange a Superannuation Split?

If you have consent orders made by the Family Court following a separation, you can include a superannuation split in your orders, which is actioned by the trustee of the superannuation fund immediately after being served with a sealed copy of the orders made by the Court.

If you have a binding financial agreement, provision for a superannuation split can be made in that agreement. A binding financial agreement can be entered into before, during or after the breakdown of a marriage or de facto relationship.

Significantly however, the Trustee will not action a superannuation split until after a separation. The BFA does not come into play unless or until the parties have separated, and consent orders cannot be made unless the parties have separated. So a superannuation split cannot take place until after a separation.

Can I Receive the Superannuation Split as Cash?

Unless you are otherwise eligible to receive your superannuation entitlements because, for example, you have retired, or can access your superannuation on hardship grounds, any superannuation split results in the money being transferred away from one party’s superannuation fund and into the other party’s superannuation fund. It is not cashable as such.

It is for this reason that it is not commonly the case that one party takes the superannuation assets following a separation and the other the non-superannuation assets. Most people want to share in both what is available and accessible now, and not wait until a future date, their retirement, before they receive their share of the property settlement.

Can a Superannuation Split Take Place by Agreement or Does the Court Have to Make an Order?

The parties can reach an agreement following a separation for a superannuation split and this agreement can be drawn up either by way of consent orders or a binding financial agreement, also known as a separation agreement or a ‘pre-nup’. Alternatively, the court can make orders for a superannuation split pursuant to a contested hearing.

Either way, there are very specific requirements that must be adhered to before the Trustee of the Superannuation Fund can be bound by the Order or Agreement that is made. Once a Court Order for a superannuation split is made, the trustee of the superannuation fund is required by law to implement it. The Court is not then able to make a different order about the superannuation interest that is dealt with in the superannuation agreement.

Who do Superannuation Splitting Laws Apply to?

Superannuation splitting laws apply to:

Married (or formerly married) couples who have not done their property settlement before the laws commenced in December, 2002.
De facto couples whose relationships broken down on or after 1 March, 2009 (and South Australian de facto couples, where their relationship broken down on or after 1 July, 2010).

Married couples need not have divorced in order to obtain orders for a superannuation split, and in many instances, they will reach an agreement for their property settlement before they even become entitled to apply to the Court to obtain a divorce.

Are Any Fees Payable to the Trustee for Arranging a Superannuation Split?

The Trustee can charge fees for administrative tasks that are carried out by them in relation to implementing a superannuation split. There are likely to be fees of an administrative nature, which will vary according to the fund, and the cost to the fund of providing the service.

Sometimes, an application to the Trustee for information about the benefits of the member spouse is made, i.e. for information about how much the interest is worth, and there are fees associated with this process, usually paid by the person making the application.

How Can I Get Information About my Ex-partner’s Superannuation Entitlements?

Under the superannuation splitting laws, you can apply to the Trustee of a superannuation fund for information about an interest if you are an ‘eligible person’. An eligible person includes the following:

the member;
the spouse of the member;
if either of the above has died, the deceased’s legal personal representative;
a person who intends to enter into a superannuation agreement with the member.

Your application for information must state that you need the information to properly negotiate a superannuation agreement, or that your request for information is in connection with family law proceedings in which the superannuation interest is likely to be considered.

With Which Information Will I be Provided?

Most significantly, you will be given information about the value of the superannuation interest. If the interest is an accumulation interest, the information will also tell you whether or not the interest is ‘splittable’ as well as whether or not the superannuation interest is already subject to a payment split or payment flag.

The information you receive may depend on whether the interest is in the growth phase, or the payment phase. If the person has retired, it will be in the payment phase and you will get information about what type of pension is being paid.

If the interest is a defined benefit interest, you will get different information, so it can be actuarially valued. These statements can be more difficult to understand and calculate than statements relating to accumulation interests.

You should always obtain information pertaining to the value of a superannuation interest before agreeing to a superannuation split. If you are going through court proceedings, you will need information from the super fund that values the superannuation interest in order for the court to make a determination as to any appropriate superannuation split.

Accumulation interest Superannuation Funds

In Australia most superannuation interests are called what is known as accumulation interests. An accumulation interest fund can be considered similar to a bank account except that because of the preservation requirements of superannuation you are not able to access the fund until you satisfy the rules of superannuation which are defined by specific events known as “condition of release”. The most common one is known as retirement.

Accumulation interest funds are relatively easy to value. The value of an accumulation interest is generally the sum of the contributions from either the member of their employer plus any earnings made by the fund less any costs associated to running that fund. In short the value of the fund is shown on the member statement.

Accumulation interest funds are known as fully vested is, the member has full rights to the value of that fund.

Accumulation interest funds can be also be partially vested. This means in addition to the vested accumulation component there is an additional component can be included after meeting specific conditions. An example of this would be an agreement that an employee will receive and additional sum if the member remain with the employer for a specific period of time. If an agreement was that employer would pay a benefit of $25,000 if you remained with an employer for 15 years ”, it known as a partially vested accumulation interest.

There are some worked examples for valuation of a partially vested accumulation interest using the valuation methods and factors set out in the Family Law (Superannuation) Regulations 2001.

Defined benefit interest Superannuation Funds

A Defined benefit interest superannuation fund as most commonly found with the public sector. Australian Military would be the largest employer with such benefits. While there are employers in the private sector they are becoming increasingly scarce.

A Defined benefit interest is much more difficult to value The valuation is dependent a number of variables that happen in the duration of your working career. – most typically length of service and final average salary.
Because you are seeking to split your superannuation now and many of things will happen in the future and there is an amount of uncertainty to what the value of the fund will be. For this reason, it is necessary to value of a defined benefit interest on the basis of a number of assumptions about what is likely to happen in the future. To do this we employ an actuary to value the fund ( Actuarially Valuing) using a prescribed method for valuing the fund.

There are a number of worked examples of actuarial valuation of a superannuation interest, using the valuation methods and factors set out in the Family Law (Superannuation) Regulations 2001.

Member spouse

You are a member spouse if you are a person who has a superannuation interest to which the superannuation splitting laws apply.

Non-member spouse

You are a non-member spouse if you are the spouse, former spouse or former de facto partner of the member spouse.

Splittable payment

A splittable payment is one that will be split in accordance with a splitting agreement or splitting order generally created in Consent Orders or a Binding Financial agreement (BFA) . Most of the payments that are paid to the member spouse by of a Court Order, Consent Order or Financial agreement with regard to a superannuation interest will be known as a splittable payment.

Non splittable payments can be made to a member spouse include a payment made on compassionate grounds and a payment made because the member spouse is in severe financial hardship. They also include pension payments made to the member spouse as a result of their ill health, but not on the grounds of permanent incapacity.

Condition of release

Generally, you are not able to access a superannuation interest until you reach what is known as a condition of release.

The most common condition of release”” is retirement from the paid workforce. The other conditions of release defined in superannuation legislation include invalidity and death.
If you are not in the paid workforce, your condition of release is when you reach your legislated retirement age.

Growth phase

A superannuation fund is said to be in the growth phase before the member spouse has reached a condition of release and before any money has been paid out of the interest as a result of the member meeting a condition of release.

Payment phase

A superannuation interest is said to be in the payment phase when the member spouse has reached a condition of release and money has been paid out of the interest – either as a lump sum payment or an income stream or a combination of the two.

Allocated pension

An allocated pension is an investment for your superannuation savings that provides you with a regular income when you retire. You invest a lump sum of money in an account that accumulates investment earnings, and from which you draw regular income payments within minimum and maximum limits set by the Government each year.

Separation declaration

You can make Consent Orders and specifically a superannuation agreement at any time before or during your marriage or de facto relationship or after your marriage or de facto relationship has broken down

Kate Austin family lawyers will write to your superannuation fund advising them of this fact and provide proposed splitting orders for their approval. The separation declaration must be served on the trustee of the superannuation fund with the Consent Orders otherwise the superannuation agreement won’t be binding on the trustee. The separation declaration has to be made no more than 28 days before the time that you serve it on the trustee..

What the separation declaration has to say depends on the value of the superannuation interest(s) that you are dealing with.

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08:25 23 Jul 18

The process of writing consent orders was made very simple by your knowledge and professionalism. Jessica was easy to talk with from my initial telephone call and easy to communicate with by email thereafter. Her manner was reassuring and considerate and she had the knowledge required to answer my questions. The fixed cost made budgeting easy and affordable. I have already recommended your company to a friend and will do so again in the futureread more

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05:31 13 Jul 18

I can highly recommend the team at Kate Austin Family Lawyers. They prepared Consent Orders and also organised the property transfers. From beginning to end everyone has been very friendly, professional and helpful and the whole process has been extremely stress free. The fees definitely did not break the bank and worth every $ to know that the process is done properly the first time. Jessica in particular has been very reassuring to me and it's been greatly appreciated. Thank you Kate Austin Lawyers!read more

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I highly recommend Kate Austin Family Lawyers. Jessica was fantastic! Jessica explained the whole process, answered all our questions and made things easy during a tough time. Jessica was professional and understanding of our requirements. The process was simple and completed in timely fashion. Thanks Jessica, Brendan and team.read more

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Handelled my consent orders and property transfer efficiently and were always prompt with communication. About time there was a firm that you can trust to have your best interests in mind the whole time 😁 thanks Rachel, Brendan and teamread more

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21:33 23 Jul 18

Rachel and her team are fantastic to deal with and made this difficult time very easy to go through. Thank you once again for all your help and I would recommend them to everyone.read more

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00:06 10 Jan 19

Kate Austin Family Lawyers have been nothing short of amazing! From the minute I spoke to Brendan when I made that initial enquiry, I knew I had stumbled across something great (just by surfing the web).. The patience and compassion he and Rachel showed me in dealing with my case was very much appreciated. Thank you both so much for making this daunting process as smooth and as easy as possible.read more

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01:49 21 Dec 18

Firstly, a huge Thank you to the team Rachel, Tori & Brendan, at Kate Austin Family Lawyers.Family law problems are not an everyday event and when mine happened it was daunting to say the least.However from my first conversation, right through to the end of processing my Consent Orders & Property Transfers, the Team at Kate Austin Family Lawyers were friendly, timely, and they communicated with me on a level I understood. Overall an extremely professional company that made the whole process stress free.Going forward I wouldn't hesitate to use them again and highly recommend their services.Thanks again Team, I wish you all a very Merry Xmas and a Happy New Year.I will be having one thanks to all your hard work.D Westburyread more

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23:39 18 Dec 18

I am really happy with Kate Austin Family Lawyer. All staff member are professional and informative. My property settlement consent order was approved by court within a week which was very impressive. Brendan, Rachel and Tori were helpful. Everything I asked for was acted in time. I would recommend anyone to contact Kate Austin Family Lawyer for their family matters.read more

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Superannuation in Consent Orders – FAQs

Superannuation Splitting – Basic Terms