What are the superannuation splitting laws?
The superannuation splitting laws allow separating de facto or married couples to value and divide their superannuation after a relationship break down. One partner may split the amount remaining in their superannuation fund and make a payment to the other partner’s superannuation fund.
The Family Law Act treats superannuation as if it were property, although it differs from other types of property as it is held in trust. Splitting superannuation does not convert it into a cash asset: the super funds are still subject to superannuation laws and the usual conditions of release.
Am I entitled to a superannuation split? Do I have to pay super to my ex-partner?
You may be entitled to a superannuation split, or legally obligated to split your superannuation if you were married or in a de facto relationship and have separated. The Family Law Act defines a de facto relationship as two people not married to each other, not related by family, and sharing a relationship as a “couple living together on a genuine domestic basis”. A person seeking superannuation splitting orders must have been in a de facto relationship with the other person for at least 2 years unless:
- there is at least one child of the relationship; or
- a party makes a substantial contribution
In that case an application can be made seeking superannuation orders even if the relationship broke down before two years.
How much of my ex-partner’s superannuation am I entitled to/might I have to pay?
In a long relationship, where neither party had substantial superannuation at the beginning of the relationship, a superannuation split will often be calculated which equalises their superannuation interests. The parties add the value of all their superannuation interests, divide the total by two and split one party’s superannuation to the other party’s fund of choice to equalise their superannuation interests.
Alternatively, parties may negotiate a superannuation split tailored to their needs which forms part of an overall package of property settlement. For example, one party may wish to retain a greater share of the cash assets to purchase a property, while the other may be approaching retirement and prefer to retain their super. The party wanting more cash assets may concede their superannuation entitlements to negotiate a greater share of the cash assets.
The Courts have a wide discretion to determine a just and equitable division of the parties’ superannuation interests. If a Court determined the matter, a four-step process would be applied to determine each parties’ entitlement:
- the superannuation must be valued; then
- each parties’ financial and non-financial contributions to the acquisition, conservation and improvement of the superannuation fund must be assessed; then
- the Court will consider factors under s 75(2) or 90SF(3) of the Family Law Act, including:
- each party’s age and state of health;
- each party’s income earning capacity;
- if there are children of the relationship, with whom they live; and
- each party’s existing financial commitments and responsibilities.
- The Court determines whether in all the circumstances the settlement is just and equitable.
What if we cannot agree about how to divide superannuation?
If you and your ex-partner cannot reach agreement about how to divide your superannuation interests, you can apply to the Court for an order. The Court will apply the four step process to determine a just and equitable division of superannuation.
How long after a separation or divorce can I make a claim for superannuation?
If you were married:
- If you have separated but not divorced, you can make a claim for superannuation at any time;
- If you have divorced, you should make a Court application for superannuation orders within 12 months after the divorce.
If you were in a de facto relationship, you should make a Court application for superannuation orders within 2 years after you separated.
The Court may grant leave for a party to a marriage or de facto relationship to apply for a superannuation order after the limitation period if they can establish hardship. However, this can be a very expensive and complicated process, as a special application must be made to the Court seeking leave to proceed out of time and there is no guarantee that leave will be granted.
How can I obtain information about the value of my or my partner’s superannuation fund?
You can apply to the trustee of the superannuation fund for information about a superannuation interest of a member if you:
- are an ‘eligible person’; and
- have a genuine reason for needing the information.
An ‘eligible person’ includes:
- the member;
- the member’s spouse;
- if the member or spouse is deceased, their legal representative; or
- a person intending to enter into a superannuation agreement with the member.
To apply for information about the member’s superannuation interest, the eligible person will have to declare that they require the information in order to either
a) properly negotiate a superannuation agreement, or
b) assist them in connection with family law proceedings relating to the superannuation interest.
The applicant will also have to provide the member’s full name and date of birth.
What if my ex-partner has a defined benefit super fund or a self-managed fund?
Defined benefit funds provide benefits to members in accordance with a formula set out in the fund’s trust deed. The formula accounts for the member’s length of employment and their salary level at retirement. These funds are difficult to precisely value, and a forensic accountant may need to be engaged to value the superannuation interest.
Self-managed super funds are private funds arranged and managed by the parties themselves (often by a lawyer and/or accountant). The parties invest the fund monies by purchasing property, shares, bonds etc. to increase the value of the fund. The value of a self-managed super fund is the total value of the assets held by the fund.
How can my ex-partner and I formalise the agreement we reached to split our superannuation interests?
An agreement regarding the division of their superannuation interests can be formalised by parties entering into a Financial Agreement or applying to the Court for Consent Orders.
Alternatively, you can file an Application for Consent Orders with proposed Consent Orders in the Federal Circuit and Family Court of Australia. Once approved by a Registrar of the Court, the Orders become legally binding and enforceable on both parties and on the superannuation fund trustee.
Alternatively, parties can record their agreement in a Binding Financial Agreement (an Agreement). An Agreement is not filed with the Court. However, each party must be provided with independent legal advice before entering into an Agreement for it to be binding and enforceable. The advice must address the effect of the agreement on the rights of the parties and it’s advantages and disadvantages when the advice was provided.
What is the process for splitting superannuation?
Before finalising an Agreement or filing Consent Orders you must provide the trustee of the superannuation fund with ‘procedural fairness’ by writing to them advising that you are seeking superannuation splitting orders. You should provide the trustee with:
- the member’s number and date of birth; and
- the specific orders sought.
The trustee has 28 days to object to the proposed orders by writing back to you or attending the court hearing (if any). The letter from the trustee agreeing to the proposed orders is filed with an application for consent orders.
A party (generally the person who financially benefits from the split) provides the superannuation orders made by the Court to the trustee of the superannuation fund to implement.
What do I do now?
Mid Mountains Legal have extensive experience in a wide range of superannuation matters, including complex matters involving self-managed and defined benefit funds. Ask us for advice about your options and entitlements to empower you to make informed decisions.
