What happens to superannuation after a couple separates?

Under the Family Law Act superannuation splitting laws enable couples to split their superannuation interests (transfer superannuation from one spouses fund to the other spouse’s fund) in family law property settlements following a relationship breakdown.

A superannuation agreement is usually included part of an overall property settlement as superannuation is classified as property under the Family Law Act.

Read our frequently asked questions below for further information.

FAQs

1. Do superannuation splitting laws apply to me?

The superannuation splitting laws apply to:

1. married (or formerly married) couples who had not finally settled their property arrangements, by a court order or a Separation Agreement, and
2. de facto couples, in most States and Territories, whose relationship broke down on or after 1 March 2009 (the laws do not apply to de facto couples in Western Australia).

2. Are there time limits?

Time limits do apply:

1. there are no time limit while a couple remains legally married however once a couple is legally divorced, they have 12 months from the date the divorce takes effect; and
2. de facto couples have two years from the date of separation.

3. Are all superannuation funds splittable?

Most superannuation can be split either by agreement or court order.

It is not, however, possible to split superannuation of little or no value when it would not be cost effective to do so. Superannuation interests with a withdrawal benefit of less than $5,000, and those paying a non-commutable pension or an annuity of less than $2,000 per annum, have been prescribed as unsplittable interests under the Family Law Regulations.

4. Do superannuation funds charge a fee?

The superannuation splitting laws say that the trustee may charge reasonable fees for the administrative costs of doing a number of things including:

1. a payment split
2. a payment flag
3. flag lifting, if the agreement doesn’t also provide for a payment split
4. an order terminating a payment flag, or
5. an application for information

With the exception of the fee for an application for information, the fees are generally to be paid by the current member spouse and the spouse receiving the split equally.

5. How do I obtain information about my fund or my spouse’s fund?

Under the superannuation splitting laws, you or your spouse can apply to a superannuation fund for information (including a valuation) about the superannuation interest if you require that information:

1. to properly negotiate a superannuation agreement, or
2. in connection with family law proceedings in which the superannuation interest is likely to be considered.

Your application also needs to be accompanied by any fees that the fund charges for providing the information.

Under the superannuation splitting laws, if the trustee receives an application that complies with the requirements, they have to provide the information that is specified in the superannuation splitting laws.

6. What information is provided?

Under the superannuation splitting laws, you will be provided information about the value of the value of the superannuation fund or information that will enable you to calculate its value by providing that information to an actuary.

Most funds will provide a valuation for an accumulation interest funds.

Generally, if the member has a defined benefit interest, then the information that you will receive will be information about the fund, so it can be actuarially valued in accordance with the Family Law (Superannuation) Regulations 2001.

7. What happens if we can’t agree on what to do with the superannuation?

If you can’t agree then the Family Court can make an order splitting a superannuation interest, as part of a property settlement.

8. Does the court have to order that a superannuation interest be split?

The superannuation splitting laws do not say that the court must make a payment splitting order. However the Family Law Act states that a court must be satisfied that it is just and equitable, in all the circumstances, to make any property settlement order it is proposing to make.

9. Does the court have to value a superannuation interest?

Before it makes an order splitting a superannuation interest, the court must determine the value of the interest.

10. When does the splitting agreement take effect?

The payment split (the transfer of superannuation from one spouses fund to the other spouses fund) takes effect at the beginning of the fourth business day after the day on which a copy of it is served (received by) the trustee of the fund.

11. How does the superannuation split occur?

The kind of splitting order depends on the type of superannuation interest and whether it is in the growth phase (the member is still working) or the payment phase (the member is receiving a pension).

For most superannuation interests the agreement will provide either:

1. an amount calculated in accordance with the Family Law Superannuation Regulations, based on the amount specified in the order (a ‘base amount’ split), or
2. a specified percentage of each of the splittable payments that is paid out of the superannuation interest (a ‘percentage’ split).

It is important to understand that you cannot access your entitlement until you reach your own condition of release.

12. Do I have to get legal advice in order to make a payment splitting agreement?

In order for a Financial Agreement to be binding it has to comply with the formal requirements of the superannuation splitting laws.

One of the most important requirements is that, as with the more general financial agreements, each party must get independent legal advice about the agreement that they are considering entering into.

The payment splitting agreement must state that each party has been provided with independent legal advice from a legal practitioner – and the legal practitioners must sign a certificate to that effect.

Also, if the payment splitting agreement is not binding then the court will be able to make an order covering the superannuation interest – which may not be what you intended.

13. What is my entitlement to my spouse’s superannuation?

What you are entitled to under a payment splitting agreement depends on a number of factors and often forms part of an overall property settlement.

Every matter is different and requires legal advice from a family lawyer with experience in dealing with superannuation laws.

If you are separated or if you are considering separating it is important that you obtain legal advice regarding how superannuation will be treated upon separation.