Superannuation can be divided between you and your partner if your marriage or de facto relationship breaks down and you permanently separate (including couples in same-sex relationships). However, there are specific rules that need to be followed in all situations to ensure compliance with both Australian super legislation and family law.
Super can be a major component of you and your partner’s combined assets. The amount of super you have can depend on a range of factors, including:
- your age,
- your socio-economic background, and
- your gender.
Statistics show that the effects of divorce on superannuation are very different for men and women. According to an AMP-NATSEM study, divorced women with children had 37% less super than divorced dads from similar age groups and socio-economic backgrounds, and 68% less super than married mums.
Note: It’s important to understand that superannuation splitting in the event of a relationship breakdown is a completely different concept to contribution splitting. Contribution splitting involves making contributions to your partner’s super to bolster it.
What happens to super benefits in the event of a divorce?
It’s important to understand that superannuation is treated as a special type of property under family law because it is an asset that is held in trust until you have met a condition of release. Super can’t be split as cash therefore unless you have already met a condition of release and can access it.
The most common conditions of release for super are:
- Being aged over the preservation age and retiring. Your preservation age is between the ages of 55 and 60, depending on your date of birth.
- Being aged over the preservation age and starting a transition-to-retirement income stream (TRIS).
- Being aged over 60 and ceasing an employment arrangement.
- Being aged 65 or over.
You can only access your super before reaching your preservation age in limited circumstances, such as if you’re experiencing severe financial hardship. Learn more about all conditions of release, including how to access your super early.
If you cannot access your super yet
If you haven’t met a condition of release and you can’t access your super, you and your partner can mutually reach a formal written agreement about how your super will be split in the future when you do meet a condition of release.
This agreement must be prepared by a lawyer who must certify that you have both received independent legal advice about it. This agreement is then used to obtain a consent order to from the Family Court to split you and your partner’s super accordingly. You won’t be required to attend court if you’re applying for a consent order.
If you and your partner cannot agree about how to split your super, you can seek a court order from the Family Court to make the decision on your behalf. Under the provisions of the Family Law Act, a court must be satisfied that any superannuation split is just and equitable for both partners. You will be required to attend court if you’re seeking a court order.
Whichever method you use to split your super (i.e. mutual agreement, consent order or court order), the trustees of your super fund (including those of self-managed super funds) will be bound by the payment terms of the order.
If you can access your super
If you have met a condition of release and you can access your super (or are already accessing it), a mutual agreement or court order can be arranged to facilitate the splitting of you or your partner’s funds immediately (including any super pensions that you may be receiving).
Once again, the trustees of your super funds are legally bound by the payment terms of the agreement or court order.
How do you split superannuation?
There are a number of steps you need to follow to split superannuation. It may be worthwhile to obtain legal assistance to help you complete these steps.
The first step in splitting super is to obtain a current valuation of you and your partner’s super. You are legally entitled to obtain your partner’s super information from the trustees of their fund/s. To do this, you need to provide your partner’s funds with four forms that are available for free download in the Superannuation Information Kit at the Family Court of Australia’s website.
Some super funds may charge you for providing this information.
It’s important to understand that if you’re seeking a court order about your partner’s super, you must inform their super trustee/s accordingly. This provides your partner’s trustee/s with an opportunity to attend the court hearing and object to the order if necessary.
File an initiating application online with the Family Court, along with a financial statement and affidavit. The Family Court will require this information to grant your consent order (if you have come to a mutual agreement with your partner) or a court order (if you haven’t reached a mutual agreement).
Once you have filed your documentation with the Family Court, your partner will need to provide a response to your initiating application, along with their own financial statement and affidavit.
Once your Family Court consent order or court order has been issued, you should provide the trustees of your super fund/s with a sealed copy of the order as soon as possible (if it will affect your payment arrangements when you have met a condition of release).
What happens if you’re in a self-managed super fund (SMSF)?
If you or your partner are in a self-managed super fund (SMSF), the members of the fund are its trustees. The valuation of your super should be determined by an accountant or actuary in this situation, as SMSF trustees normally don’t have the financial expertise to make accurate fund valuations.
Note: There are strong penalties for SMSFs that do not comply with superannuation laws, for example by accessing super money without meeting a legitimate condition of release.
Are the rules the same in every State and Territory?
Superannuation splitting laws currently do not apply to de facto couples in Western Australia. Instead, individual partners are only entitled to walk away with their own super entitlements when a relationship breaks down.
However, in late 2018 the Western Australian government flagged that the State may soon be brought into line with the superannuation splitting arrangements available for de facto couples in all other Australian States and Territories.
Splitting superannuation when there is a relationship breakdown is an important financial decision for both partners. It’s therefore important to seek independent professional advice based on your individual circumstances and needs.
The information contained in this article is general in nature.