A party’s interest in his or her superannuation is considered property (compared to a financial resource) for family law purposes. Superannuation therefore can be split as part of a property settlement.
Depending on your circumstances superannuation may be considered separately from the overall pool of assets. This is known as the two-pool approach. One reason for applying the two-pool approach is if the value of the superannuation interest cannot be quantified at the time of the hearing.
The four-step process applies to determine how much superannuation is to be divided, if any.
A party to a family law settlement can obtain details regarding their partner’s superannuation by completing:
Before the court can make an order to split superannuation, the trustee of the superannuation fund must be given notice of the terms of the proposed order. This is known as “procedural fairness”.
The court will not make an order involving a superannuation split unless there is evidence that procedural fairness has been provided to the trustee of the superannuation fund.
Evidence that procedural fairness has been provided is generally done by way of an affidavit attaching:
Depending on the type of superannuation involved, you may need to conduct a valuation of the superannuation fund to ascertain its value. This is particularly important for superannuation funds with the Australian Defence Force.
Most superannuation funds are accumulation funds and the value of the fund will be the amount stated in the statement received from the superannuation holder.
A splitting order is the most common way to divide superannuation.
A less common method of dividing superannuation is by way of a flagging order. This is an order requiring the trustee to provide notice to the court when the next splittable payment is payable without actually making the payment.
A flagging order is effectively an injunction which prohibits payment from the superannuation fund until a splitting order is made or the parties agree for the flag to cease.
A flagging order is normally used in situations where the value of the fund is not known (at the hearing or the time the order is made) and is likely to be known in the near future upon the release of the funds.
The amount of superannuation to be split can be calculated either as a base amount or as a percentage of the value of the funds. Using the base amount is the most common way to split superannuation.
Once an order has been made to split superannuation the next step is to forward a copy of the sealed order to the trustee of the fund. The process from here may involve a separate account being established in the non-member’s name. Alternatively, the amount that the non-member is entitled to can be rolled over to the non-member’s own superannuation account.