When a couple separate, whether they have been married or in a de facto relationship, they need to resolve how to divide their assets, including their assets, debts, and superannuation.
Superannuation is considered an asset – but it is treated as a different type of property under the Family Law Act 1975, and the superannuation splitting laws allow superannuation to be valued and divided if the parties agree that this is appropriate. The application of these rules is not mandatory, but they provide a legal path to splitting up the super.
In Western Australia, de facto couples are not subject to the superannuation splitting laws however superannuation is still considered when the court looks at the future needs of the parties – as it is a financial resource that can be accessed in the future.
Ways to Split Superannuation
How the superannuation is split will depend first upon how the rest of the property division is approached. Property division occurs if an agreement is reached when the parties can formalise their agreement by either applying for consent orders in the Family Court or, in certain circumstances, entering into a Binding Financial Agreement.
Within the agreed settlement, the parties can include a written agreement to split the superannuation. This document each party signs requires a lawyer’s signature stating that they have each received independent legal advice about the agreement.
Most commonly the parties will file an Application for Consent Orders in the Family Court.
Regrettably there are many instances where agreement is not reached and either party can resort to applying to the Family Court court for financial orders, including orders relating to the division of the matrimonial property and to seek payment of spousal maintenance. While an agreement can still be reached by the parties at any time during the court process, even after applying for a court order, ultimately the process will result in a defended court hearing when a judgement is delivered making orders for financial settlement.
How is the Superannuation Valued?
Different types of superannuation fund, e.g. defined benefit funds or self-managed superannuation funds, are valued in different ways. The Family Law (Superannuation) Regulations 2001 set out the methods of valuing different types of superannuation interests, the way in which any payment split is to be put into effect, and the information that the trustees of the superannuation fund have to provide, including information to enable the superannuation interest to be valued.
Informing the Owner (Trustee) of the Superannuation Fund
Part 7A of the Superannuation Industry (Supervision) Regulations 1994 creates obligations for trustees to take action to give effect to deal with superannuation which has been the subject of court orders made by the court.
When and How the Split Super Funds Become Available
Under the superannuation splitting laws, an agreement or court order to split superannuation is, in effect, an agreement or order for payment splitting. This means that only when a payment from a superannuation interest becomes payable to the member spouse (e.g. on retirement from work), will a certain amount will be paid to the non-member spouse effectively splitting the benefit, with the remainder being paid to the member spouse.
Payment splitting does not necessarily create a new superannuation interest for the non-member spouse in the superannuation fund. However if there is a payment splitting agreement or order operating on a superannuation interest, the splitting laws may permit the creation of a new interest for the non-member spouse. They may also permit a transfer or roll-over of benefits for the non-member spouse to another fund. This is often the case with a self-managed superannuation fund where it may be best for a party to simply take their member balance to another fund and disengage from the joint fund. This is known as interest splitting. Interest splitting lets the non-member spouse access entitlements independently of the member spouse. Commonwealth regulations also set out the process that funds and retirement savings account providers must follow in these circumstances.
If you require further information, Havilah Legal’s experienced family lawyers today.
(Disclaimer: The material in this article is of a general nature and intended for information only. It is not intended to be comprehensive and does not constitute legal advice. Any person with a specific legal issue should consult a lawyer.)