The short answer is yes! When a marriage or de facto relationship breaks down, superannuation (super) can be divided between spouse parties.
Why is super considered as part of a property settlement?
For the purposes of a family law property settlement, super is considered to be property and can be transferred between spouses funds as part of a property settlement. One of the first steps taken in property settlements is to identify the property of both parties available for division. Naturally, this includes the parties’ current assets and liabilities, but also includes any super that they may have.
How will my super be impacted?
As you are probably aware, you cannot usually access your super until you reach retirement age. There are some other limited circumstances in which you can access your super (or part of it) earlier, but this cannot be done easily and there are certain conditions that need to be met, such as if you are assessed to be totally and permanently disabled.
In the context of a family law property settlement, super can be transferred between spouses as part of a property settlement, which has been formalised in a way that the Court recognises. This is referred to as a super split.
However, a super split to a former spouse or de-facto partner does not mean that the party receiving the benefit of a super split will receive that transfer as immediate cash. It will simply be transferred as super into their nominated fund.
An example of this is:
Ben and Anne have separated from a long marriage. Ben has $500,000 in superannuation. Anne has $100,000 in superannuation. Ben and Anne have agreed that as part of their property settlement, Anne will receive $200,000 from Ben’s superannuation. Once this has been implemented this will mean that Anne’s super will increase to $300,000. Ben’s super will decrease to $300,000. Both Ben and Anne will not be able to access their super or utilise the funds held in their super unless and until they meet the conditions to access their super, such as reaching retirement age.
How much of my super will my former spouse/de facto partner receive?
This is a tricky question and the answer really is – it depends. Superannuation is just one aspect of property that will need to be divided between the parties, in amongst houses, companies, motor vehicles, mortgages, personal loans etc.
The Court will generally decide what percentage of the overall property pool each party should receive and from there identify which assets, liability and/or super (or part thereof) needs to be transferred (and from which party) to achieve that percentage.
We explain further on how a Court will arrive at a percentage in our article: – https://www.murdochs.com.au/family-law/property-settlements/
What needs to happen for super to be transferred?
In order for super to be divided between spouses, there a few requirements that need to be met. These steps put simply, are:
- You will need to obtain a valuation of the person’s super interest you intend to divide. The method of valuing a superannuation interest, will depend on the particular superannuation scheme being considered;
- You will need to document the proposed division. Super can be divided by way of an Order of the Family Law Courts (including Orders made by consent) or by way of a Superannuation Agreement. If the division is by way of an Order or Superannuation Agreement, most people will need the assistance of a legal advisor as the wording of any Order or Agreement is generally quite complex and dependent on the type of interest being considered. A Superannuation Agreement cannot be entered into without both parties having first received independent legal advice;
- Once the proposed Order or Agreement has been drafted, a copy of the document will need to be sent to the relevant Superfund. The Superfund can require changes to the wording to ensure that the division is able to occur, pursuant to the particular rules governing the relevant fund; and
- Once the Order has been approved or made by the Court, or in the case of a Superannuation Agreement signed by the parties and their legal representatives, a copy of the Order or Agreement will then need to served on the fund or the fund administrator so that the administrative process of a super division can occur.
Division of super can be quite complex and is subject to a raft of legislative requirements. We recommend that you seek legal advice before making any decisions regarding division of superannuation and property settlement generally.