SUPERANNUATION – IT‘S MINE! WELL ACTUALLY IT PROBABLY ISN’T ALL YOURS.

How is superannuation treated under the Family Law Act? Can I get an adjustment of our superannuation in our property settlement?

The quick answer is that superannuation is like any other property either of you may have in your name or in joint names (or sometimes in a third party’s name) and yes it can be adjusted (split) between you.

Superannuation splitting laws were introduced some time ago when it was realised that in some cases outcomes were not “fair” (just and equitable) because superannuation could not be split between separating parties.

There is often a presumption by at least one party to a separating couple that it is “their” superannuation because they worked during the whole of the relationship and the other party stayed at home with the children and did not work. Well, as is quickly discovered, that is not the case. The rationale is that the only reason the worker in the relationship could work full time was because the other party took up the home maker and parenting role. The other reason is that superannuation is property, the same as everything else, including the house, the car, shares in companies, etc.

So if you are being told (and that’s something we often hear) “It’s my superannuation.” That is unlikely to be an outcome either through negotiations, mediation or court based decision.

So How is Superannuation Actually Split

Sometimes splitting arrangements can become quite complex because of the nature of the superannuation interests of one or both parties. Often though it is fairly straight forward by having the superannuation valued by requesting a valuation from the fund/s. However, depending upon the individual circumstances of the parties and their ages e.g. if close to retirement or retired, financial advice as well as legal advice is important to obtain. there may be very good reasons it split one of the funds rather than another or it might be in one party’s interest to retain their superannuation because of taxation or other reasons. Lawyers can’t give financial advice so we will always suggest to our clients to obtain financial advice before settling on a superannuation splitting order before finalising property matters.

Superannuation can be split in either a consent order or a private financial agreement (a formal agreement under the Family Law Act). Valuations are needed and also the superannuation fund must agree to the terms of the court order or financial agreement.

The method of arriving at the value of superannuation each party receives is usually ascertained by adding together the value of all funds of both parties and then dividing it by the percentage agreed or ordered by a court then deducting the receiving parties existing superannuation interest. A formula might look like this:

Party 1 Super Value = A (e.g.. $100,000)

Party 2 Super Value = B (e.g. $50,000)

Total is C ($150,000) The percentage split is 50% to Party 2

Outcome A + B = C x 50% = D – B = x

Once that figure is ascertained then It is possible to nominate either a dollar figure or a percentage to be split from a particular fund or funds.

The order which is drafted (or the agreement) must comply with both the Family Law Act and superannuation legislation. It is important to have both legal and financial advice whenever settling property matters, particularly when superannuation splitting laws are involved.

Can I spend it?

No you usually can’t because it remains superannuation but if you are entitled to your superannuation due to age/retirement then it may be cash available to you. Again you should get financial advice before you convert superannuation to cash. There may be very important taxation advantages available which you will need to consider.

We offer fixed fees for both consent orders and financial agreements to contact. us to help you settle your property matters