When couples separate, a property settlement will determine who owns which assets. This process can be straightforward when the assets are clearly defined – such as with a house, car, or investment property. However, when it comes to superannuation, the division of assets in a property settlement can become much more complicated.

Types of superannuation

There are a number of different superannuation schemes, each with its own advantages and disadvantages.

With a defined benefit scheme for example, a person can receive a pension or a lump sum when they reach a certain age. Although, as this plan is pre-established, they are often inflexible.

An accumulation scheme on the other hand will allow for you and your employer to gradually contribute to your superannuation fund. Though you will eventually receive your accumulated contributions, these funds cannot be accessed until you reach retirement age. However, there are limited circumstances in which you may be eligible to access your superannuation funds before your retirement.

How is superannuation split in a property settlement?

Though superannuation is treated as a form of property in a property settlement, it is not converted into a cash asset. This means that super interests and payments are subject to super fund rules and superannuation laws.

Part VIIIB and Part VIIIC of the Family Law Act 1975 (Cth) establishes how superannuation interests are split between parties in a property settlement.

There are a number of methods separating couples can choose when splitting superannuation.

• Enter into a formal written agreement. A lawyer can sign a certificate of independent legal advice to certify an agreement to split superannuation.
• Apply for consent orders. Consent orders are a legally binding agreement that can be used to formalise the splitting of superannuation. An application for consent orders will require the full disclosure of each party’s financial circumstances. This means that you will need to obtain superannuation information from the relevant superannuation fund trustee to be able to disclose it to your former spouse.

How do I obtain superannuation information?

The Federal Circuit and Family Court of Australia (FCFCOA) website provides a Superannuation Information Kit containing the relevant forms for obtaining superannuation information.

When requesting information from the trustee of an eligible superannuation plan, a Form 6 Declaration must accompany your Superannuation Information Request Form. This declaration satisfies the trustee that you are requesting information for an approved purpose.

Parties in a current property settlement proceeding can apply to the FCFCOA to request access to their partner’s superannuation information.

Superannuation interests can also be valued by an actuary to ensure a fair division of assets.

Superannuation splitting orders

If you cannot reach an agreement with your former partner, the FCFCOA can issue a court order to split superannuation funds and payments.

The Family Law (Superannuation) Regulations 2001 set out the methods and calculations for determining the split of superannuation interests between parties.

The FCFCOA can order that a certain amount of a superannuation income stream is converted into a lump sum and be paid to the non-member partner when it becomes payable to the member partner. In other circumstances, the superannuation income stream can be split into two regular payments from the same income steam.

To learn more about the consequences of splitting orders on superannuation interests, please refer to the Australian Taxation Office website.

Can superannuation fund trustees affect my orders?

Yes, the superannuation fund trustee must be given the opportunity to attend a court hearing or object to the proposed orders. This is known as ‘procedural fairness’.

The FCFCOA must receive evidence of procedural fairness prior to making an order.

To satisfy procedural fairness, you must serve a sealed copy of your application on the trustee of the eligible superannuation plan. The trustee must also be notified in writing of the terms of the order at least 28 days before the trial.

Seek legal advice

Superannuation splitting can be a complicated process if not properly understood. Seeking professional advice is crucial to ensuring a fair division of superannuation interests in property settlement proceedings.

To learn which superannuation splitting option is right for you, please contact Etheringtons Solicitors on (02) 9963 9800 or via our contact form.