In appropriate circumstances, parties are able to obtain superannuation splitting orders to apportion their superannuation between the parties. Splitting superannuation may occur by consent or court order. If done by consent, superannuation splitting may occur by a superannuation splitting consent order or superannuation agreement.
Superannuation does not lose its character after a superannuation split has been made. The beneficiary of the superannuation split will not be able to access their benefits until they satisfy a condition of release. In some cases, the beneficiary of a superannuation split has to wait for the other party to satisfy a condition release as a condition precedent.
In Australia, in 1983, the Hawke government, introduced the compulsory superannuation scheme. Since that time employers have been obligated to pay on behalf of employees a percentage of their total income into a nominated superannuation fund of the employee.
The minimum amount of superannuation required to be paid by employers is intended to increase from 9% to 13%.
Therefore, not surprisingly, many Australians have superannuation entitlements. It is estimated that the total wealth now contained in superannuation are is about the sum of $1.8 trillion.
There are a wide variety of superannuation funds are available. Each of these superannuation funds has different rules and regulations. The Australian Prudential Regulation Authority, the Australia Securities and Investments Commission, the Australia Taxation Office and the Superannuation Complaints Tribunal are the regulatory bodies responsible for administration and regulation of superannuation in Australia.
The parties’ rights and obligations in relation to the superannuation is a very expertise area of law about which parties may need to consult a superannuation lawyer.
Where superannuation is relevant to family law purposes, is after separation when the parties are turning their minds to a property settlement.
Although superannuation is not property for family law purposes, the Family Courts are now able to treat superannuation like property and if deemed appropriate the Courts may make a super splitting order for the benefit of a party.
In deciding whether to make a super splitting order the courts have regard to the following factors:
1. The value of the superannuation interest.
2. The age and state of health of the parties.
3. The capacity of the parties for gainful employment.
4. The income, earning capacity, assets, liabilities and financial resources of the parties.
5. The care and control of the children.
6. The nature and accessibility of the superannuation entitlements.
7. Whether the trustee has been given procedural fairness.
8. Any other factor or circumstance that the court considers relevant.
The Family Courts previously struggled with the valuation of superannuation interests of the parties. The scheme for splitting superannuation now provides formulas for the calculation of the values of the parties’ superannuation entitlements. These valuations do not necessary equate with the values provided on a parties’ annual superannuation statement of account.
The Family Courts have a very wide discretion in deciding whether to make a superannuation splitting order.
Apart from deciding whether to make a superannuation splitting order, the difficulty often arises in what form the superannuation splitting order should take.
As each fund has its own requirements in relation to implementing superannuation splitting orders, the form of the superannuation splitting orders vary from superannuation fund to superannuation fund.
The nature of the superannuation interest itself must be considered in the making of a superannuation splitting order. The order will vary depending on whether the superannuation is a defined interest benefit or an accumulation interest. Superannuation funds include public sector funds, self-managed funds, approved deposit funds or retirement savings accounts.
The trustee of the superannuation fund being split, must be afforded procedural fairness and given an opportunity to comment on any proposed superannuation order or agreement. Failure to provide procedural fairness, will mean that the trustee of the superannuation fund will not be bound to comply with any superannuation order or agreement. The trustee of the superannuation fund is likely to render a fee for implementing a superannuation split.
Importantly, each superannuation fund has a different approach to implementing a superannuation split or agreement.
In ‘traditional’ marital context, often one party will have a significant amount of superannuation whereas the other party may have a very limited amount of superannuation. The potential need for a superannuation splitting order in the context of a traditional marital relationship takes on significant importance.
The manner and the amount of any superannuation splitting order is not able to be determined from a reading of the superannuation splitting law. The way in which a superannuation interest will be split varies on a case by case basis.
In summary, superannuation splitting laws are relatively complex and technical area of family law.
If you answer positively to any of the following questions it is likely that a superannuation order may be necessary:
1. Does only one party have superannuation?
2. Does one party have a significant amount of superannuation?
3. Does the value of superannuation of the parties equate to more than 40% of the net asset pool?
4. Does one party have the primary care of the children?
5. Do the parties have unequal income earning capacities?