Superannuation

How the law deals with superannuation when couples are dividing their assets after a marriage/de facto relationship breakdown
The following is a summary of how the law deals with superannuation when couples divide their property after the  breakdown of a marriage or de facto relationship. 

Superannuation splitting law

The superannuation splitting law treats superannuation as a different type of property. It lets separating couples value their superannuation and split superannuation payments, although this is not mandatory. Splitting does not convert it into a cash asset – it is still subject to superannuation laws (for example, it is usually retained until retirement ages are reached).

Options for splitting superannuation

Separating couples may either:

• enter into a formal written agreement to split superannuation. A formal written agreement requires that both you and your partner instruct a lawyer who must sign a certificate stating that independent legal advice about the agreement has been given. Once this agreement is made you do not need to go to court. The agreement is not registered in court and you must be careful that each of you retains a copy, or
• seek consent orders to split superannuation, or
• if you cannot reach an agreement, seek a court order to split superannuation.

Even when an application is made to a court, it is possible to reach an agreement at any stage, without the need for a court hearing.

You should get legal advice about these options.

What you need to do to split superannuation

Step 1: Obtain valuation information 

You need to get information to value the superannuation. You should provide the following forms to the trustee of the superannuation fund:

• Form 6 Declaration. This satisfies the trustee of the fund that you are entitled to get the information for this limited purpose, and
• Superannuation Information Request Form (accompanied by the appropriate Superannuation Information Form).

The superannuation fund may charge a fee for providing the information, and this is paid when you send the forms. The Superannuation Information Kit provides the information and the forms you need. The kit is available under the 'Forms' section of this website, by calling 1300 352 000 or at your nearest family law registry.

The information from the trustee may be enough to value the superannuation. However, the valuation of some superannuation interests can be complex. An expert may need to provide a further valuation. You should get legal advice about this. 

How super is valued

There are different types of superannuation. The superannuation splitting legislation sets out methods for valuing most types of superannuation, but there are exceptions, including:

• self-managed superannuation funds – they are generally valued with the assistance of an expert such as an accountant
• where the Attorney-General has approved a fund using a different valuation method. 

Step 2: Decide the method of splitting 

Either enter into a formal written agreement or obtain a court order. 

Obtaining a court order 

You get court orders about the division of property in two ways:

• by consent of the parties. If you and your partner have reached an agreement at the outset, then a Application for Consent Orders application can be filed in the Family Court, accompanied by a consent order recording the agreement. The orders can then be made in chambers without either of you attending court, or
• as a result of a court hearing. Even if you start proceedings, you can reach an agreement at any stage and once the orders recording the agreement are made you do not need to attend court further.

Either way, you need to file an application with the Court. Registry staff can tell you what forms to file. To start proceedings in the Federal Magistrates Court you must file an Initiating Application, and Information Sheet and a Financial Statement. The other party will file a Response and a Financial Statement. To commence proceedings in the  Family Court you must file an Initiating Application together with a Financial Statement. The other party will file a Response to Initiating Application together with a Financial Statement.

The Superannuation Information Kit is available under the publications section of this website, by calling 1300 352 000 or at your nearest family law registry.

The information from the superannuation fund trustee will help you to complete the Court forms. You must disclose all superannuation, even if you do not intend to split superannuation payments.

Informing the superannuation fund

If you are seeking court orders about superannuation, you must tell the superannuation fund trustee about the orders you are seeking. The trustee must have an opportunity to attend the court hearing and object to the orders that you are seeking. This is called providing the trustee with ‘procedural fairness’.

Once the superannuation order is made, whether by consent or after a hearing, it is important to provide a sealed copy of the order to the trustee.

Superannuation – Defined benefits funds

Valuation – scheme specific methods and factors

The Attorney-General's Department has provided some information concerning the valuation of defined benefit superannuation funds. This relates specifically to addressing current applications to approve scheme specific methods which have not been determined. 

Legislative framework

1. Subsection 90MT(2) of the  Family Law Act commenced with the other provisions of new Part VIIIB of the Act on 28 December 2002. It requires a court to value the interest in respect of which superannuation  benefits are payable before it orders that they be split in property settlement proceedings.

2. The court is required to value the interest in accordance with any method set out in the Family Law (Superannuation) Regulations.

3. The Regulations provide methods for determining the value of defined benefit superannuation interests in the growth phase (rr.28 and 29 and Schedule 2).

4. They also provide for the Attorney General to approve in writing methods or factors for determining the gross value of a defined benefit superannuation interest that is in the growth phase (r.38

). Applications may be made to the Attorney-General by funds for this purpose.

Method of valuing defined benefit superannuation interest – factors 

5. The method in Schedule 2 for valuing a defined benefit superannuation interest in the growth phase has been developed by the Australian Government Actuary's Office, on a typical private sector defined benefit scheme.

6. However, it is recognised that this method of valuation may be misleading, in relation particularly, to public sector funds. 

Applications for scheme specific methods or factors 

7. Consequently, applications for scheme specific methods or factors for valuing defined benefit interests in the growth phase are expected to come mainly from the public sector superannuation funds. 

To date applications have been received and are being considered from:

Applications being considered – Name of Fund

New South Wales Parliamentary Contributory Superannuation Fund

8. The Attorney-General's Department goes through a process of approving the necessary scheme specific factors and methods. Funds affected are likely to advise their members that they have applied for approval of such methods and factors and suggest that non-member spouses await the results of those applications.

9. Applications for adjournment of proceedings may flow in such situations.

10. The Family Court liaises with the Attorney-General's Department and provides information on its website when it is notified that applications have been approved in relation to particular funds.