Home About Us Our Team Services Articles Newsletter FAQ Contact


Hot Topics Articles View All
October 30, 2016
Why Superannuation Should be a Talking Point in a Divorce

When couples enter into divorce proceedings and begin negotiating who gets what, it tends to be the more tangible assets such as homes and cars that take priority over things like superannuation.

And yet, a well-considered division of superannuation can make it easier for both partners to move forwards, particularly if one partner earned significantly less than the other over the course of the relationship.

This can be done when each party understands how family law and superannuation law interact.

Superannuation as Property in the Event of Divorce

Under family and superannuation law, benefits held by superannuation funds may be treated as a kind of property to be divided between spouses when they separate.

In Western Australia, the superannuation benefit of a partner involved in a de facto relationship cannot be split. Instead, the benefit is considered a resource of the relationship and is taken into account when looking at how all the assets should be divided.

Separated or formerly married couples can enter into a payment split or an interest split — with an interest split being the more common option used in Western Australia.

5 Steps Involved in Splitting Superannuation Benefits

Splitting superannuation benefits may sound complicated but the process can be broken down into five more manageable steps.

They are as follows:

1. Request information from the member’s fund about your former spouse’s super

2. Have the superannuation benefit valued

3. Enter into an agreement with your ex-spouse, or apply for a court order if you cannot agree

4. Send a copy of agreement or court order to the member’s super fund trustee

5. Split or flag the superannuation benefit (usually valued as a base amount or percentage)

Reaching an Agreement with Your Former Spouse

For an agreement between you and your ex-spouse to be binding, both parties must sign the document and state in writing that each party has sought and obtained independent legal advice.

The legal practitioners who gave the advice must also provide a signed certificate corroborating this fact. Then, a court must review the documents and issue a consent order in line with the agreement.

Payment Splits

A member’s superannuation can be subject to a payment split if the person entitled to receive the benefit as part of the property settlement — the ‘non-member’ — legally satisfies a condition of release, such as retirement.

Once granted, the trustee must provide the member and non-member spouse with notice of the payment split within 28 days.

If the non-member does not reply to the notice within the allotted timeframe and request the trustee take a specified action, the trustee may:

1. Create a new non-member interest in the member’s superannuation fund

2. Transfer or roll over the member’s withdrawal benefit to another, non-member nominated regulated superannuation fund, or

3. Transfer the member’s withdrawal benefits to an eligible rollover fund (ERF)

In either case, the trustee must provide the non-member spouse with written notice of their intention and must not make a lump sum payment without their instruction.

Interest Splits

More typically, an interest split will be made and the benefit to be paid to the non-member spouse will be specified as a dollar amount, giving each former partner an interest in the fund.

The non-member spouse can then choose to leave their super interest in the member’s superannuation fund — provided the fund rules allow this — or transfer it to another superannuation fund they nominate.

It must be noted, however, that some superannuation interests cannot be split.

This includes lifetime or fixed-term pensions the member is no longer entitled to, or lifetime or fixed-term annuities where the annual benefit payable is less than $2,000.

Other interests which cannot be split include those yet to pay a benefit, or those paying a benefit in the form of an annuity with an underlying capital sum or a commutable pension where the benefits payable are less than $5,000.

Understanding Your Options Moving Forward

Superannuation may be one of the last things separating couples think about, but it is no less important a talking point than the more tangible and sentimental assets during divorce settlement negotiations.

If you are attempting to navigate the complex issues at the intersection of superannuation and family law, speaking to a lawyer about your entitlements and the rules is a must — even when the divorce is amicable.

Should you wish to speak to a lawyer experienced in family law and superannuation benefits, contact Sue Holgate, LBH Partner on to book your appointment today.