In accordance with the Family Law Act 1975 and the Superannuation Industry (Supervision) Act 1993 an interest in superannuation or superannuation payment may be split by agreement or court order between partners where the relationship has broken down.
What can be split?
Most superannuation interests may be divided between the former partners. However, exceptions include superannuation payments made from a fund on compassionate grounds, payments made due to severe financial circumstances or for health reasons or superannuation interests under $5,000.
What options are available?
Partners wishing to divide their superannuation interests have three avenues:
- Splitting a superannuation interest though a 'payment' or 'interest' split
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The superannuation account will be split when a condition of release is satisfied, for example, becoming payable on retirement. An interest split sees each party receive a superannuation interest as opposed to a payment. This benefit can remain in the existing account or be transferred to another super fund.
- Flag the benefit to defer the decision until a later time
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A "flag" ensures each partner's interest is protected until a certain event occurs such as the retirement of one partner. When the specified event occurs, the value of the benefit will be known and the superfund's trustee can execute the account as previously agreed between the parties.
- Take into account the superannuation but take no direct action.
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The partners may take into account the value of the superannuation account, and divide other marital property taking into consideration the value of the superannuation account. The superannuation funds are regarded as a "financial resource" that the fund holder will have access to in the future.
Splitting superannuation through a family law property settlement?
In WA only married or divorced couples may divide their superannuation interests in a family law property settlement. De facto partners living in Western Australia cannot split their superannuation interests. In de facto matters the court will consider superannuation amounts when it looks to the future needs of the parties as a financial resource accessible in the future.
What advice do I need?
Superannuation splitting is complex. Parties considered going down this path will need legal advice and financial planning and accounting advice.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
