For many Australian couples, superannuation represents one of the largest assets in the property pool - often second only to the family home. When a relationship ends, superannuation splitting via consent orders provides a legally binding mechanism to divide super interests fairly, without requiring either party to withdraw funds or wait until retirement age.
How Superannuation Splitting Works
Under Part VIIIB of the Family Law Act 1975 (Cth), the Court can make orders to split a superannuation interest between separating parties. A splitting order directs the trustee of a superannuation fund to allocate a specified amount or percentage of one party's super interest to the other party. The receiving party can either:
- Have the amount rolled over into their own existing superannuation fund
- Open a new superannuation account to receive the split amount
- In limited circumstances, receive a lump sum payment (only where a condition of release has been met)
Importantly, superannuation splitting does not require anyone to cash out their super early. The split occurs within the superannuation system, and preservation rules continue to apply to both parties' interests.
Valuing Superannuation for Family Law Purposes
Before superannuation can be divided, it must be properly valued. The method of valuation depends on the type of fund:
- Accumulation funds: These are the most common type of super fund in Australia. The value is generally the account balance as at a specified date, making valuation relatively straightforward.
- Defined benefit funds: These funds pay a benefit calculated by reference to a formula (typically based on years of service and final salary) rather than an account balance. Valuation requires a calculation in accordance with the Family Law (Superannuation) Regulations 2001, and in some cases an actuarial report is needed.
- Self-managed super funds (SMSFs): SMSFs can hold a range of assets including property, shares, cash and collectibles. A current valuation of all fund assets is required, and the splitting order must be structured to comply with both family law and superannuation law requirements.
Obtaining an accurate superannuation valuation is essential. An incorrect valuation can lead to an unfair division of assets or, worse, the Court refusing to approve the consent orders. We work with qualified actuaries and financial professionals to ensure every super interest is valued correctly.
Procedural Requirements for Superannuation Splitting Orders
Superannuation splitting via consent orders involves specific procedural steps that do not apply to other types of property orders. These requirements exist to protect the rights of superannuation fund trustees and ensure the orders are capable of being implemented.
- Obtain information from the fund: Before drafting the orders, you must request information from the superannuation fund trustee using the prescribed form. The trustee is required to provide details about the member's interest, including the current value and any fees that may apply to a split.
- Serve procedural fairness notice: The trustee of any superannuation fund affected by the proposed orders must be given notice of the application and an opportunity to object. This is known as procedural fairness, and the Court will not approve the orders without evidence that this step has been completed.
- Draft compliant orders: The splitting order must identify the superannuation interest, specify the base amount or percentage to be split, nominate the receiving fund, and comply with the regulations. Errors in drafting can cause significant delays.
- File and obtain approval: The consent orders, together with evidence of service on the trustee, are filed with the Court for approval.
"Superannuation splitting orders are among the most technically demanding documents in family law. Precision in drafting and strict compliance with the regulations are not optional - they are essential."
Integrating Super Splitting with Your Property Settlement
Superannuation splitting is almost always dealt with as part of a broader property settlement. The value of each party's superannuation is included in the total asset pool, and the splitting order forms one component of the overall consent orders. This ensures that the division of super is considered alongside the division of all other assets and liabilities, producing a just and equitable result.
At Reid+Alexander Lawyers, we have extensive experience preparing superannuation splitting orders for all fund types, including complex defined benefit and SMSF arrangements. We handle the valuation process, trustee notifications and drafting with the precision this area of law demands. Contact us to discuss how superannuation should be addressed in your property settlement.