In 1983, the Australian Government introduced the compulsory superannuation scheme. Since then, employers have been obligated to pay on behalf of the employees, a percentage of their total income into a nominated superannuation fund of the employee.
Note: The minimum amount of superannuation required to be paid by employers is due to increase from 9% to 13%.
Whilst divorce or separation spells the ending of a relationship, it begins the arduous task of sharing your finances with your partner. Superannuation is considered to be an asset, and it may be included in a property settlement.
When a marriage or a de facto relationship breaks down, superannuation can be split through reaching a superannuation agreement. If an agreement cannot be made, you can have the court determine the settlement.
In deciding whether to make a super splitting order, the court takes the following factors into consideration, the:
- value of Superannuation interest;
- age and state of health of parties;
- capacity of the parties for gainful employment;
- care and control of children;
- income, earning capacity, assets, liabilities and financial resources of the parties; and
- nature and accessibility of superannuation entitlements.
The principle of fairness is key to superannuation settlements hence why the courts take into consideration numerous factors that will give them a better picture of each parties’ financial situation. When coming to agreements, some potential approaches can include:
- one partner may get part of their settlement in the form of their ex-partner’s super;
- one partner may receive more super now and less of the other assets;
- where one partner has a super and the other has little or none, the super is likely to be split 50/50 along with the other assets.
You can request information regarding your partner’s super from their fund and if the super is split, then you will have the following choices:
- add the money to your super account;
- transfer the super to another fund; or
- take the super as cash if you are eligible for a cash payment.
Process of Splitting a Super
- Request information about the super accounts.
Before deciding how to split the super, you need to find out how much super you both have.
- Decide how you will split the super.
The most efficient way to do this, is to prepare a formal written agreement with the aid of a lawyer. This is likely to cover super as well as other family assets. The agreement must be accompanied by a signed certificate stating that both parties’ have taken independent legal advice.
You could seek a consent order if both you and your partner have already agreed to split the super. You can file an application for consent orders through the family courts, together with a consent order recording the agreement.
If you cannot reach an agreement with your former partner, you will need to file an application for a court order. Even when an application has been made, you and your former partner may reach an agreement at any time without the need for a court hearing.