The Family Law Act 1975 (“the Act”) was amended in 2002 to allow superannuation to be treated as property so that it forms part of the asset pool available for division on the breakdown of a marriage. The superannuation provisions now apply both to marriages and to de facto relationships.
Superannuation is treated in a similar manner to other assets in family law proceedings. As such, the first step is ascertaining the value of each superannuation interest. There are various different types of superannuation interests. The most common are accumulation interests, defined benefit interests and self-managed superannuation funds. The appropriate method of valuation of superannuation interests depends on the type of superannuation fund.
Superannuation is often dealt with separately from the other assets of a marriage in what is known as a ‘two pools’ approach, but the entirety of the asset pool, including superannuation, can also be dealt with globally. The approach taken in each matter will depend on the facts of the case.
Superannuation can be divided by consent as part of an overall property settlement and can form part of Consent Orders made by the Court.
It is also possible to enter into a superannuation agreement as part of a Binding Financial Agreement either before, during or after a marriage or de facto relationship.
Pursuant to the Act, the courts have power to make orders providing for:
- A superannuation flag; or
- A superannuation split.
A flagging order operates as a form of injunction and prevents the trustee of the fund from dealing with the interest until the flag is lifted.
A superannuation split has the effect of providing for a proportion of a member’s superannuation benefit to be transferred to the member’s spouse.
There are certain technical requirements involved in superannuation splitting and it is therefore important that orders are drafted correctly.
Superannuation in the family law context can be quite complex and each case is unique. It is recommended that you seek legal advice from one of our lawyers in order to understand your legal rights in relation to your superannuation upon marriage or relationship breakdown.