Do you look forward to a happy and well-funded retirement? If the answer is yes, then you’re probably going to rely heavily on your superannuation for your retirement income.
But what happens to the money you’ve saved over your working life if you and your partner go through a separation and divorce? The closer you are to retirement, the more of an issue it becomes.
Increasingly, the management of superannuation in divorce requires special attention in family law property settlements.
How to Manage Superannuation in Divorce and Separation
Know What You Have
Firstly, you must know the type of superannuation fund(s) you and your partner hold and the accumulated balance(s).
The majority of super funds these days are so-called ‘accumulation funds’ and you can find out the value of your accumulated funds from the member’s statement or by submitting a form to the super fund trustee. Some older forms of superannuation, particularly government funds, are valued according to complicated formulas.
A large and growing percentage of superannuation funds are now self-managed funds (SMFs), in which the person organises their own superannuation investments, and the pool of assets in these funds need to be carefully valued and supporting documents obtained.
Once you know what’s in the fund(s), you and your former partner need to work out how to deal with or divide the superannuation amounts.
Decide How You Treat It
Superannuation can be treated as either separate to or part of the asset pool.
Sometimes the superannuation is included in the asset pool along with the other assets (home, cars etc) and each person’s super is treated as part of the pool.
It may be that each person keeps their own super. Or superannuation may be treated separately to the other assets and split up. There may be certain specific reasons for splitting the super. For example, if one person can access it or convert it to a pension entitlement much earlier than the other person can, then that person might get part or all of the super as part of the agreed settlement.
A lump sum or percentage of one person’s super can be split off and rolled over into the other’s superannuation fund. This can be done through the superannuation fund trustee as part of an agreement between the parties, and in some cases, it may be part of a court order (called a ‘splitting order’) if the matter is dealt with by a Family Law Courts.
The Family Law Courts tend to treat superannuation as a separate asset pool and will often make such a ‘splitting order.’ They may choose to divide the superannuation pool in the same percentage as they divide the other assets. Or they may divide superannuation according to a different percentage, such as by giving one party a much larger share of superannuation, so that they can retain a home for themselves and children.
Super benefits may be split even if one or both parties have already retired, and are receiving a superannuation pension; the pension income streams can be divided.
Seek Professional Advice
Superannuation in divorce and separation is not always simple and often the issue can get quite complex.
It’s a smart move to get expert advice from superannuation experts and family lawyers.
They can help work out the best way to divide super and to create binding and enforceable superannuation orders and agreements.