For many Australian couples, super is the largest asset they own, after the family home. So it’s likely superannuation savings will form a not insignificant part of the asset pool in any property settlement.
Curiously, however, it is often not the primary focus when separated spouses are negotiating about financial outcomes – it can seem less ‘important’ than the bricks and mortar assets if retirement is still a long way off, and how much super there is, and with which fund(s) that super is held, can be a bit opaque.
In the past, this has meant that some superannuation interests have ‘fallen through’ the cracks, and have therefore not been included in the property settlement, or taken into account at an incorrect value. That may have been a deliberate step, such as if one half of an estranged couple has consciously under-disclosed, or even entirely hidden, their superannuation assets, or may simply occur as an innocent omission because neither spouse has paid much attention to where their super is held, and what it’s worth.
This can have disastrous consequences for the under-informed spouse – historically, mostly women – as not only can tracking down the super savings of a former spouse sometimes become a costly, complex and time-consuming process, but it can mean that a settlement which was thought to be just and equitable, is in fact neither of those things.
Whatever the case, if superannuation assets are hidden, or under-valued, spouses may be missing out on an important part of the asset pool. This can have serious consequences down the track, given the compounding nature of investment of funds over long periods of time – overlooking an entitlement to $20,000 worth of superannuation today can potentially mean a six-figure loss in 40 years’ time.
However, it’s now harder for ex-partners to hide their super under new legislation that took effect on 1 April 2022.
What’s changed?
The legislation means any party to a family law proceeding can apply directly to the courts (the Federal Circuit and Family Court of Australia (Division 1), or the Federal Circuit and Family Court of Australia (Division 2)) for the information about their ex-partner’s super which is held by the Australian Tax Office.
The ATO will then release the superannuation information, which can include the superannuation fund(s) with which interests are held, and member account balances, to the Court’s registry, for use by the parties and their lawyers in the proceedings.
According to the ATO, this should improve the visibility of superannuation assets at the end of a relationship, and is expected to result in faster and fairer property settlements. In this way, all superannuation assets, and their current values, can be taken into account in the financial negotiations which occur after relationship breakdown.
The move has been widely supported by women’s groups, the superannuation industry and Super Consumers Australia, as it could help reduce the gender superannuation gap.
Women’s superannuation balances are typically more than 40% less than men’s at retirement, according to AustralianSuper. While the reasons for this are primarily around inequalities in pay and unpaid caring roles, separation plays its part too, with this impacting women more than men. According to AMP-National Centre for Social and Economic Modelling research, super balances for divorced mothers are:
● 68% lower than married mothers
● 37% less than divorced fathers
How is super split in a divorce?
Super is considered a species of property which is divisible, just like other classes of asset like property and share investments, after a relationship breakdown. This means it can be split (transferred) between the two parties by agreement (called a Superannuation Agreement) or by court order – much like any other asset, such as real estate.
However, splitting super after relationship breakdown does not convert that retirement benefit into cash. That’s because it is still subject to superannuation preservation laws, which means it must remain held in trust until you meet a condition of release, such as reaching your preservation age.
How will the super be split?
While the super pool held by two parties is considered joint property, it does not mean that each party is automatically entitled to a 50/50 split. Rather, the Court looks at what is fair and equitable for both parties, taking into account the factors uniquely relevant to a particular relationship, including:
● The length of the relationship;
● What each party brought, financially, to the relationship (including any superannuation imbalance at the time of cohabitation);
● The contributions made by each party during the relationship, including how the division of roles has affected the accrual of superannuation;
● The circumstances of each party after separation, including such things as age, health, and any care or commitments to children.
We can help
BGM Family Lawyers is a specialist family law firm serving the Gold Coast. We’ve helped many couples navigate a divorce settlement and we can help you too.
Get in touch by emailing info.bgm@bgm.legal or calling 1300 246 529.
