When a relationship breaks down, property settlement is not just about dividing houses, cars and savings. Superannuation is also treated as property under the Family Law Act 1975. This means it can be split between separating spouses or de facto partners. Super splitting can be complex because of the strict superannuation laws that regulate how retirement savings are managed.
This guide explains how superannuation is divided, what processes apply and why seeking independent legal advice is essential.
Why superannuation matters in family law
Superannuation is often one of a couple’s largest assets in Australia. Even though funds are preserved until a member spouse retires (that is, they reach their preservation age and can legally access super), the value of each super account must still be considered when dividing property.
The law applies equally whether you are married or in a de facto relationship. In Western Australia, superannuation laws were updated in 2022, so de facto couples now have access to super splitting through the family courts.
How is super split in divorce and separation?
Superannuation can be divided in the same way as other assets, but because super is held in a regulated system, the split happens through special processes. This is called superannuation splitting.
There are three main ways to split superannuation:
Consent orders
If both parties agree, you can apply to the Family Court or the Federal Circuit and Family Court of Australia for a consent order. This is a court order formalising the agreement and is usually the simplest way to split super.
Superannuation agreement
A superannuation agreement is a type of binding financial agreement that deals explicitly with superannuation interests. It must be in formal written agreement form, and both parties must receive independent legal advice.
Superannuation splitting order
If there is no agreement, the family court can make a superannuation splitting order after a family law proceeding. The Court will assess contributions, future needs, and other assets before deciding how superannuation should be divided.’
Key terms explained
- Member spouse: The person who owns the super account.
- Non-member spouse: The former partner or ex-spouse who will receive a share of the super.
- Preservation age: The age at which a person can legally access super benefits, usually between 55 and 60, depending on birth year.
- Super income stream: Ongoing payments made from super, such as a pension, rather than a lump sum.
- Self-managed superannuation fund (SMSF): A private super fund controlled by its members, often requiring more complex arrangements when splitting.
The process of super splitting
Dividing super is not as straightforward as transferring money between bank accounts. The process usually involves:
1. Requesting information
You or your legal representative can request superannuation information directly from a superannuation fund using a Form 6 declaration. This provides the balance, type of account, and whether it is a super income stream (like a pension) or an accumulation account.
2. Valuing superannuation interests
For family law purposes, super must be valued in accordance with industry standards. Some funds provide this automatically, while self-managed super funds (SMSFs) often need a specialist valuation.
3. Applying for a split
Either through consent orders, a superannuation agreement or by court order.
4. Payment split or payment flag
The superannuation fund then implements the order. A payment split transfers a lump sum amount or percentage into the non-member spouse’s name in the same fund (or rolled over into a new super account). A payment flag temporarily stops payments, usually when the super interest is difficult to value.
Factors the Court considers
When making a superannuation splitting order, the Federal Circuit and Family Court of Australia considers:
- The contributions each party made to the super account and other assets
- Future needs such as income, health, and caring responsibilities
- The type of super interest and whether it is already paying a super income stream
- Administrative costs charged by the super fund for processing the split
- Procedural fairness to both parties
Just like with houses or savings, super assets are part of the overall property pool and assessed alongside other assets and liabilities.
Special issues with self-managed super funds
Self-managed super funds (SMSFs) require careful handling in family law proceedings. Because SMSFs hold varied investments like property or shares, splitting super may require selling assets or creating a new member account. Independent valuations are often necessary.
In some cases, contribution splitting or rolling over into another fund is used instead of direct transfers. These decisions carry tax and compliance risks, so it is essential to seek legal and financial advice together.
Tax, costs and timing
Superannuation splitting does not usually create immediate tax liabilities. However, once superannuation payments are eventually accessed, standard tax rules apply.
Superannuation funds may also charge administrative costs for processing a split, which can reduce the balance. The timing of the relationship breakdown is also essential. If the member spouse retires and starts drawing a super income stream before orders are made, this can affect how the super is valued and divided.
Time limits and jurisdiction
Applications to split super must be made within the same time limits that apply to other family law property settlements:
- Within 12 months of a divorce order becoming final
- Within 2 years of a de facto relationship breakdown
The Federal Circuit and Family Court of Australia, and in Western Australia, the Family Court of Western Australia, have jurisdiction to hear superannuation splitting cases.
Practical tips for splitting super
- Always request information from the superannuation fund early to avoid delays.
- Check whether the super balance includes insurance benefits or defined benefit schemes, which may require special valuation.
- Remember that superannuation agreements are only binding if each party receives independent legal advice and signs a formal written agreement.
- Consider whether splitting super is the best option or whether it makes sense to adjust other assets instead.
- Keep in mind that splitting super does not give immediate access to cash – the funds remain preserved until preservation age.
Why independent legal advice is essential
Because of the strict rules around superannuation splitting, it is crucial to have a legal representative guide you through the process. Independent legal advice ensures you understand your rights, the effect of any superannuation agreement, and whether a proposed split is fair in light of other assets.
Court proceedings about superannuation are technical, and procedural fairness must be observed at every stage. Having a skilled family lawyer who understands the nuances of super splitting and the Family Law Act gives you the best chance of reaching a workable settlement.
Property settlement and superannuation
Superannuation is often overlooked in family law property settlements, yet it can make up a significant part of your retirement savings. Whether through a consent order, binding financial agreement or court order, super splitting is a key step in achieving a fair division of assets after separation.
If your relationship breaks down, it is essential to request information about your ex-partner’s super early, weigh up whether to split super or adjust other assets, and to seek formal agreements to protect your entitlements. If you are facing a property settlement or superannuation split and are unsure how to proceed, get in touch with the team at Avokah Legal.
Need to have a chat with a family lawyer about divorce and superannuation?
If you are separating or going through a divorce and need guidance on superannuation splitting, our family law team can help. We provide clear advice on the Family Law Act, court proceedings, and the practical steps to split superannuation. Contact us today for independent legal advice and tailored support for your situation.
Other Q & A for Divorce & Superannuation
How much super is an ex-wife entitled to?
There’s no set percentage. The Court assesses contributions, future needs, and assets. A super fund account can be split fairly, not automatically half.
How is superannuation calculated in a divorce?
Superannuation is valued under family law purposes using prescribed methods, with a separation declaration required before division.
How to protect your super from divorce?
You may be able to protect your super through a binding financial agreement, consent orders, or fair negotiations. Our recent article, ‘How To Protect Superannuation In A Divorce,’ provides more information about this.
What are the three options for splitting super in a Family Law split?
To legally formalise a super split, you can seek consent orders, create a superannuation agreement, or have the court issue a superannuation splitting order. These orders allow a non-member spouse receiving a share to have it transferred or flagged.
Can I use my super to pay out my former partner?
Superannuation is not a liquid asset, and can’t generally be ‘cashed out’ during a separation settlement. It is preserved until you reach your preservation age or meet a condition of release, such as retirement or hardship. This is why it’s treated a little differently in family law settlements.
If your former spouse is open to receiving super as part or all of their settlement, it can be done, and may be suitable if they want a nest egg for later on, or are nearing or have reached retirement age. In some settlements, super is the only asset, and in that case, it would be the only option to be split with your former partner.
Can I use my super to buy a house after a divorce?
Super remains locked until you reach preservation age. You cannot access it to purchase a house after a divorce unless specific early release rules apply. An SMSF may invest in property, but the property is held in the fund, not by you personally, unless you meet a valid condition of release (such as preservation age, terminal illness or severe financial hardship).
What is a superannuation payment flag?
A payment flag temporarily prevents any superannuation payments until the family court resolves how the superannuation will be split between the parties.
What is a Regulation 72 notice?
A Regulation 72 notice lets a party request information from the super fund to confirm a member’s superannuation interests before negotiating a split.
What is Part 6 of the Family Law Superannuation Regulations 2001?
Part 6 sets out procedures for splitting superannuation, including valuation methods, notices to funds, and rules ensuring procedural fairness to both parties.