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Frequently Asked Questions on Dividing Superannuation




Can superannuation be divided upon marriage breakdown?

Recent amendments to the Family Law Act 1975 have been made to enable superannuation interest to be divided on marriage breakdown. These changes are effective from 28 December 2002. Previously, your super was in your name only and no part of it could be assigned to another party. Couples now have that option.

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What does this mean for a divorcing couple?

What this means is that divorcing couples no longer have to use other assets to help finalise property settlement involving superannuation. Super funds are now required to act on a Court order to split a super benefit in two, in the proportions outlined in the order. Alternatively, the courts may order a benefit to be "flagged" for splitting at a later date.

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Which couples does this apply to?

The new rules only apply to couples who are or were legally married, and does not apply to defacto, same sex or other couples. Of course, such couples are free to agree to use the new rules but there is no compulsion.

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Who can ask for information about a member's benefit?

The law allows the following people to ask for information about a member’s benefit in a super fund:

Under the new rules, a spouse can ask for information about their partner’s superannuation fund without their partner’s knowledge.

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How do I ask for information about a member's benefit?

You must complete an Application for Information. You must also complete a Form 6 Declaration as set down in the legislation - this declares that you are eligible to ask for information. You can download a copy of the Application and Declaration forms from the Family Court web site.

Some Trustees require you to complete their forms designed for their schemes. Where such forms are provided some Trustees will only accept requests on their forms and will return the Family Law forms. SuperValuers supports valuations for some of these schemes. To check whether your scheme is one of them, refer to our list of superannuation schemes we support.

You must also pay any fees imposed by the Trustees for providing the information. These fees must be paid at the same time as the Declaration and Application is sent to the Trustees. Not all Trustees impose fees.

In the event that an Application for Information is received from someone other than the member of the Fund, the Trustees cannot tell the member that the Application has been received.

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How can superannuation be split?

The superannuation benefit can be split as part of the property settlement either by private agreement between the parties, or by Court Order.

A benefit can be "split" - by a Splitting Agreement or Order of "flagged" - by a Flagging Agreement or Order.

Splitting means that a decision on how to split the benefit has been made and that a portion is to be allocated to the non-member spouse. Whilst non-member spouse portion can be allocated immediately from an accumulation account, for some defined benefit schemes, it cannot be allocated from a defined benefit interest until the member’s benefit becomes payable.

Flagging means that the decision on how to split the benefit is deferred until a later date. If a benefit becomes payable to the member while a flag is in place, the benefit cannot be paid and the Trustees must notify the parties or the Court. The Trustees must then wait for further instructions from the parties or the Court before paying the benefit.

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What happens when an Agreement or Order is made?

When an Agreement or Order is made, a copy should be provided to the Trustee along with any other required document - your legal advisor will tell you what needs to be done. The Trustee will check that the Agreement or Order is valid and will then notify both parties that the Agreement or Order is in place. This notification will also include details of the options available to the non-member spouse in respect of their share of the member’s benefit. It will also set out what action need to be taken by the non-member spouse and the implications if the Trustees do not receive a reply.

The amount allocated to the non-member spouse is not usually immediately available in cash. It must remain in the superannuation system until age 60 in most cases, or until the person meets one of the legal conditions that allows their benefits to be paid in cash.

When allocating the required amount to the non-member spouse, the Trustees must also split some of the tax components of the member’s benefits. The components to be split, and the method by which they are to be divided between the parties, are set down in the legislation.

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The above provides a brief summary of Family Law legislation as it applies to superannuation. It is not intended and should not be relied upon as advice. You should always seek professional advice for your specific circumstances.




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