Property settlements can be a difficult stage in finalising family law matters, especially when other financial resources may affect the property pool such as superannuation. The law treats superannuation as a different type of property and it is important that you know how the superannuation splitting law that governs this area may apply to you in your property settlement.
Superannuation Splitting Law
Superannuation splitting laws may apply to you if you;
- Are married or formerly married and have not finally settled your property matters under section 79 or 87 of the Family Law Act 1975; or
- Are a de facto couple, whose relationship broke down on or after 1 March 2009.
Some couples may choose to value their superannuation and split the superannuation payments but is not a requirement of a property settlement. Splitting superannuation does not convert into a cash asset in the property pool and is subject to separate superannuation laws.
A Recent Decision
In a recent appeal to the Full Court of the Family Court of Australia, ABKJ Lawyers successfully defended a Wife’s position in relation to her military pension.
In Carron & Laniga (2019) the wife’s superannuation interests with the Military Superannuation Benefits Scheme (“MSBS”) were in question as to whether the entirety of her superannuation at trial should have been taken into account as an asset or whether it should have been considered a financial resource.
There are two phases of the wife’s superannuation which were pertinent to this case, the first being the growth phase and the second being the payment (pension) phase.
The husband argued that the Superannuation in the payment phase (the pension) was a commutable interest as it had been valued pursuant to the Family Law (Superannuation) (Methods and Factors for Valuing Particular Superannuation Interests) Approval 2003.
A splitting order may have been sought in these circumstances, however the husband had not sought a splitting order at trial. Further, whilst the valuation provided a notional value, it was not a sum that could be converted into anything other than a fortnightly pension. If anything, the husband may have been successful in obtaining a splitting order (receiving part of the pension, fortnightly) where evidence supported his contributions to that interest.
The Full Court determined that the trial judge appropriately determined that the MSBS Superannuation in the payment phase was not an asset available for distribution.
Further, the MSBS pension was a financial resource and a continuing income stream for the wife. The pension being received was a modest income stream but not enough alone to be sustainable and the wife would need to supplement it with paid work. It was held that there was no error in the Court’s treatment of a non-commutable military pension as a financial resource/income stream as property.
The matter has been set down for a re-trial on the basis of other issues not related to the Superannuation.
Property Settlement and Superannuation
In a property settlement there is no need to ascertain the captilised value of a superannuation interest. Especially one that is in the payment phase, a pension which is non-commutable.
However, should a splitting order be sought as a part of a property settlement the superannuation interest must be valued before being subject to a splitting order as set out in subsection 90XT of the Family Law Act 1975.
Superannuation Interests That Can’t be Split
Most superannuation can be split by an agreement or court order, however it is not possible to split superannuation of little or no value. If your superannuation interest has a withdrawal benefit of less than $5,000.00, it will be deemed an un-splittable interest.
There is no requirement under the superannuation splitting laws that say the court must make a splitting order in relation to a property settlement.
Get Legal Help Now
If you wish to discuss how your superannuation may be assessed in a property settlement contact family lawyer Ruth Jeffers for a consultation.