The rules and regulations governing superannuation funds are very complex. For many people, superannuation is their biggest asset, or the next biggest asset after the family home.
In family law matters, agreements can be made about “splitting” a superannuation interest.
Special requirements apply. The first step is working out the type of fund that you have.
The vast majority of superannuation interests are Accumulation Accounts. These are accounts, operated by an industry or retail fund, in which an employer deposits a percentage of an employee’s salary. The fund invests the monies and the value of the fund increases (or decreases) as the case may be.
Defined Benefit Funds
This account is one where the value is determined by:
- The member’s salary at the date of the termination of employment, or retirement; or
- The member’s salary averaged over a period, or
- The amount of salary payable to another person, or
- A specified amount, or
- Specified conversion factors.
Some examples of these funds are the Defence Force Retirement and Death Benefits Scheme (“DRFDB”), the Commonwealth Superannuation Scheme, QSuper and the Public Sector Superannuation Scheme (“PSS”).
Self-Managed Superannuation funds
To be a self-managed superannuation fund, a fund must have fewer than five members. Self-Managed funds are expensive to operate and usually are confined to couples with significant property.
Obtaining Information about your superannuation fund
Applications for information about the value of a superannuation interests are made by sending a “Form 6” request. The form is available from the Family Law Courts. Some funds also provide their own version of the form.
Access to superannuation
As a general proposition, to receive super a party must attain the preservation age. Presently, the preservation age for anyone born after 30 June 1964 is 60.
There is highly likely to be conditions attached to receiving superannuation as cash, and may include:
- transition to retirement;
- attaining age 65 or more;
- terminating gainful employment;
- terminal medical condition;
- permanent incapacity;
- temporary incapacity;
- compassionate grounds;
Effect of a superannuation split
If a person receives superannuation from a superannuation split, the rules about perseveration (i.e no access) will still apply.
Before reaching any agreement about a superannuation interest, we recommend:
- Financial advice about the likely tax implications of any proposed superannuation split; and
- Legal advice about your entitlements and whether the proposed superannuation split is in your best interests.
Contact us for advice on whether superannuation splitting is appropriate for you.