By Jessica Coles-Black 

Ordinarily, in a property settlement, superannuation is considered separate to parties’ non-superannuation property. This means that the percentage division applied to the parties’ non-superannuation property pool does not necessarily equate to the division of the parties’ superannuation pool.

However, in some circumstances, such as where the parties are close to retirement age, a global approach may be taken where the parties superannuation and non-superannuation property are considered together as one pool.

So, how do the courts deal with superannuation?

First and foremost, each party’s superannuation is combined to ascertain what is known as the total superannuation pool.

Parties can reach an agreement themselves as to how their superannuation is divided in a Binding Financial Agreement or by Consent Orders, provided the division, including the overall division of the property settlement, is just and equitable.

If an agreement cannot be reached between the parties, then the matter will proceed to trial and the court will make orders for how the parties’ non-superannuation property and superannuation will be divided.

What superannuation splitting orders can the court make?

The court has a discretionary power to ascertain whether the parties’ superannuation should be split and if so, how the super should be divided.

Depending on the circumstances of the matter, the court can either order that the parties’ superannuation be equalized, that is the total superannuation pool is divided equally between the parties, or split, which can be a percentage division.

In order to ascertain which type of order is just and equitable, the court will consider the following factors[1]:

  • the age of the parties and whether they are close to retirement
  • the duration of the relationship
  • each parties’ needs for cash and/or saleable assets
  • the proportion of the parties’ superannuation in their total property pool
  • if there are children
  • whether a splitting order could result in the primary carer of children keeping the home
  • the length of the relationship

In Doherty & Doherty, the Family Court ordered that the Wife retain essentially all of the parties’ property, predominantly comprising of the the former matrimonial home, whilst the Husband retained most of his superannuation.

On appeal by the Husband, the Full Court of the Family Court confirmed that the court has discretionary power to make an order for a mixture of superannuation and non-superannuation assets, that is to split the superannuation unequally.

The Full Court found that the order for a mix of superannuation and non-supernation provided the Wife the opportunity to remain in the former matrimonial home, which was of modest value, to care for the parties’ youngest child of which she was the primary carer.

The order allowed the Husband, who was now relieved of paying the mortgage instalments, to have greater disposable income. Additionally, the Husband lived with his current partner and shared his day to day living expenses with her. As a result of these factors, the Full Court concluded that the Husband had a far greater borrowing capacity than that of the Wife.

Otherwise, the Full Court found that if the home were to be sold, the reduction of the property pool as a result of sale costs was a relevant factor. Additionally, the Full Court found that Wife would have much less borrowing capacity than the Husband.

Alternatively, the court can order a superannuation split that is an unequal percentage division or a cash adjustment in lieu of one party receiving some or all of their entitlement in the total superannuation property pool.[2]

Depending on the circumstances of each case, the court has the discretion to order a mixture of superannuation and non-superannuation property, which results in a whole range of superannuation splits.

 

If you need advice in relation to a property settlement, require assistance in drafting a Binding Financial Agreement or applying to the court for a property settlement, please contact Rowan Skinner & Associates Lawyers, Accredited Family Law Specialist, to arrange a complimentary 15-minute consultation.

Notes

[1] Levick & Levick (2006) FLC 93-254; DAR & JMR (2005) FLC 93-231.

[2] Prantage & Prantage (2013) 93 – 544