In 1983, the Hawke government introduced the compulsory superannuation scheme whereby employers have since been obligated to pay on behalf of employees a percentage of their total income into a nominated superannuation fund of the employee. The minimum amount of superannuation required to be paid by employers is intended to increase from 9% to 13%. Not surprisingly, therefore, most Australians have superannuation entitlements. For Family Law purposes, superannuation is certainly relevant – however in WA superannuation will be treated differently in a property settlement depending on whether you were married or in a de-facto relationship.
In Western Australia, pursuant to the Family Law Act 1975 (“Cth”) married couples can “split” their superannuation as part of a property settlement. Superannuation therefore forms part of the asset pool. A superannuation split means that a portion of a spouse’s superannuation gets transferred into the other spouse’s nominated fund. However, a superannuation spit does not convert superannuation into a cash asset and superannuation laws still apply in relation when you can access these funds (usually upon retirement).
The benefit of superannuation splitting is not, however, available to de-facto couples in Western Australia. Rather, de facto couples’ superannuation is considered a financial resource as opposed to an asset. Financial resources are taken into account when considering the future needs of each party.
The question of whether a party is entitled to the other’s superannuation will depend on a range of factors including:
- What financial and non-financial contributions you have each made to the asset pool;
- What homemaker and/or parenting contributions you have each made;
- What each of your future needs are, for example – whether one of you will have the primary care of the children under the age of 18 years and whether one of you has a superior income earning capacity; and
- What other assets in the pool are available for division between you.
A common scenario where a superannuation split occurs between married couples is where the transfer of other assets, such as property or shares, are insufficient to satisfy a spouse’s property settlement entitlements and thus the superannuation split is needed to “top up” their assets.
Superannuation does not form a part of the asset pool for de facto couples, but is considered in an assessment of the future needs of each party. If one party, for example, has significantly more superannuation, the other party may be entitled to a higher percentage of property pool to compensate for the fact that they do not have a significant “nest egg” for when they retire. This may result in a moderately higher percentage allocation to the spouse with less super, but will not result in a “dollar for dollar” arrangement.
Superannuation can be complex so it is important to seek expert advice from and experienced Family Lawyer.
If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.