What Happens to My Superannuation if We Separate?

Contrary to popular belief, superannuation is not off-limits when your relationship breaks down and you are dividing your assets. The law treats superannuation as property that can be divided just like any other asset, however different principles may apply.

1. Am I entitled to my partner’s superannuation? 

When your relationship breaks down, you will need to negotiate how you are going to divide your joint assets, including real estate, bank accounts, investments, and superannuation. You may be entitled to a portion of your partner’s superannuation, however this depends on the circumstances of your relationship, and it is not guaranteed.

2. How will our super be split?

Generally speaking, superannuation that has accumulated during the relationship will be equalised between you. If one of you brought superannuation into the relationship, that person may receive a credit for this contribution before superannuation balances are equalised.

If there is a small asset pool of less than $500,000, and one of you has greater future financial needs, the total asset pool including superannuation may be adjusted in that person’s favour.

3. Will I have access to the superannuation once it’s split?

When superannuation is split, it must comply with the laws governing superannuation. You will not get any cash in hand at the date your superannuation is divided, rather, the money will be transferred into your nominated superannuation fund for you to access once you retire.

For example, let’s say that you currently have $50,000 in your superannuation fund and your former partner has $100,000. Equalisation of that superannuation will result in you both receiving $75,000.

4. Court Order or Binding Financial Agreement?

There are two legally binding ways to divide your superannuation.

Firstly, you can do this by using a Court Order. The order identifies the amount the person with the higher superannuation balance must transfer to the other (this is called the ‘Base Amount’). The Court Order also states the date at which their superannuation fund must rollover this money. Interest will accrue on the Base Amount until the money is transferred.

Secondly, you can enter into a Binding Financial Agreement. This directs the Trustee of the relevant superannuation fund to split the superannuation and rollover the agreed Base Amount to another nominated fund. You and your partner must both seek independent legal advice before signing the agreement, and each person’s lawyer must sign a statement stating that they provided this advice.

Superannuation can only be divided using a Court Order or Binding Financial Agreement. These are the only methods that are recognised and acted upon by superannuation funds.

Speak to one of our expert team today for further guidance on issues concerning your superannuation and how to divide it.

Note: This is general information advice only and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters, please contact us on 03 9620 0088 or email [email protected]

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