Superannuation is treated as property under the Family Law Act 1975 but it differs from other types of property because it is held in a trust. Superannuation splitting laws allow superannuation to be divided when a relationship breaks down.
Essentially, super is considered as property in the event of a relationship breakdown, so like any other asset it can be divided between partners by agreement or court order. This includes marriage or de facto relationships, both heterosexual or same sex.
While the super pool held by two parties is considered joint property, it does not mean that each party will walk away with a 50/50 split. The Family Court will typically consider what is fair and equitable for both partners. Things that they will consider include: What you brought into the marriage.
Superannuation makes up a part of the asset pool, and so, if you find yourself wondering: Is my ex wife entitled to my superannuation? The short answer is yes. If you are married – after a divorce is finalised, your ex wife or partner is entitled to make a claim for your superannuation for up to a year.
Because of all of these factors associated specifically with you and your superannuation account, it is not administratively practical, nor legally possible, to combine your super with your husband, wife, spouse or partner. Your superannuation member balance relates specifically to you and your retirement.
If the 60-year-old spouse has retired, they are eligible to withdraw their super as a tax-free lump sum, unlike the younger spouse. Splitting contributions may increase pension entitlements, as super assets of a younger spouse may not be assessed when in accumulation phase while they are under Age/Service Pension age.
The ASFA Retirement Standard Explainer says a comfortable retirement lifestyle would need $640,000 in super for a couple, or $545,000 for a single person.
Superannuation splitting law
It lets separating couples value their superannuation and split superannuation payments, although this is not mandatory. Splitting does not convert it into a cash asset – it is still subject to superannuation laws (for example, it is usually retained until retirement ages are reached).
How much superannuation can I transfer to my spouse? With contributions splitting, the maximum amount you can transfer is the lesser of 85% of: your total concessional contributions for the period, including employer, salary sacrifice and deductible personal contributions and.
A 60/40 divorce split refers to a property settlement where one party gets 60% of the combined assets, while the other receives 40%. The combined assets of a couple are also known as the 'asset pool.
In summary, a wife in a divorce settlement in Australia is entitled to a fair and equitable share of the assets and property accumulated during the marriage. This may include a share of the family home, vehicles, savings, and investments, and any superannuation that has been accumulated during the marriage.
70/30 refers to one separated party getting 70% and the other getting 30% of the property pool. The “property pool” is all the assets and liabilities of the parties to the relationship. You may have heard about 70/30 divorce or property settlements in Australia – or even been told that it's a common outcome.
Most property proceedings result in a division of 55 to 65% in favour of the economically weaker spouse, historically the wife, before payment of legal fees. Nevertheless, the outcome of your property settlement will depend upon your practical circumstances, judicial determination in this field being discretionary.
(ii) The terms of splitting orders
For example, assume a couple has superannuation valued at $200,000 and it is to be split 50/50. The terms of orders to give effect to a split would be as follows: That orders 2 to 4 have effect from the operative time.
How do I split my superannuation? In order to effect a split of you or your ex-partner's superannuation, you must first write to the trustee of the superannuation fund and advise them that you are seeking superannuation splitting orders. This is called seeking 'procedural fairness'.
To qualify for the full offset of $540 in 2021/22, you need to contribute $3,000 or more into your spouse's super and your spouse must earn¹ $37,000 p.a. or less. A lower tax offset may be available if you contribute less than $3,000 or your spouse earns more than $37,000 p.a. but less than $40,000 p.a.
Pre-planning helps
ASFA estimates people who want a comfortable retirement need $640,000 for a couple, and $545,000 for a single person when they leave work, assuming they also receive a partial age pension from the federal government.
Yes a base amount is a specific dollar amount as against a percentage split which may result in a larger or smaller dollar amount as a result of movements in the value of the fund between agreement and the time the trustee gives effect to the court order or financial agreement.
The law in relation to superannuation provides that it is to be treated as though it were property of the parties. The court can make orders 'splitting' or 'flagging' superannuation interests. A splitting order splits the superannuation interest so that some of it is given to the other partner.
Assume, for example, you will need 65 per cent of your pre-retirement income, so if you earn $50,000 now, you might need $32,500 in retirement.
The Association of Superannuation Funds of Australia (ASFA) standard shows that for a couple to have a comfortable retirement, they will need $640,000 saved for retirement. Singles will need to have $545,000 saved. These figures assume that retirees will draw down all their capital and receive a part Age Pension.
Disadvantages of Spouse-Splitting Contributions
If you spouse-split some or all of your concessional contributions to a younger spouse, it may mean waiting longer before accessing these funds, due to your spouse attaining their superannuation preservation age or retirement after you.
Contribution splitting can provide an effective way to build wealth for retirement for a non-working or low income spouse. These funds may also be used to fund insurance premiums through super to protect against unforeseen illnesses, disabilities or death.