When couples separate or divorce in Australia, dividing assets can be one of the most complex and emotionally charged steps. While most people are familiar with splitting property, cash, and investments, one major asset can cause significantly more confusion and stress: superannuation.

Superannuation can be a substantial part of a couple’s combined wealth, particularly as retirement nears. Under Australian family law, superannuation is treated differently from other assets, and understanding how it’s divided is essential to achieving a fair property settlement.

Superannuation: A Special Kind of Property

Although superannuation is held in trust and typically cannot be accessed until retirement, the Family Law Act 1975 (Cth) recognises it as property for the purposes of a financial settlement. However, because it’s not an asset you can use or spend immediately, it is subject to special rules under what’s known as the superannuation splitting regime.

This regime allows separating couples, whether married or in a de facto relationship, to value and divide their superannuation interests, either by agreement or through a court order.

Step 1: Identifying the Superannuation Interests

The first step is to identify all superannuation accounts held by each party. This includes traditional superannuation funds, defined benefit schemes, and self-managed super funds (SMSFs). It’s essential to provide full and frank disclosure of all superannuation entitlements, just as with other assets.

If you're unsure of your partner’s superannuation details, you (or your lawyer) can apply to the Australian Taxation Office (ATO) via the Family Law Superannuation Information Form, which allows you to obtain this information using their tax records.

Step 2: Valuing Superannuation

Next, the superannuation must be valued. For accumulation accounts (which make up most super funds), the value is simply the account balance. Defined benefit schemes are more complex and often require actuarial valuation to determine a fair estimate of their worth. The Family Law (Superannuation) Regulations 2001 provides formulas and valuation methods that must be used for these accounts.

It's important to note that valuation doesn’t mean liquidation. Instead, it's used to determine how much of the superannuation should be reallocated between parties.

Step 3: Deciding on a Splitting Method

The foundation of successful blended families is positive, open, and respectful communication—both between former partners and within the new family unit.

1. Agreement Between the Parties

Couples can mutually agree on how superannuation will be split. This agreement must be formalised in either:

A binding financial agreement (BFA), which must meet specific legal requirements and be signed by both parties with independent legal advice; or
Consent orders, which are submitted to and approved by the Family Court.

2. Court Order

If parties cannot reach agreement, one of them can apply to the Federal Circuit and Family Court of Australia to determine how superannuation should be divided.

The court considers a wide range of factors, including:

The length of the relationship
The financial and non-financial contributions of each party
The future needs of each party (e.g. age, health, income-earning capacity, care of children)

It is important to note that there is no presumption of equal division, and the court aims for a “just and equitable” outcome based on individual circumstances.

How Does a Super Split Actually Work?

A superannuation split does not usually involve withdrawing funds or handing over cash. Instead, a payment split or base amount split is made by transferring a portion of one partner’s super into a new or existing account in the other partner’s name.

For example, if one partner has $300,000 in super and the court orders a 40/60 division, then $120,000 may be rolled over into the other party’s super fund. The receiving party typically cannot access the funds until they reach retirement age or meet a condition of release.

It's also worth noting that a superannuation split can only occur once per interest unless the fund rules allow otherwise.

Special Considerations for De Facto Couples

Since 1 March 2009, the Family Law Act has applied to superannuation splitting for de facto couples in all states and territories except Western Australia. In WA, de facto couples are still subject to state laws, and superannuation is not treated as property but as a financial resource, meaning it cannot be split but can be taken into account when dividing other assets.

However, recent reforms have been proposed to align WA’s approach with the federal system, which may result in future changes.

What If There Are Multiple Super Accounts?

If each party has their own super accounts of similar value, they may agree to keep their own entitlements rather than split them. Alternatively, a super split may be used to balance out other parts of the settlement—for instance, if one party keeps more of the real property, the other may receive more super.

Seeking Legal Advice

Because of the technical and long-term nature of superannuation, and the strict legal requirements surrounding its division, it’s strongly recommended that separating couples seek advice from a family lawyer with experience in superannuation splitting. Mistakes in this area can have serious consequences, especially as superannuation may be the largest or only asset for many Australians approaching retirement.

Superannuation plays a critical role in many Australian property settlements. While it may seem complicated, the law provides a clear framework to ensure that superannuation is divided fairly and appropriately. Whether by mutual agreement or court order, it's important to handle super splits with care, transparency, and proper legal advice to ensure long-term financial security for both parties.