Since the introduction of mandatory employer superannuation contributions in 1992, most adults have a superannuation interest.
It flows then that most property settlements include superannuation. It is important to identify the type of superannuation benefit you each have, and the value of that benefit.
The majority of superannuation benefits are “accumulation” interests, which means the balance of the fund depends on the amount deposited by your employer, your voluntary contributions and the fund’s investment return. The balance of the fund may vary from time to time depending on market performance, however it is simple enough to value, by considering the most recent superannuation statement balance.
“Defined benefit” funds are an older type of benefit, usually applied to the public sector, and which are being gradually phased out. Defined benefit funds cannot be calculated by simply considering the employer/employee contributions and investment returns. These types of funds will each have a specific set of rules to calculate the benefit on your retirement. Usually these rules include calculations based on final annual salary and years of service. Given these types of funds are not properly valued until retirement age, it is almost impossible to negotiate property settlement without a forensic valuation of the benefit.
A relatively new superannuation model is the “Self-Managed super fund”. This type of fund is a unique form of trust that is established with the objective of providing financial benefits and cash flow to the members of the trust when they reach retirement. Self-managed superannuation funds have strict compliance guidelines. These funds often comprise of real estate, shares and cash, which, because of their nature can be valued in the usual way. However, less common forms of investment may require evidence from an expert to accurately ascertain their value (eg. Artwork, antiques, jewellery). Beware of the possible taxation consequences of non-complying self-managed super funds, particularly if you are to solely retain the fund as part of the property settlement.
Family Law amendments were made in 2002 to allow parties to “split” superannuation interests. This means that as part of a property settlement, one party can transfer part of their superannuation benefit to the other party’s superannuation account. This can be achieved through a Binding Financial Agreement (otherwise known as a ‘deed’), Consent
Orders (obtained upon application to the Court) or Court Order (made after a final hearing in the Family Law Courts).