Is Superannuation Always Split During a Property Settlement?

When a marriage or a de facto relationship breaks down and the parties to that relationship start to discuss the division of the property of their relationship, the parties’ superannuation interests are considered assets that form part of that property pool.  We are often asked by our clients whether superannuation has to be divided or split?  Our answer is…Well, sometimes yes and sometimes no.  It depends on your circumstances.  Let’s take a look at a matter we recently helped a client with.

Mark’s marriage to Sue ended and Mark sought advice and representation about his settlement and in particular his superannuation.

Sue said to him that she is entitled to half of everything including his super.  Mark was concerned about this comment and he did not think it was fair.

Before jumping to any conclusions, we needed to consider:

• How long Sue and Mark were married including the length of their de facto relationship before their marriage?
• What was the nature and value of assets they each brought into the relationship – both superannuation and non superannuation assets?
• What contributions they each made to the assets during the relationship?
• Mark and Sue’s current circumstances – both financial and personal?

Mark and Sue were married for 8 years. Mark was 54 when they married and Sue was 31.  They are now 62 and 39 years old respectively.

Mark had been previously married and had 2 adult self-supporting sons.

At the time of the marriage, Mark had two superannuation funds. One was a defined benefit scheme and the other an industry fund.  Mark worked fulltime during the relationship as did Susan.  Since separation Mark’s health has deteriorated and he has been diagnosed with a chronic health condition requiring regular treatment and monitoring. Mark will medically retire at 62 years of age.

When they married, Sue’s superannuation was less than Mark’s because she had taken time out of paid employment to travel.

During the marriage, Sue worked as a teacher in a private school.  Sue was promoted to head of her department during the relationship.  At 39 years of age her career is progressing and her good income means her superannuation guarantee contributions are higher.  Sue’s current superannuation balance is less than Mark’s.

Mark and Sue did not have any Financial Institutions together.  Sue is in good health and has a further 2.5 decades to work in paid employment.  Mark does not.

In this type of matter, we can adopt a two pool approach and separate the superannuation and non superannuation assets and look at each of them.

We need to carefully assess the nature of the superannuation assets, when they were acquired and what contributions (if any) Sue has made towards Mark’s superannuation and vice versa.

In this matter, each party was ordered to retain their own superannuation assets and the remaining assets divided between them.

This result was because there was no evidence from Sue that she contributed to Mark’s super or vice versa. It was also relevant that at no point in time was Sue a full time home maker or parent with Mark, or supported Mark in caring for his Financial Institutions.

Mark did not salary sacrifice to make additional contributions to his superannuation meaning that Sue and Mark’s household did not have less money available for their mutual benefit.

Had these factors been present then Sue could have argued she made indirect contributions towards Mark’s super and that she has an entitlement to it.  However in this case, it was clear that she had made no direct or indirect contributions to Mark’s superannuation.

It is important to remember that all relationships are different and consequently your family law outcome will vary depending on the facts in your matter.