Superannuation Splitting Order Example: Helpful 5-point Guide

What is a Superannuation Splitting Order?

A Superannuation Splitting Order is when a court or an agreement splits one partner’s superannuation (retirement savings) between both people after separation or divorce. This ensures both people share the financial assets fairly, just like property is divided.

The split can be carried out either through a percentage split (e.g., 50% of the balance) or a base amount split (a fixed dollar amount).

This allows superannuation to be shared between both people as part of the financial settlement.

Example of a Superannuation Splitting Order

An example of how a superannuation splitting order might work:

• Percentage Split: The court orders that 40% of one partner’s superannuation be transferred to the other partner’s super account.
• Base Amount Split: The court orders that $100,000 of one partner’s superannuation be transferred to the other partner’s account, regardless of the total amount in the super.

In either case, the transfer takes place after both parties agree or the court makes a ruling, ensuring that each person receives their entitled share based on the broader property settlement terms.

When Does a Superannuation Splitting Order Apply?

A superannuation splitting order is needed when couples separate and need to divide their assets. This can happen in two ways:

1. Consent Orders: Both partners agree on how to split the superannuation and submit the terms to the court.
2. Court Orders: The court makes the decision to split the superannuation after looking at both people’s financial situations.

It’s important to know that splitting superannuation doesn’t mean the person can take the money out early—it just moves the money to the other person’s superannuation account.

How Does Superannuation Splitting Work?

Here’s how the process works after the order is made:

1. Notify the Super Fund: The court order is sent to the super fund (the place where the super is kept).
2. Fund Processing: The super fund moves the agreed amount to the other person’s super account.
3. Open an Account: If the receiving person doesn’t have a super account, they’ll need to open one to receive the transfer.
4. Tax and Fees: Splitting the super doesn’t cause immediate tax issues, but there may be fees from the super fund.

Factors to Think About in a Superannuation Splitting Order

Several things affect how superannuation is split:

1. Length of the Relationship: The longer the relationship, the more likely the superannuation will be seen as shared property.
2. Type of Super Fund: Some super funds have different rules, and some may have fees or conditions that make the split more complicated.
3. Retirement Plans: A superannuation split can reduce one person’s super balance, which might affect their future retirement income.
4. Age and Employment: A super split can reduce one person’s super balance, which might affect their future retirement income.
5. Other Assets: Superannuation is only one part of the settlement. People can trade other assets, like property, to balance out the split.

Summary

A Superannuation Splitting Order is a way to divide superannuation during a separation or divorce. It can be done using either a percentage or a fixed amount, depending on what works best for the couple.

The process ensures both people get a fair share of the retirement savings. Legal advice can help make sure the order is done correctly and that it fits with each person’s long-term financial needs.