Superannuation is included as property for the purposes of property settlement proceedings under section 79 of the Family Law Act 1975 (Cth) or when making a financial agreement.
First, the superannuation must be valued. The Family Law (Superannuation) Regulations 2001 (Cth) set out the methods of valuing most superannuation interests, and the information that trustees have to provide. It is advisable to seek assistance from an accountant and the relevant funds or schemes when valuing superannuation interests.
Once it has been valued, it must be decided how the superannuation can be dealt with to provide a just and equitable property settlement or financial agreement. Superannuation can be split, flagged, or off-set against other property.
When an interest is splittable, parties may make a superannuation agreement agreeing to split superannuation. A superannuation agreement is part of a financial agreement and therefore must meet the same requirements as a financial agreement in order to be valid (see 'If you agree about property and finance' on the Family Court's website).
A court may order that superannuation be split between the parties in whatever proportions it considers fair in all the circumstances.
Splitting superannuation does not change the rules about when the superannuation becomes available - it will still generally only be available upon reaching retirement age.
Not all superannuation interests are splittable. Under the Family Law (Superannuation) Regulations 2001 reg 11, some interests cannot be split. Under reg 12, some payments made to a member spouse cannot be split, for example payments made because of hardship, compassionate grounds or permanent incapacity. Under reg 13, some payments made to a child after the death of a member spouse cannot be split.
Flagging a superannuation interest
A flag operates to stop the trustees of a superannuation fund or scheme from dealing with the superannuation interest. An interest can be flagged pursuant to an agreement between the parties or a court order. The flagged interest is preserved until dealt with under a financial agreement or court order. When a flagged interest becomes payable, the trustees have to notify the parties or the court.
Off-setting superannuation against other property
Instead of splitting superannuation, each party may keep the superannuation in their name, but, if one party's superannuation is greater than the other's, one party may receive a greater share of the other property. Similarly, if only one party has superannuation, they may retain their interest and the other party may receive a greater share of the other property. Off-setting can be done by agreement or by court order.