Splitting of Your Superannuation in a De Facto Relationship


Superannuation can be one of the most substantial assets a person owns considering that each year, an employer has to pay an amount equal to 9.5% of their employee’s annual salary into the employee’s superannuation account.  Building a superannuation is important so that you are financially provided for during retirement. This form of forced savings over many years can become a sizeable asset. 

In all states and territories in Australia except WA, superannuation funds can be split so that one party doesn’t leave the relationship with much more superannuation than the other. This applies to all married, de facto and same-sex couples in all states and territories in Australia except WA. Presently in WA, only married couples who have separated can split their superannuation. But times are changing and WA could soon fall in line with the other states so that de facto couples aren't discriminated against.  

Why is Superannuation Split?

Presently in WA, in a property settlement between a separated married couple, superannuation is treated as property under the Family Law Act 1975. However, it is different from other types of property because it is held in a trust. One party may have a large superannuation account and the other party may only have minimal superannuation or may have no superannuation. If there are few other assets to divide and the superannuation isn’t split, then one party leaves the relationship with much more than the other party.   

How is Superannuation Split? 

There is no hard and fast rule as to how superannuation is to be split. The separated couple can decide how assets including superannuation will be divided, either through negotiations or mediation but if that is not possible, then the Family Court may decide for them. 

A Court Order or binding financial agreement is needed to allow superannuation splitting to occur.  

In a property settlement, a Court Order can be one of two types – 

  • A consent order (i.e. an order made with the consent of the parties).  Parties can seek a consent order where they have agreed on how their property will be divided. If the Court believes the agreed division is just and equitable, the Court will make a consent order to make the agreed division binding and enforceable; or 
  • An order made by the Court without the parties’ consent and upon the Court’s decision as to how the property division is to take place after a hearing. 

The following are the steps taken to split superannuation:

1. Find out the value of each person’s superannuation account. You can find this out from the trustee of the superannuation fund by completing and submitting a form to the trustee and, in some cases, paying a fee. 

2. If the parties agree on how the property division and superannuation splitting are to take place, then parties prepare an Application for Consent Orders and Minute of Consent Orders or binding financial agreement. If the parties are unable to reach an agreement on the property division and superannuation splitting and Family Court proceedings are commenced, then prepare a draft of the orders sought in relation to superannuation splitting. 

3. The draft Minute of Consent Orders or the draft orders sought in the contested Family Court proceedings is sent to the superannuation trustee which is to be split for the superannuation trustee to approve the wording of the proposed Court orders for the superannuation splitting before a Court order can be made.  The superannuation trustee will not be concerned with the amount to be allocated to the party receiving the benefit of the superannuation splitting provided the amount does not exceed the value of the superannuation account. 

4. If the superannuation trustee approves or does not object to the wording of the superannuation splitting in the draft Minute of Consent Orders or the draft orders sought in the contested Family Court proceedings and orders are subsequently issued by the Family Court, a certified copy of the order is supplied to the superannuation trustee.

5. The superannuation trustee then proceeds with the superannuation splitting. Tax and administration fees may be payable on the transfer of funds. If superannuation funds are to be allocated to you with the superannuation splitting, the funds will be rolled over to the superannuation account in your name.  The superannuation funds allocated to you can’t be taken as cash and must remain in the superannuation account until a condition of release is met. 

If there is any chance that a party may withdraw money from a superannuation account or deal with a superannuation account to the detriment of the other party pending any superannuation splitting, a payment flag may be placed on that superannuation by agreement of the parties or a Court order so as to prevent the withdrawal of money or adverse dealing. The flag can be lifted by agreement or a Court. In some cases, a payment flag is needed because the superannuation account can’t be split at the time but can only be split at some time in the future. 

In WA, De Facto Relationships Are Treated Differently to Marriages for Superannuation Splitting

Presently, separated de facto couples in WA cannot split superannuation.

Under the Family Court Act 1997 (WA), which applies to separated de facto couples, superannuation can only be considered a financial resource and can’t be included in the pool of assets to be divided. The party with the smaller superannuation fund may have an adjustment made in their favour to receive a greater portion of the non-superannuation assets. 

Will WA Come into Line with the Rest of Australia?

Some people believe superannuation shouldn’t be split because it’s in the name of an individual and was earned solely by that person. 

However, there are valid reasons for splitting superannuation.  

A break from career to care for children and pay gaps between men and women are the main reasons most women retire with only about half of the superannuation account balances than men, which disadvantaged women in their retirement. 

Men going through a separation normally have more in superannuation than women.  Because of this, before superannuation splitting was introduced, men tended to receive less of the non-superannuation assets (which could be readily accessed) although they had no access to their superannuation until retirement, which disadvantaged the men.

Therefore, superannuation splitting was introduced about 10 years ago to allow a more equitable property division for both men and women and so that one gender was not unduly disadvantaged.  Sadly, the law introducing superannuation splitting did not flow through to benefit separated de facto couples in Western Australia.

The 2016 Census revealed that more than 200,000 Western Australian individuals (or roughly 20 per cent of couples in Western Australia) indicated they were in a de facto relationship. 

In March 2018, WA’s State Attorney-General John Quigley and Federal Attorney-General Christian Porter both supported an amendment to the legislation which prevents separated de facto couples in WA from splitting their superannuation

In October 2018, the Government agreed to amend the law as soon as possible to allow separated de facto couples in WA to split their superannuation

In September 2019, the Federal Attorney-General Christian Porter announced that he planned to introduce legislation end of 2019 allowing separated de facto couples in WA to split their superannuation.

Once the legislation is passed, separated de facto couples in WA will be able to split their superannuation just like separated married couples in WA.  

Knowing Your Entitlement to a Superannuation Split and How to Split Superannuation 

If you need advice on your entitlement to a superannuation split or how to go about splitting superannuation, book a consultation with us now on (08) 9364 2588 or contact us online.

Category: Advice