The Family Law Amendment (Superannuation) Act 2001, which came into effect from 28/12/2002, will enable superannuation interests to be divided (split) like other matrimonial property assets, rather than being regarded only as a financial resource. It is possible to make a financial agreement including how a superannuation interest is to be divided. The agreement is binding, provided the formal requirements for such agreements are met. Alternatively, the Family Court may make an Order about how the superannuation interests are to be split.

Some superannuation interests are not splittable (mainly those under $5,000 or made on compassionate grounds). For those that are, we can have payment splitting or interest splitting. The former can specify (via a base method, a percentage method or a special percentage method) what will happen at payment time, which may be many years hence.

On the other hand, interest splitting results immediately in a new interest being created for the non-member spouse in the fund, rolled-over/transferred to an eligible fund or paid out if a condition of release is met.

A flagging agreement can be made by the parties or ordered by the Court. This postpones decisions until the value of the benefit is clear, and prevents the trustee of a superannuation fund from making any payments until the payment flag is terminated.

Superannuation interests can be traded off against other assets - such as shares or the matrimonial home.

Valuation Methodology

The value of a superannuation interest is calculated according to the provisions of the Family Law Act and Regulations. I understand that the Court must determine the value according to regulations but that consent agreements may adopt alternative approaches. Regulation 28 provides a three-step method. The first step is to determine the current gross value of the entitlement. From this is deducted any earlier payment splits. The final step is to deduct any surcharge debt.

Fully vested accumulation benefits are basically valued at the account balances. Provision exists to interpolate provided values to the relevant date agreed upon by the parties.

For a defined benefit design, the value is the actuarial value of the member's accrued benefits. The accrued (past service) component takes into account all benefits provided. The discounted value takes into account when benefits are expected to be paid.

The Family Law (Superannuation) Regulations 2001 has default valuation factors for:

	Defined benefits in the growth phase	(Schedule 2)
	Partially vested Accumulation benefits	(Schedule 3)
	Life Pensions in payment phase	(Schedule 4)
	Fixed Term Pensions in payment phase	(Schedule 5)
	Pension and future lump sum	(Schedule 6)

Trustees of superannuation plans can apply to the Minister for special factors and/or methods.

Database of Major Funds

Family Law practitioners need information about superannuation fund:

• contact details
• special methods and factors
• fee for information, splitting and flagging
• apportionment method options
• calculation options
• etc

Please check periodically as additional funds and information is being added daily.

Link to Superannuation Fund Database

Family Law Support Pack

A crucial part of many tasks undertaken by lawyers, accountants and financial palnners is the calculation of a value of losses, benefits and entitlements. At times an extra step of an optimal strategy is also involved. Bendzulla Actuarial will produce appropriate reports where necessary. HOwever if the client has a need and a wish to undertake some or all of these tasks, then FinSight Plus provides the calculator tools, reference material, workshop and training to facilitate this.

Our Family Law Support Pack consists of two calculators - valuation of superannuation entitlements and present value of spousal maintenance agreement plussupporting documentation.

The cost of this software is $198 which includes GST and postage anywhere in Australia.

To order your copy please go to our order form.

Reports

As consulting actuaries we have an extensive knowledge of superannuation design issues. In addition we have prepared summaries of the various categories of the major superannuation funds. Many of these funds have benefits that vary with date joined fund especially with regard to access to anti detriment pension rights.

If you would like us to prepare a report please print out and complete the request form and freefax it to us on 1800 103 123.

Ideally the new Form 6 information should be attached. However the latest member benefit statement will suffice in most cases where this is not available.

The report costs a fixed $385 including GST, no matter how complex the situation is. Please feel welcome to include both parties superannuation interests if this is appropriate.

Reference

CCH publishes a comprehensive reference guide to this area called "super splitting on marriage breakdown".

The Family Law Legislation Amendment (Superannuation) Act 2001 can be found at:

http://scaleplus.law.gov.au/html/comact/11/6350/top.htm

The Family Law (Superannuation) Regulations 2001 (FL Super Regulations) - which set out the methods of valuing superannuation interests, the way in which the payment split is to be put into effect and also the information that the trustees have to provide can be found at:

http://scaleplus.law.gov.au/html/pastereg/3/1707/top.htm

The Attorney-General's Department also published some basic information about superannuation and family law. It includes Frequently Asked Questions and Valuation examples. The web site can be found at:

http://www.ag.gov.au

The property settlement regime of the Family Law Act is explained on the Family Law Court's website at:

http://www.familycourt.gov.au

This also includes the information request forms.