It is often a very difficult pill for clients to swallow when they receive legal advice in family law that their superannuation forms part of the net pool of assets to be shared between the parties to a relationship or marriage breakdown.
In the late 1980’s, the Federal Government legislated for superannuation to become part of most employment packages. It was a type of enforced saving to reduce the burden on the public purse when people hit retirement age. In a way, if it hadn’t been for this enforced saving, this money would have been a part of an employee’s regular pay packet.
Until the early 2000’s, it wasn’t possible to split superannuation. This meant that many “breadwinners” walked away with all of the superannuation, but no cash upfront to reestablish, and the “homemakers” had plenty of cash upfront to reestablish, but no retirement savings.
In the mid-2000’s the family law courts started to recognise that contributions that each party to a marriage or relationship made to each other’s and their own superannuation funds could and in some instances, should, be dealt with separately to all the other assets that the parties have.
There are two main types of superannuation funds: accumulation funds and defined benefit funds. There are less and less defined benefit funds around anymore. These were once referred to as “the golden handshake” funds and weren’t a simple accumulation of money, but rather, a complex formula based on years of service and other factors.
It is always important to make sure that a defined benefit superannuation fund is properly valued rather than a recent statement relied upon.
Legal advice about the application of family law to superannuation funds is really important, particularly if you are separating when one or both of you are of retirement age.
Freedom Law is here to help. Contact our head office at Maroochydore for an in person or online today for a consultation.