Superannuation is the regular payment made into a fund by an employee towards a future pension. In Australia superannuation is compulsory, meaning that there is a minimum percentage of income which must go into a super fund. There are certain protections around spending the money in a super fund.
For many people, it is one of their most valuable assets, alongside the family home. However, many people do not consider their superannuation fund when separating from their partner or spouse.
In a family law property settlement, super is considered an asset, alongside other assets such as the car, home and bank accounts. It can thus be subject to a splitting Order, wherein each party will receive a part of the super fund. Parties may also agree not to split the super, and decide that the party who does not receive the super fund will receive more of the other assets.
Why is superannuation so important? Why can't the parties just keep the fund in their own name?
In many cases there is a great disparity between the super fund held by a female party and that held by a male party, with women generally holding less super. In 2015-16 the overall gender difference in superannuation balances was 3.8%. The average men's superannuation balance was nearly twice the size of an average woman's.
This disparity can happen for a multitude of reasons, such as:
- Women taking more time out of the workforce due to caring, household and parenting duties,
- Higher rates of part-time work amongst women,
- Women working in industries and in roles which, on average, earn less than men (e.g. administrative roles, community service and sales)
- Less women in senior and executive roles in the workforce.
This is particularly relevant, as life expectancy for women is generally longer and thus retirement savings must stretch over a longer period.
Therefore, while important for both parties, it is particularly important for women to consider super one of the matrimonial assets which should be considered when splitting the asset pool after separation.
If you would like to enquire about any of the issues raised above, please do not hesitate to contact Freedman and Gopalan by calling 8917 8700 or by filling out the enquiry box.