skip to log on skip to main content
VoiceOver users please use the tab key when navigating expanded menus

How to handle super in a divorce


Published 03 July 2019

In the event of a divorce, how should you and your ex-partner’s super balances be split so you each get your fair share?

Breaking up is hard to do, and so too is deciding who gets what if you and your partner have decided to call time on your marriage or de facto relationship.

Superannuation is a major component of the shared property pool for many Australian couples. In fact, if one or both parties is a high-income earner or has spent a significant amount of time in the full-time workforce, its value may well exceed that of the marital home or other joint investments.

Let’s not stick together

There were 46,606 divorces granted in Australia in 2016, according to the Australian Bureau of Statistics’ report on Marriage and Divorces. The median duration of those marriages was 12 years, with the median age at time of divorce being 45.5 years for men and 42.9 years for women.

By this stage of life, superannuation balances can be sizeable. The average Australian male aged 45 to 49 had $145,076 in super in 2015–16, according to the Association of Superannuation Funds of Australia (ASFA), while women aged 40 to 44 had an average of $61,922.

Who gets what in the divorce?

When it comes to determining how divorcing couples should divide their assets, the courts generally take what’s termed a ‘two-pool approach’, according to family law specialist and Linden Legal principal Margaret Linden.

“One pool is the non-super assets, and the other is the super assets,” Linden explains, “and they’ll generally be split in the same proportions – whether that’s 50/50 or 60/40, or whatever is agreed on.

“Money is then transferred from one party’s super fund to the other, to make up the balance.”

Some couples opt for a one-pool approach, whereby all assets, including super, are tallied and then divvied up in whatever proportions the parties agree on. This can result in a situation where one person receives most or all of the equity in the family home while the other party retains the bulk of their shared super.

In such scenarios, says Linden, it’s typically women who seek a larger share of the non-super assets, particularly if there are dependent children in the mix.

“Usually they’re the ones with the lesser income, so cash now is far more important to them than super in 20 years’ time,” Linden explains. “Their immediate consideration tends to be housing their kids and getting through the next five or 10 years, until they’re off their hands.”

Conversely, some high-income earners have the cash flow to rehouse themselves and are happy to receive a lump-sum injection to their super fund, in lieu of more liquid assets.

A one-pool split essentially equates each dollar of super with one dollar of cash – an equation worth considering carefully depending on your specific circumstances, Linden points out.

“Depending on your age, it can be a good approach,” she says. “If you’re over 50 and nearing retirement, that’s fine. But if both parties are in their forties or younger, a dollar of cash is going to be more valuable than a dollar of super, unless there’s really serious money in the equation.

“If that’s not the case, then it’s unlikely either person will agree to take a lot of super, because the wait to access the funds is too long.”

Super splitting laws

Superannuation splitting laws introduced in 2001 made it possible for superannuation balances to be divided as part of family law property settlements.

If you don’t know how much your ex has amassed in super, you’re entitled to ask their fund’s trustee. You’ll be provided with their balance on an agreed date, and a valuation can be calculated based on this information.

You may then make a legal agreement, known as a superannuation agreement, about how any super either of you has will be divided between you. In order for this agreement to be binding, you need to provide evidence that you’ve both received independent legal advice prior to its signing.

Your super can be split by court order if you’re unable to come to agreement.

Sorting out your super split

So should you share the collective contents of your super accounts equally, hang onto your own contributions, or take a larger slice of the retirement pie and a lesser proportion of the family home and other assets?

There’s no one correct answer that suits everyone, according to RetireInvest planner John Walker. Respective ages, incomes and family situations all play a part in determining how couples should divvy up their retirement savings within a property settlement, so it’s a good idea to seek personalised advice.

“The idea is to take into account everyone’s circumstances from a practical point of view when you’re trying to determine an equitable split,” Walker says.

“Ideally, you’ll have a financial planner as well as a lawyer on your team. There can be real value in working with someone who’s competent and listens, but isn’t sucked into the emotionality of it all.

“Their role is to be a sounding board and to help you get to grips with your new circumstances, and [to] work out a plan to move forward financially once you’ve settled your affairs.”

To discuss your circumstances, contact your financial adviser.

Explore how Superannuation can work for you

What to read next

Article

Super is seriously tax-friendly

Super remains one of the most tax-effective ways to save for your retirement so it’s important to understand how you can best benefit from it.

  

Article

Don't let a career break hurt your superannuation

Planning some time out of the workforce? Here are some ways to make sure your super keeps growing when you're away from the workforce.

   

Article

Tips for managing your super throughout your life

Actively managing your super throughout your life is key to a comfortable retirement. Here are some of the most common considerations.

  

OnePath Custodians Pty Limited (OnePath Custodians) ABN 12 008 508 496, AFSL 238346, RSE L0000673 is the trustee of the Retirement Portfolio Service (ABN 61 808 189 263, RSE R1000986) (Fund) and issuer of the interests in “ANZ Smart Choice Super”, a suite of products consisting of ANZ Smart Choice Super, ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees.

ANZ Smart Choice Super is issued by OnePath Custodians and distributed by Australia and New Zealand Banking Group Limited (ANZ) 11 005 357 522. ANZ is an authorised deposit taking institution (Bank) under the Banking Act 1959 (Cth). OnePath Custodians is the issuer of this product but is not a Bank. Except as described in the relevant Product Disclosure Statement, the obligations of OnePath Custodians are not deposits or liabilities of ANZ or its related group companies. None of them stands behind or guarantees the issuer or the capital or performance of any investment. Such investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. Returns can go up and down. Past performance is not indicative of future performance.

This information is subject to change. You should read the relevant Financial Services Guide (FSG), PDS, product and other updates (for open and closed products) available at ANZ.com.au/super and consider whether the product is right for you before making a decision to acquire, or to continue to hold the product. Updated information will be available free of charge by calling Customer Services on 133 665.

Taxation law is complex and this information has been prepared as a guide only and does not represent tax advice. Please see your tax adviser for independent taxation advice.

The information on insurance cover is a summary only of the terms and conditions applying to the insurance cover. To the extent there is any inconsistency with the terms of the insurance cover provided by the insurer, the terms of the insurance policy will prevail.

The information provided is of a general nature and does not take into account your personal needs, financial circumstances or objectives. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances or objectives. The case studies used in this article are hypothetical and are not meant to illustrate the circumstances of any particular individual. Opinions expressed in this document are those of the authors only.

ANZ does not represent or guarantee that access to the ANZ Internet Banking or the ANZ App will be uninterrupted. Temporary service disruptions may occur. ANZ recommends that you read the ANZ App Terms and Conditions available at anz.com and consider if this service is appropriate to you prior to making a decision to acquire or use the ANZ App.

In addition to their salary, ANZ staff members may receive monetary or non-monetary benefits depending on the product they are selling or providing advice on.

Apple, the Apple logo, iPhone and iPad are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc.

You need Adobe Reader to view PDF files. You can download Adobe Reader free of charge.