S is for Superannuation – A-Z of Family Law

Superannuation, ever relevant since compulsory super laws were brought into effect, is a unique part of a property settlement which can oftentimes be simple and looked over, but can be very important and an area for significant dispute.

One such way is in how the Court deals with super versus non-super assets. The global approach can be used, with the judge then considering how best each party should retain their entitlements within that approach. Alternatively, a two-pool approach can be used, where differing assessments are applied to the super and non- super assets.

The method of accumulating super is also a notable topic, given that super will typically be built as a result of super guarantee contributions from a person’s employer. However, often, one party to the proceedings took on the role of being the primary carer to children; invariably, though not always, this party is the children’s mother. As a result, at the time of the property settlement, there can be a significant discrepancy between the parties’ super funds.

For parties separating in their 30’s versus those separating in their 50’s, super is likely to take on a much different meaning. Younger parties who have more super than their ex-spouse may be much more willing to part with their super as they would prefer keeping more cash, and vice versa. On the other hand, older parties may be able to consider their super to be analogous to cash.

Having said this, “the trial Judge has a discretion as to how superannuation interests will be treated in a particular case” (Coghlan & Coghlan [2005] FamCA 429 at [65]). The Court retains this discretion, and the unique facts of each case will determine different outcomes.

The Division Two proceedings of Radcliffe & Marsters [2023] FedCFamC2F 611 in the Federal Circuit and Family Court of Australia, a decision of Judge Turnbull, is an example of a case which involved commentary on super and how it should be treated. Whilst the decision is not particularly noteworthy in and of itself, it is a guide on how super may be assessed.

In this case:

• The parties’ had $238,482 of super. The applicant held $190,670, and the Respondent $47,812.
• The respondent wanted, however, to retain the family home but was unsure if he could refinance the mortgage and pay out the applicant. His position was therefore that the applicant would retain 100% of the super pool.
• The applicant naturally opposed the respondent’s position, submitting that she should not be prejudiced by receiving the majority of her entitlement by way of an asset that was inaccessible for several years at least. The family home would need to be sold.

Unsurprisingly, Judge Turnbull agreed with the applicant’s position that the respondent’s position would not be followed. There was no sound basis for the applicant having to wait to access the funds. Notable, but likely not determinative, was the fact that the respondent had not provided evidence of any ability to refinance the mortgage on the family home, even if successful in relation to the super.

The Court considered that a two-pool approach was the most appropriate for the matter and proceeded to assess the super assets in accordance with sections 79(4) and 75(2) of the Act. In determining that the super asset should be equalized, Judge Turnbull noted that:

• Both parties came into the relation with some super, though the applicant had a higher balance
• The applicant made higher contributions to the super assets during the relationship and post-separation, by virtue of her super guarantee contributions
• On the same hand, however, the respondent was less likely to experience an ongoing increase in his super as he did not receive ongoing super guarantee contributions

When super is listed on the balance sheet of a property settlement:

1. There is no default method of treatment, be this the global approach, a two-pool approach, or simply equalizing the interests.

2. Judicial discretion is key.

3. The Court is very unlikely to make decisions which significantly financially prejudice one of the parties, unless there is a compelling basis.