Superannuation Orders (By Courtesy of Stephen Bourke)

Superannuation orders (by courtesy of Stephen Bourke)

Precedent superannuation orders
The precedent orders and notes in this section “superannuation orders” have been supplied by courtesy of Stephen Bourke. Stephen was formerly the head of the Family Law Division of the Commonwealth Attorney-General’s Department and project leader on the amendments for superannuation and family law. He is now a director of the specialist legal practice, Certus Law, a practice that specialises in superannuation, trusts and estate planning. He also consults to other practitioners on superannuation and family law through the consulting practice, SuperSplitting.

Note – Simply add the applicable superannuation orders to your property orders.

Index of superannuation orders

Accumulation plan, growth phase: a split to retain non-member spouse interest (fixed amount) in same fund

Accumulation plan, growth phase: a split to enable rollover of fixed amount by non-member to another complying super fund

Accumulation plan, growth phase: a split to enable payment of lump sum to non-member (and release of member)

Defined benefit plan, growth phase: payment split calculated from amount, separate payments made to each party when payments made to member

Defined benefit plan, growth phase: a split to create a new interest (fixed amount) for non-member in same fund or rollover to another fund – if permitted by trust deed

Accumulation plan, growth phase: percentage split to retain non-member spouse interest in same fund

Accumulation plan, growth phase: percentage split to enable rollover of non-member spouse interest to another fund

Accumulation plan, growth phase: a split to enable a percentage to be paid to non-member in a lump sum (and release of member) (value at date of transfer)

Self-managed superannuation

Payment phase order (to split pension payments): account based (allocated) pension, type (a) (base amount) order

Payment phase order (to split pension payments): account based (allocated) pension, type (b) (percentage) order

Payment phase order (to split pension payments): defined benefit pension

Flagging orders

General notes on drafting

1. The splitting of superannuation occurs through the combined operation of two sets of laws. The first set of laws is, of course, the Family Law Act 1975. The second set of laws is the law governing the prudential regulation of superannuation, the Superannuation Industry (Supervision) Act 1993 and associated regulations as well as the governing rules of the superannuation trusts.

2. All splitting orders require provisions derived from the first set of laws, the Family Law Act 1975. These might be called the mandatory elements.

3. However, provisions in a splitting order relying on superannuation law are not mandatory but may be used depending on the type of superannuation involved. Trustees of superannuation in an accumulation plan are required to observe the operating standards of Part 7A of the Superannuation Industry (Supervision) Regulations 1994. Trustees of superannuation in a defined benefit plan are bound by the terms of the governing rules of the superannuation trust.

The mandatory elements – the Family Law Act requirements

1. The power of a court exercising jurisdiction under the Family Law Act 1975 in relation to superannuation is a power to split payments (s 90MS).

2. The court does not have the power to order the superannuation trustee to split the underlying superannuation interest. All splitting orders must therefore be made in accordance with that limitation on the court’s power (s 90MT).

3. The trustee of the superannuation plan is a third party to the marriage but is not bound by the terms of the payment splitting order unless the trustee has been accorded procedural fairness (s 90MZD).

4. The court may make one of three types of payment splitting orders (the first two will be the most frequently used):

(a) an order which allocates an amount (“the base amount”) – this may be referred to as a type (a) order because it is an order made in accordance with s 90MT(1)(a);

(b) an order which prescribes a percentage – this may be referred to as a type (b) order because it is an order made in accordance with s 90MT(1)(b);

(c) an order which prescribes a percentage for the percentage-only interests – this may be referred to as a type (c) order because it is an order made in accordance with s 90MT(1)(c). However, these orders will be quite rare as they would only apply to a few judicial, parliamentary and governors’ superannuation schemes.

5. The four required elements of a payment splitting order are as follows:

(a) Allocate the base amount or prescribe the percentage, depending on whether the order is a type (a) or a type (b) order;

(b) Order that the non-member spouse has an entitlement to be paid from payments made to the member spouse;

(i) calculate the entitlement of the non-member spouse in accordance with the Family Law (Superannuation) Regulations 2001;

(ii) pay that entitlement whenever the trustee makes a splittable payment (this is the part of the order that binds the trustee);

(iii) set the operative time.

The optional elements – superannuation law

1. Part 7A of the Superannuation Industry (Supervision) Regulations 1994 requires that trustees of superannuation in an accumulation plan must, upon service of a payment splitting order made under the Family Law Act, create a new interest for the non-member spouse (“the non-member spouse interest”).

2. The trustee is then required to give the non-member spouse three options in relation to that interest:

(a) Retain that new entitlement for the non-member spouse in that plan;

(b) Rollover or transfer the entitlement to another complying superannuation plan; or

(c) Pay the entitlement to the non-member spouse but only if the non-member spouse has met a superannuation condition of release.

3. Trustees of superannuation in a defined benefit plan are not governed by Part 7A of the Superannuation Industry (Supervision) Regulations but they are required to observe the governing rules of the superannuation trust. These rules may or may not have been amended to mirror the pathway under Part 7A of the Superannuation Industry (Supervision) Regulations for accumulation plans. It will depend on the particular superannuation plan in question.

4. There are optional elements that may be added to a super splitting order to cover the superannuation law elements in the splitting process. These optional clauses of an order would be in personam orders to define the pathway for a clean break using both family law and superannuation law.

5. However, care needs to be taken that the optional elements of the splitting order will bind only the parties to the marriage. The court cannot bind the third party trustee under Part 7A of the Superannuation Industry (Supervision) Regulations. The optional in personam clauses of the order would direct the parties to do things within the scope of the options under superannuation law such as exercise a request to rollover or transfer to another complying superannuation fund. Remember, the Court has no power under Part VIIIB of the Family Law Act to bind the superannuation trustee in this area.

6. Notations may also be made to a splitting order noting that the superannuation trustee will have additional obligations under:

(a) Part 7A of the Superannuation Industry (Supervision) Regulations (in the case of trustees of superannuation in an accumulation plan); or

(b) the governing rules of the superannuation trust (in the case of trustees of superannuation in a defined benefit plan and only if the rules of the plan have been amended).

Guide to these superannuation orders
The following precedents provide a guide for the most common types of splitting of superannuation – accumulation plans (about 50% of all superannuation), defined benefit plans (such as government schemes and large corporations) (about 20%) and self-managed superannuation funds (about 30%).
Select and download the set of orders you require from our online precedents. The field codes for your entry of applicable particulars are as follows:-
96 = base amount
97 = non-member spouse (or de facto partner)
98 = member spouse (or de facto partner)
99 = name of fund
101 = specified percentage

Accumulation plan, growth phase: a split to retain the non-member spouse interest (fixed amount) in same fund

1. That in accordance with Section 90MT(4) of the Family Law Act 1975, a base amount of $[`96`] is allocated to the [`97`] out of [`98`]'s interest in the [`99`] Superannuation Fund.

2. That, in accordance with Section 90MT(1)(a) of the Family Law Act 1975:

(a) [`97`] (or [`97`]'s administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and

(b) the entitlement of [`98`] in the [`99`] Superannuation Fund (or the entitlement of such other person who becomes entitled to receive a payment out of [`98`]'s superannuation interest) Note – this refers to the beneficiary of a deceased estate] is correspondingly reduced by force of this Order.

3. That the trustee of the [`99`] Superannuation Fund ("the trustee") shall do all such acts and things and sign all such documents as may be necessary to:

(a) calculate, in accordance with the requirements of the Family Law Act 1975 the entitlement awarded to the [`97`] in the immediately preceding clause of this Order; and

(b) pay the entitlement whenever the trustee makes a splittable payment from [`98`]'s interest in the [`99`] Superannuation Fund.

4. That this order has effect from the operative time and the operative time is [insert date of valuation].

5. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 ("the SIS Regulations"), the [`98`] shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the [`97`]’s request in accordance with the SIS Regulations, for the retention of the non-member spouse interest in the [`97`]'s name in the [`99`] Superannuation Fund.

6. That the Court notes:

(a) the value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and

(b) any payments from [`98`]'s superannuation interest in the [`99`] Superannuation Fund made after the trustee has created a new interest in the [`97`]'s name in the [`99`] Superannuation Fund are not splittable payments in accordance with the requirements of the Family Law (Superannuation) Regulations 2001.

Accumulation plan, growth phase: a split to enable rollover of fixed amount by non-member to another complying superannuation fund

1. That the Court allocates, as required by Section 90MT(4) of the Family Law Act 1975, a base amount of $[`96`] to the [`97`] out of [`98`]'s interest in the [`99`] Superannuation Fund.

2. That, in accordance with Section 90MT(1)(a) of the Family Law Act 1975:

3. That the trustee of the [`99`] Superannuation Fund ("the trustee") shall do all such acts and things and sign all such documents as may be necessary to:

(a) calculate, in accordance with the requirements of the Family Law Act 1975 the entitlement awarded to the [`97`] in the immediately preceding clause of this Order; and

(b) pay the entitlement whenever the trustee makes a splittable payment from [`98`]'s interest in the [`99`] Superannuation Fund.

4. That this order has effect from the operative time and the operative time is [insert date of valuation].

5. That, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 ("the SIS Regulations"), the [`98`] shall do all such things and sign all such documents as may be necessary, including but not limited to exercising the [`97`]’s request in accordance with the SIS Regulations, for the rollover or transfer of the non-member spouse interest to a complying superannuation fund of the [`97`]'s choosing in accordance with the SIS Regulations.

6. That the Court notes:

(a) the value of the non-member spouse interest is calculated in accordance with the SIS Regulations; and

Accumulation plan, growth phase: a split to enable payment of lump sum to non-member (and release of member)

1. That the Court allocates, as required by Section 90MT(4) of the Family Law Act 1975, a base amount of $[`96`] to the [`97`] out of [`98`]'s interest in the [`99`] Superannuation Fund.

2. That, in accordance with Section 90MT(1)(a) of the Family Law Act 1975:

3. That the trustee of the [`99`] Superannuation Fund ("the trustee") shall do all such acts and things and sign all such documents as may be necessary to:

(a) calculate, in accordance with the requirements of the Family Law Act 1975 the entitlement awarded to the [`97`] in the immediately preceding clause of this Order; and

(b) pay the entitlement whenever the trustee makes a splittable payment from [`98`]'s interest in the [`99`] Superannuation Fund.