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Separation and super splitting | A case study

Upon the breakdown of a marriage or partnership, couples come to an agreement about how their superannuation will be split. Separation and super splitting give regard to various contributions and trade offs made throughout the course of the relationship.

This case study provides an example of how super can be split. Consider these facts:

  • the wife joined the State Superannuation Scheme (SSS) in 1979
  • the parties commenced living together in 1999
  • the parties separated in 2019
  • both parties are retired
  • the net non-superannuation assets total $2m
  • the wife receives an SSS pension payment of $4,300 per fortnight (pf). The family law value of her SSS entitlement is $1.7m.

It is agreed that an equal division of the non-super assets is appropriate. Therefore, $1m each.

On these facts, regarding the separation and super splitting of the couple, the wife argues that as she has been in SSS for forty years, twenty years of which pre-date the relationship, she has made a greater contribution and therefore should receive a greater share of her SSS entitlement. The husband accepts this. After negotiations, they agree that the division of the wife’s super should be 57.5% to the wife and 42.5% to the husband. That means the husband getting a split of $722,500 (as he is unable to receive an SSS pension).

This arrangement will reduce the wife’s pension by 42.5%, from $4,300 pf to $2,472 pf. The wife wants some cash but also wants to preserve as much of her SSS pension as possible. As such, she decides to trade off $400,000 and receive $600,000 of the non-super assets (in lieu of $1m) in return for the super split to the husband being $322,500 (in lieu of $722,500). This is 18.97% of the value of her super, therefore her pension reduces to $3,484 pf.

If you need assistance on separation and super splitting, contact us on (02) 4929 3995.

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