You and your ex-partner have reached an agreement. As part of that agreement, you have decided that their super fund will be ‘split’, meaning that you will receive a portion of their super as part of your settlement. So what actually happens with this transaction?
If you’re thinking that your ex-partner can withdraw from their super and pay you in cash, this is not the case. The transaction is still subject to superannuation laws, and ‘splitting’ super does not simply convert that into a cash asset. In stead, in most cases the agreed amount of super will be transferred from their fund to your fund, where it will usually remain until you reach retirement age.
‘Splitting’ super does not require you to split both parties superannuation accounts. For example, let’s say you have $50,000 in super and your ex has $100,000 in super. You have agreed to split super 50/50.
In this instance, it is not necessary for both parties to split both funds. You do not need to transfer your ex $25,000 from your fund at the same time that they transfer $50,000 from their fund (being 50% of each parties’ super). In this case, you only need to disturb one fund, being theirs. For example, they would transfer $25,000 of their super to your fund, giving each of you $75,000 overall in super. Each of you would continue to accumulate super, and would then each access your individual supers upon reaching retirement age.
The split occurs after you have entered a recognised agreement. You would not need to wait until each party retires to effect the split.
To give effect to this, there are many requirements and factors to consider as each case is different. You should therefore ensure that you have sought legal and financial advice before entering into any binding agreement.