January 13 2023

Divorce or separation and superannuation

Divorce or separation can take an emotional toll, but it can also have a big impact on your super and finances.
Divorced or separation and superannuation Divorced or separation and superannuation

Breaking up can be emotionally traumatic for many people. But it can also deliver a financial blow – probably the last thing you need when you’re going through a relationship breakdown. That’s why it’s important to understand the impact it can have on your finances and your ability to save for retirement.

Possible impact of divorce or separation on your finances

No two couples face the same financial challenges in a relationship breakdown. It can affect men and women in different ways. It can depend on how assets are divided and, if kids are involved, where the children will be living.

Individuals with dependent children are generally also more likely to be financially disadvantaged in a relationship breakdown. They face the extra challenge of balancing caring for the kids with keeping up their income. With less money in the household budget, growing their super can be a big challenge. This can have long-lasting effects on their retirement savings, especially for women who tend to carry the bulk of unpaid caring responsibilities, which can take years to build back up.  

What happens to super after divorce or separation?

Under family law, when a marriage or de facto relationship breaks down, super can be split under a superannuation agreement reached by the two people involved. If you can’t reach an agreement, the court can determine the settlement for you.

Before you decide what to do, consider getting legal advice. A lawyer can help you understand your rights and responsibilities and explain how the law applies to your case.

Super information

To find out how much super is available, you can request this information from your own or your partner’s super fund . This will help you work out whether you want to split the super you both have and, if so, how.

Similarly, your partner can ask your super fund for information about your super .

In addition, from 1 April 2022, parties going through certain current family law property proceedings can request this information through the Family Courts .

Details about how a party can apply for this information are available on the websites of the Federal Circuit and Family Court of Australia and the Family Court of Western Australia.

Super Splitting

Your super

If your super is being split, your partner will be asked where their part of your super should be paid.

Your partner’s super

If your partner’s super is split, you’ll have the following choices when the super becomes available:

  • transfer the money to your existing super account, or
  • take the super as cash if you’re eligible for a cash payment.

Some funds, such as Defined Benefit Funds, may be subject to different rules. It’s best if you check with your super fund to see what rules apply.

Things you can do after a divorce or separation

Going through a relationship breakdown can be mentally and emotionally taxing as it is. Sorting out the household finances and legalities, as well as adjusting to your new situation, can add to the struggle. Your finances are a significant part of that, so here are a few key things you can do to stay on top of it.

1. Assess your financial situation

The first step is to get a clear picture of your financial situation. Gather information about your financial situation, such as :

  • assets like property, bank accounts or super balances
  • debts like credit cards, mortgages or other loans
  • income like salary, government assistance or pensions (if applicable)
  • expenses like bills, recurring fees, groceries or other financial commitments
  • upcoming changes to your circumstances like employment status or any once-off expenses

2. Consider getting financial advice

Making important decisions can be overwhelming. A financial adviser can provide you with knowledge and guidance to help you feel more confident about the decisions you make. It’s important to be aware that financial advice which is more complex and takes into account your personal circumstances might involve a fee.

Amongst other things, you can ask financial advisers for advice about your super. They can:

  • discuss your options around splitting your assets (including super)
  • help you understand the impact on any future super contributions
  • advise on how best to handle any super payments you may receive

3. Get legal help

Consider getting legal advice. A lawyer can help you understand your rights and obligations resulting from any family law proceedings, including by representing you in court if necessary.

Want to learn more?