What Happens to my Superannuation or Pension After Divorce/Separation?
When parties separate or divorce, a major consideration will be the division of assets. Many people who seek legal advice on property settlement issues after the breakdown of their relationship or marriage are often unaware that superannuation, retirement or pension funds, whether held in Australia or overseas, could be considered an asset and be subject to Australian splitting Orders or other types of splitting or sharing Orders obtained overseas.
Whether a Court treats a party’s super or pension interest as an asset within the pool of assets to be divided, or merely as a future financial resource of a party, will depend on the specific nature and characteristics of that interest, which can have a significant impact on a party’s Court proceedings or property settlement.
It is therefore imperative that you get the right legal and financial advice about aspects of a superannuation or pension interest you may have. Different considerations apply to interests that are accumulation funds or defined benefit funds; whether they are in the growth phase or pension phase; and the accessibility of those funds as a lump sum, partial lump sum, or as a pension.
Additional complications will arise if your interest is an overseas superannuation or pension fund such as a fund held in the UK. These include looking at the appropriate valuation methods to be applied and the selection of a suitable expert; the treatment of tax in potentially two different countries; the particular rules of the fund; and the laws applicable to the fund in the other country that affect the implementation of any super splitting or pension sharing arrangement; or perhaps canvassing the possibility of transferring the interest (from say the UK) to Australia.
By way of example, careful consideration must be had to obtaining the right expert advice for English and UK citizens and expatriates living in Australia who have English pension funds and the manner in which English or UK pension sharing Orders may be obtained in Australia and implemented in the United Kingdom.
Some US retirement funds allow benefits to be accessed on bases other than in retirement, hardship or death. In that instance, the method of access and the resulting double taxation consequences and existing international treaties between the US and Australia needs careful consideration.
If you have superannuation or pension interests in Australia or overseas and would like further advice, please contact us.