Superannuation and Divorce in Australia: An evaluation of post-reform practice and settlement outcomes

Abstract

This article presents the findings from a national survey of property distribution on separation and divorce. The aim of the study was to evaluate the impact on settlement behaviour of the Family Law Legislation Amendment (Superannuation) Act 2001 (Cth)(‘the Act’), which allows superannuation (i.e. pensions) to be shared between former spouses on divorce. The law was reformed to facilitate a fairer distribution of the husband's superannuation benefits to the wife following divorce. The Act had the potential to increase divorced women's ability to finance their own retirement, and resolve the procedural problems that had prevented the court from being able to create a separate interest for the non-superannuated spouse at the time of settlement. Whilst these objectives were clear, the Act's effect on the pre-existing discretionary system of allocating property on divorce was harder to predict because the Act provides no direct guidance as to whether, and in what proportion, superannuation should be shared. We hypothesized, on the basis of previous research, that various procedural, legislative and social factors may limit the impact of this reform on settlement outcomes. The survey findings indicate that an unexpectedly low proportion of former spouses split superannuation. However, the high proportion of former spouses taking superannuation into account when dividing matrimonial property has increased the pool of wealth available for division post-reform, and the overall share of property received by particular groups of women has changed as a consequence. The legal, social and economic factors that were related to the uptake of superannuation splitting are also discussed.