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The big super split
It's only been 10 years since the Family Law Act was amended to provide
for the splitting of super upon the breakdown of a marriage.
And it's only been four years since the law was further amended to provide for the splitting of super in most Australian states upon the breakdown of a de facto relationship.
Since these amendments, superannuation is treated as property which can be divided between separated couples as part of their property settlements.
Super News Alert, published by Thomson Reuters, reported late last week the passing of amendments providing a method for the valuation of defined-benefit superannuation interests held in the Judges' Pension Act Scheme and the Governors-General Pension Scheme following the breakdown of relationships.
Obviously, the latest amendments will have possible implications for very few people. However, these changes serve as a reminder of the significance of Australia's super-splitting provisions.
And that significance of super splitting is increasing as the value of superannuation dollars grows and as waves of baby boomers near or enter retirement.
As Smart Investing discussed last month in Love, money and relationship breakdowns (see below), ABS research on marriage and divorce rates suggests that more than 40 per cent of marriages are going to end in divorce. And that's not counting failed de facto relationships.
Publications from the Australian Prudential Regulation Authority - a special issue of Insight magazine and Statistics - quarterly superannuation performance - show that total super fund assets have multiplied almost three times since the introduction of super splitting a decade ago.
The point has been reached where the value of some couples' combined super savings exceeds the value of their family homes.
By Robin Bowerman Smart Investing Principal & Head of Retail, Vanguard Investments Australia9 18th March 2013
