There is still considerable general misunderstanding about many aspects of the superannuation amendments to the Family Law Act 1975 and other relevant legislation. The amendments apply from December 28, 2002 and contrary to popular misconception, are not retrospective.
Under the old regime, and dependent upon the content of any legal advice obtained, trustees typically concluded that while they would note on the member’s file the Family Court Order or agreement purporting to bind the trustee, at the end of the day it was the member, and not the trustee, who was ultimately responsible for carrying out the order of the court. Members were also notified that they were required to authorise the trustee to take any requisite actions. Trustees experienced cases of members trying to wriggle out of their agreements or orders. Trustees then had to deal with conflicts of interest issues, breaches of confidence and privacy issues, as well with the risk of being found to collude with a member in seeking to avoid the order of the court.
The new rules, which don’t apply to de facto partners or same sex couples, reverse this situation and impose onerous duties on trustees and members. They dictate every step that must be taken when a super split is the intention of the parties or the court.
A party to a marriage does not have to be divorced in order to file an application for a Family Law Act (FLA) property settlement. This can be done by agreement or by court order at any time after the marriage breaks down or when the parties are planning to separate. However, if parties are divorced and they wish to start proceedings for property settlement in the court, the FLA imposes a 12 month limitation period from the date of the decree nisi of dissolution of marriage becoming absolute. Exceptions to this rule can apply and an application can be made to the court for an order extending the limitation period in special circumstances.
If the parties proceed to litigation, the Family Law Court process is such that it encourages parties to “settle”. This means that the trustee could be served with “Consent Orders” midway or towards the end of the process. If parties cannot agree on an outcome, then the court will determine their property issues for them (which now includes their super) and hand down “Final Orders” after its deliberation.
For many separating couples superannuation will be one asset amid the total “property” to a marriage so while there is extensive legislation covering the new regime it should be remembered that the new laws operate in the context of a much wider family law property division regime.
While the new superannuation laws allow married parties to make superannuation agreements that state how a superannuation interest is to be divided when the parties separate, it should be noted that ordinarily a superannuation agreement will typically take the form of a dedicated clause or clauses within a financial agreement (dealing with all of the property of the parties) under Part VIIIA of the FLA. The superannuation agreement section of the financial agreement will deal with superannuation interests of either or both of the parties to the agreement. It does not matter whether or not the superannuation interests are in existence at the time the agreement is made.
Implications for Employers
In administering the new laws, employers and trustees alike need to ensure that they prevent exposures relating to breaches of confidentiality and privacy. The first port of call for requests for information may well be the Human Resource section of a company. All employers should consider providing their HR functionaries with full training on the new laws.
Special emphasis should be placed on the need to immediately refer inquiries to the inquiries officer of the relevant super fund and to stress the need to maintain absolute confidentiality of both parties’ requests for information and of their personal details, such as addresses. Significant penalties exist for trustees that reveal to a member spouse that a non-member spouse has made an inquiry or if a member’s address is given to an inquiring non-member spouse. Equally, in the hands of an HR division of a company, breaches of these rules could lead to significant exposures for breach of confidentiality and privacy. Of critical importance, especially given that an employee may have access to his or her file in certain circumstances, is that no record of a non-member spouse’s inquiry be recorded on the member spouse’s personnel file. If both parties work for the same organisation, one cannot access the other’s superannuation information.
Marie Sullivan is the principal of Marie Sullivan Consulting.
