Superannuation splitting is a major pain point within the divorce sector. While most joint assets are straightforward, because super is held in a trust, it can be trickier to navigate.

In Australia, the current process is overly bureaucratic and lacks uniformity across superannuation funds, which can lead to unnecessary delays and costs for separating couples. Add in issues around family violence and the gender pay lens, and the facts are undeniable: super splitting is a practice rife with challenges that can impact people long-term, especially women.

This presents an opportunity to review how the super sector is managing its corporate social responsibility (CSR) and environmental and social governance (ESG) goals and delivering on their mandates to protect the future wealth of everyone upon retirement.

In this article, we will delve into the intricacies of the super splitting process, explore the challenges faced by clients and lawyers, and determine potential solutions to streamline and improve the system.

What is super splitting?

Super splitting is the practice of dividing up superannuation assets upon the breakdown of a marriage or de facto relationship. While not mandatory, it is recognised as an equitable way of dividing assets, especially when one person in a partnership has accrued substantially less super than the other due to the gender pay gap, caretaking responsibilities, or other social factors.

It’s important to note that super splitting does not convert the gained superannuation to a cash asset – it is still subject to the same laws that govern all superannuation, including the age and circumstances under which it can be accessed.

What is the standard practice for super splitting?

The standard practice for super splitting involves several steps:

Step 1 – Agreement formation: The separating couple agrees on the superannuation split through DIY arrangements, mediation, or independent legal advice.

Step 2 – Engagement of a lawyer: The client engages a lawyer to formalise the agreement in writing.

Step 3 – Procedural fairness: The lawyer writes to the super fund, providing a copy of the agreement and seeking procedural fairness.

Step 4 – Issue of a court order: If the court considers the agreement as a whole (including the superannuation split) is just and equitable, the order will be issued.

Step 5 – Paperwork sent to the super fund: After the court order is issued, release forms and a copy of the court order must be signed and certified and provided to the superannuation fund.

Step 6 – Release of funds: The super fund can then transfer the funds to the relevant party or parties.

This is a 90-day process from start to finish at best, but in many cases, can become lengthier.

What are the inefficiencies in the current superannuation splitting process?

The current super splitting process is full of inefficiencies – here is a snapshot of the most pressing issues.

No standardisation across super funds

Currently, the forms used to approve and process super splitting orders vary greatly from fund to fund. This leads to a high initial rejection rate, wherein only 30% of initial drafts are accepted – the remainder of the time, the super fund will write back with amendments to the order.

Each super fund also has its own preferences and nuances in drafting and processes, which can lead to further delays and confusion.

Significant time outlay

Super funds have 28 days to respond to lawyers when the order is first presented. If amendments to the order are required, the lawyers must then resubmit the order, giving the super fund another 28 days to respond. This can become a roundabout, time-consuming process.

Additional legal fees

This back and forth of paperwork almost always results in higher legal fees for clients. Current super fund processes are costing our society an unfathomable $126,000 per separation due to outdated and slow processing delays.

Stress on separating couples

The inefficiencies and additional costs of this process can exacerbate the already-present stress and emotional fragility that comes with separation.

Out-of-date granularities of the super splitting process

There are antiquated practices still enshrined by the superannuation industry, and as a result, the super splitting process. For instance, superannuation funds require wet (physical) signatures on the paperwork, which is out of step with the current movement towards online lodgements in other areas of law and financial documentation.

Oftentimes, super funds require electronically issued court orders to be certified by a solicitor, Justice of the Peace (JP), or Commissioner for Declarations (CDec). Simply put, it is perplexing to provide a copy of an original when there is no physical original in question.

Lastly, super funds often request specific wording changes that do not impact the legalities of an agreement. For instance, changes like this one can and have caused unnecessary delays: “[client name], The Trustee” to “The Trustee, [client name]”.

Family lawyer Jill Johnstone from The Law People puts it best: “The current process could be faster and more uniform across each individual fund,” she says. “It feels like we’re stuck sending faxes when we now have smartphones and there is an abundance of technology we could be using [to improve the super splitting process].”

Inconsistent internal processes

Internally regulated processes mean that even lawyers with good connections with super funds face difficulties due to frequent changes in account managers and internal procedures.

Complications with military pensions and defined benefits

Defence pensions, considered ‘defined benefits’, require formal valuation by experts. There are only two known experts in this field in Australia, which adds another layer of complexity to the already complex super splitting process for military personnel.

Procedural fairness

Technically, the super amount belongs to the Trust (the super fund) until it is accessible by the recipient at age 65. Therefore, the super fund is included as a party to the proceedings and must permit the funds to be transferred.

What happens if people choose not to engage a lawyer in their separation?

If people DIY their divorce without a lawyer, they instantly forgo their right to a portion of their partner’s superannuation. Research from The Separation Guide shows as many as 67% of people will attempt a DIY divorce, often due to the fear of high legal costs, escalating tensions, and time delays – which means over 67% of people are losing out on their right to split the second-largest asset in their asset pool, after property. This can expose them to long-term issues impacting their ability to create and maintain future wealth.

Another significant ramification of not super splitting is the status of your superannuation when you die. If the affected person dies before their former spouse, it’s likely their superannuation will be left to that former spouse in the absence of a will.

The impact of our current super splitting process on women and marginalised people

The Separation Guide is concerned with how many women unknowingly pass up this major asset when deciding not to get legal advice during their separation.

Every day of delay during a separation will create a ripple effect estimated to equate to over $1,400 per day in societal impact. This covers downstream issues caused by the separation process, including higher rates of poor mental and physical health, productivity loss, absenteeism and attrition from employment, higher rates of addiction, impacts on children, family violence, poverty, homelessness, and suicide.

Angela Harbinson, CEO and Founder of The Separation Guide, says, “Separation is rarely simple or easy. With the high rate of women opting out of the often conflict-fueled family law system, we are creating a broader societal issue that further exacerbates the gender super gap.

“When women choose not to engage with the law during their separation, or have the perception that it is cost-prohibitive for them to access legal advice, they forgo their right to equalise the marital super balance pool.

“This can have a costly ripple effect later in life, one far greater than the cost of paying a lawyer to formalise the documents at the time,” Ms Harbison says.

Long-term solutions to super splitting inefficiencies

There are several ways to address issues within the super splitting process, but two stand out as strong long-term solutions.

Introducing unified forms across super funds

A single form accepted by all super funds as acknowledgment of procedural fairness, similar to the consent order form application, would greatly simplify the super splitting process.

Reducing timelines

Implementing shorter response times to expedite the process could remove the stress – both emotional and financial – from super splitting.

How the super industry can amend super splitting processes to support gender equality

“The super industry has an opportunity to make a few small changes to their processes that could significantly help those experiencing relationship breakdowns and positively impact the long-term health and wealth of women,” Ms Harbison says.

“If the super sector is serious about balancing the gender super gap, there are immediate steps that we can take right away and people are crying out for support.”

The Separation Guide has identified three key changes super funds can make to positively impact the super splitting process.

Providing members with education, support, and resources

As we’ve identified, many women are unaware of the significant financial impact of not super splitting. Women have the right to know that their super and their partner’s super are both part of the relationship asset pool, and to understand how they can quickly and easily separate it.

By offering education, support and resources throughout the separation process, including actionable tips and advice on separating super, funds can enable a smoother separation process and minimise potential fallout.

Working collectively with the super industry to standardise super splitting forms

Delays and costs incurred by lengthy documentation processing are a huge part of the problem with super splitting. Super funds can work together to create a standardised super splitting form to mitigate these knock-on effects.

Sharing The Separation Guide resources with members

The Separation Guide provides easy-to-digest advice to help people take the stress out of separating. By offering The Separation Guide resources and Q&A opportunities up front, super funds can manage the legwork they need to do to educate their members on the super splitting process.

It’s clear the current super splitting process is outdated and inefficient, and causes significant distress and financial burdens for separating couples. Collectively, these inefficiencies have exacerbated our existing gender pay gap and contributed to less-than-equitable outcomes for women post-divorce, which run the gamut from minor financial setbacks to grave long-term consequences like poverty and homelessness.

By implementing a unified approach and reducing response times, the superannuation sector could streamline the super splitting process and provide financial security for more women. In a time of great digital transformation, this should be an item on every super fund’s agenda and a major ESG issue to address in the fund’s strategic objectives.

“This simple change could enable women to fairly split their superannuation, making the difference between poverty and financial security,” Ms Harbison says.

“This is a chance for super funds to unite and make a real difference by giving their members access to funded support services.”

The Separation Guide is an independent guide to separation and divorce in Australia, providing resources and assets to empower people to smoothly navigate these often-complex processes. Learn more about The Separation Guide at theseparationguide.com.au. 

When a couple separates or divorces, they must split their assets – but superannuation, the second-most valuable asset in this pool, is almost always poorly divided or overlooked entirely.

This is because of the ‘gender superannuation gap’, a phenomenon born from our global gender pay disparity that sees women less educated and equipped to pursue an equitable split of the asset they are rightly entitled to a portion of.

Sadly, the consequences of this are far from harmless – not only does the gender super gap create short-term financial issues for women post-divorce, but these can spiral into much larger repercussions, including increased susceptibility to family violence, homelessness, and long-term poverty.

So, what can we do about levelling the playing field, and addressing the major societal fallouts of financial inequity in the process?

The gender superannuation gap and separation

Australia’s gender pay issue means women are retiring with up to 25% less money in superannuation than men, according to a report from The Association of Superannuation Funds of Australia (ASFA) in 2023.

But, for the almost one-half of our population who will experience separation or divorce in their lifetime, the financial consequences are even more dire. Women retiring now who separated from their spouses prior to 2002, when superannuation was made part of the shared asset pool, have a staggering 113% less superannuation at retirement compared to divorced men.

Why does the gender super gap exist?

The gender superannuation disparity exists for one major reason: the current divorce system is geared in favour of men and against women. The factors that limit women from pursuing an equitable split of their own and their former partner’s superannuation include:

Lack of superannuation education

Although superannuation is classed as a shared asset in a partnership, this doesn’t mean that women are any more educated about how to access it, or even that they have the right to do so. Many women don’t know about super splitting, and if they do, there are very few resources available to help them smoothly and quickly navigate this process.

The burdens of separation imposed on women

Social factors, such as the mental load, financial burdens, and the inherent caregiving responsibilities placed on women make pursuing legal proceedings in the wake of separation a tough task. A survey of 568 people conducted by The Separation Guide revealed that 48% of women have experienced high-conflict or unfair separations.

“Women are stepping away from conflict and in the process are not getting access to advice, and that is costing them,” says Angela Harbinson, CEO and Founder of The Separation Guide.

“Anecdotally, we find many women fear the cost and emotional toll of fighting for their fair share of their partner’s super, as they are scared the costs of conflict will negate the benefit received.”

“With limited access to funds, women are vulnerable and fearful about their short-term security, which can make them feel paralysed to move forward and pay for advice,” she says.

This trend of leaning away from legal advice has costly consequences for women’s long-term financial security, which then can spiral into endless social repercussions.

Inefficiencies in the super splitting process

The current process for splitting one’s superannuation during a separation is slow, costly, and cumbersome, and has led to women turning away from their right to financial equity.

You can read more about the roadblocks imposed by Australia’s error-fraught superannuation splitting system here.

The link between the gender super gap and family violence

The current superannuation and super splitting systems contribute to a higher risk of financial disadvantage amongst women, which in turn, feeds homelessness, financial abuse, and critically, family violence.

Australia’s gender-based violence and financial abuse epidemics

An already prominent issue in Australian society – over 50 women have been killed from violence in Australia in 2024 to date – domestic and family violence is further exacerbated by financial instability, and becomes harder to navigate the less capital a woman has access to.

Data from The Separation Guide shows that of 32,000 people who completed an online educational Q&A about finance and family violence, 41% of those who identified as female were not confident their partner was being open and honest about their financial affairs.

A further 42% of the people who responded as such requested further information about family violence from the service. This effectively categorises them as at risk of potential financial abuse.

Where superannuation comes in

By being so difficult to understand and access, the current superannuation and super splitting systems do nothing to mitigate gender-based violence. If women don’t have the financial resources, time, or education to pursue an equitable separation of super following a relationship breakdown, they put themselves on the back foot and impact all of their future financial endeavours.

“Women are often more concerned about short-term needs like putting a roof over their head, feeding their children and protecting their safety,” says Ms Harbison. “This means their long-term needs, like growing their super balances, are overlooked.”

By not protecting these long-term needs, women are more likely to slide into poverty, which then can provoke the myriad social consequences of financial insecurity that we have explored.

Addressing the gender-based issues caused by superannuation inequities

It’s clear that we must pursue structural change to financial systems in Australia, both pertaining to superannuation and more broadly, to supporting victims of gender-based violence.

A new Government funding package to prevent violence

On Friday, 6 September 2024, Prime Minister Anthony Albanese announced that the National Cabinet had agreed upon a comprehensive $4.7 billion package to prevent family violence and support essential legal services.

Specifically, this package will fund:

• Much-needed support for front-line specialist and legal services addressing gender-based violence
• Innovative approaches to identifying and responding to high-risk perpetrators to curb the escalation of violence
• Research into the role that systems and harmful industries play in exacerbating violence

How The Separation Guide is supporting the Government’s plans

In light of this package from the Federal Government, The Separation Guide is proposing a complementary low-cost solution, backed by public and private investment, to combat the dual issue of gendered financial inequality and rising rates of gender-based violence.

The Separation Guide’s proposed platform will serve as a central place for people navigating separation, particularly those experiencing financial challenges and family violence, to receive subsidised support from lawyers and financial professionals. It will directly benefit them by connecting them to private and public funding to pursue equitable financial outcomes.

Ms Harbison suggests that what sets The Separation Guide’s solution apart is how cost-effective it is in the grand scheme of the multi-billion-dollar divorce industry.

“Every separation costs our society $868,792, which equates to $1,400 per day – yet our solution at The Separation Guide costs a mere $6.60 per day,” she says.

To make this new platform a reality, The Separation Guide has partnered with providers like Law in Check, which monitors and regulates fees charged by lawyers, and JustFund, a family law finance provider supporting women and victims of gender-based violence to secure funding for legal advice.

How the platform works

The platform generates a step-by-step plan personalised to an individual’s circumstances, with immediate, localised and holistic support across legal, financial, parenting, wellbeing, and property issues. It offers connections to relevant providers and subsidised advice on these matters and more.

“We can’t afford to wait for the Government to develop these support processes in 2025,” Ms Harbison says. “Our system is built and ready to deploy. It’s already triaged over 32,000 people and has resulted in positive outcomes like improved fairness and reduced fees and friction.”

The Separation Guide is calling upon groups such as Women in Super, health insurers and employers of choice to support this initiative. As a social enterprise, The Separation Guide has committed 10% of profits to digital transformation initiatives to streamline and improve separation and divorce outcomes for our community.

To find out more, get in touch with The Separation Guide today.

The stress of separation accompanies people to work, reducing employee wellbeing and leading to lost productivity. The Separation Guide is the starting point for better separation, making the process simpler, less costly and less stressful. As part of your Employee Assistance Program (EAP), it will improve employee wellbeing and increase EAP utilisation rates.

Employee wellbeing is a focus for most organisations, because happy employees are more likely to be productive employees. Employers are utilising a more proactive approach to employee wellbeing and taking more responsibility for the mental and physical health of their people as part of their broader employee health and safety programs. Employee Assistance Programs (EAPs) provide access to counselling services that are designed to improve the emotional, mental and general health of employees.

However, it is estimated that most EAPs have very low utilisation rates – often as little as 5%. There are many reasons for this, including:

• Lack of knowledge about the available services
• Stigma around seeking mental health support
• Not ready to talk to someone on the phone or in-person
• Issues of access to in-person services for remote and hybrid employees
• Concern about confidentiality of personal information
• Potential impact on career path for those using mental health services

Compounding this is a life event that causes a lot of stress and takes a large toll on mental health, but to date has not had adequate and easily accessible support services. Separation is considered the second most stressful life event after the death of a loved one. Separation and divorce are complicated, and they can have a high emotional and financial cost if not managed well.

And there are potential high costs to workplaces of separation and divorce, including lost productivity, absenteeism and even attrition.

Separation is the silent productivity killer lurking in most workplaces

It is likely that as many as 90% of separating employees suffer in silence, though they bring their stress to work every day, impacting their productivity and potentially causing disharmony in the workplace. More than 200,000 Australians separate each year, and on average it takes 619 days for a couple to complete their separation or divorce. That’s the better part of two years where an employee will be dealing with high stress and high stakes family and financial matters, and there is no way for them to switch that noise off when they come to work.

The cost of separation to employers

It is estimated that the cost of separation and divorce to Australian employers is on average $210,000 per separating employee per year. That translates to a staggering $35 billion per year across all Australian businesses. The stress of dealing with separation impacts employees ability to concentrate and make decisions at work and they need to take time off work to meet with professionals such as lawyers. The stress of separation even causes some employees to leave their jobs, incurring a high cost for employers to replace them.

How The Separation Guide helps separating employees

The Separation Guide is an independent guide to separation and divorce in Australia. It is a comprehensive online resource that supports people through their separation from start to finish, providing access to resources and services designed to reduce the time, cost and stress of separation.

Using a personalised approach that is tailored to the individual needs of separating people, The Separation Guide is designed to help them navigate a typically complex process in a self-paced, structured and guided way. This empowers separating people to feel more in control, giving them confidence to work towards an outcome that is beneficial to them, their ex-spouse and their children.

By simplifying the process and providing access to specialist professional financial, legal and emotional support as and when it is needed, The Separation Guide helps improve the mental fitness, resilience and overall wellbeing of people going through separation.

Download our new e-book, 7 Reasons to Add The Separation Guide to Your EAP to find out how offering access to this life-changing resource via your EAP can improve employee wellbeing and workplace performance.

Why de-escalation is the key to more productive separation

A poorly managed separation is destined to cost more in terms of time, money and stress. A ‘bad’ or acrimonious divorce can cost as much as $400,000 per person, more than three years of tension and untold stress for everyone involved. Poor communication and no access to support services for advice and guidance can cause conflict to escalate and set separating couples on an inevitable path towards court.

By contrast, people who use The Separation Guide can have a ‘good’ separation that reduces conflict, costs less than $10,000 per person and removes nearly six months of high stress. De-escalation is not only key for people separating, it is also proven to be the number one way to protect employers from severe productivity loss.

Better outcomes for employees, and their employers

The Separation Guide is a proven way for people to better manage the process of separation, and to reduce the financial, legal and emotional costs that can be incurred. We’ve helped almost half a million people
people reduce the cost, conflict and conclusion of separation, and more than 52% of these separations have ended in amicable outcomes.

Not only does this make a difference to employee wellbeing, but it also reduces the risks to employers and improves workplace wellbeing.

Strengthen your EAP with The Separation Guide

The Separation Guide is a valuable addition to any EAP. Not only will it improve employee wellbeing as part of a focus on employee health and safety, but it will promote a positive and cohesive workplace that will be appreciated by all employees. Promoting ‘whole of person’ wellbeing by adding The Separation Guide to your EAP will enhance employee loyalty and commitment to the organisation.

It will also help improve EAP utilisation rates – 83% of people who complete the Q&A on The Separation Guide website create a SupportHub account, and of those, 85% come back to the site weekly during their separation.

More than just access to mental health support to cope with the stress of separation, The Separation Guide is a comprehensive, step-by-step guide to help simplify the process of separation for people, empower them to manage their separation with confidence, and improve their overall wellbeing.

 

*Data from survey of 568 people that compared the outcomes for those who had used The Separation Guide and those who hadn’t.

Separation and divorce don’t just affect personal lives—they ripple through the workplace, impacting productivity, morale, and overall business health. Discover how these life events can cost employers millions and why proactive support is crucial.

Download The State of Separation Impact Report to gain deeper insights into the factors driving reduced productivity and increased absenteeism, and discover strategies to help your employees thrive, even during life’s most challenging moments.