Limits On Ordering Super Cash Payout
Can a spouse be ordered by a court to make a cash payment out of their superannuation? As tempting as it may be in some circumstances, the answer is “no”, as a trial judge recently found out.
The Superannuation Industry (Supervision) Act governs the operation of superannuation funds in Australia and provides specific and detailed rules and regulations that superannuation funds must follow.
This legislation also governs the splitting of superannuation between spouses as part of property settlement agreements and gives certain powers to courts and individuals as to what the options are in relation to splitting superannuation.
When a property settlement (either by consent or court ordered) includes a superannuation split, superannuation must stay as superannuation and be transferred to the nominated superannuation account of that spouse.
A recent case before the Family Court looked at the powers of the court when making orders that affect superannuation. The parties reached agreement in June 2015 and signed consent orders which, amongst other things, provided for the husband to pay the wife $350,000.
The husband failed to make the payment in accordance with the orders and the wife brought enforcement proceedings before the court. As part of those proceedings, the wife sought orders that the trustee of the husband’s superannuation fund be required to pay to her nominated account the husband’s entitlement in the form of a ‘Transition to Retirement Income Stream’ until the $350,000 was paid to her.
The court made the orders sought by the wife and the husband appealed that decision. The appeal court found that the relevant legislative provisions restricted a member’s benefit from being cashed in favour of a third party. The court found that the orders made breached this regulation and the orders were set aside.
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