Women going through acrimonious divorces are being forced to give up the retirement savings they are entitled to because the legal requirements to split super are “unnecessarily” difficult.
The problem has become so bad that industry fund HESTA has joined forces with advocates to push for change to the system.
“Dividing superannuation assets through the family law system is unnecessarily complex and often requires costly legal advice” HESTA chief executive Debby Blakey said.
“This results in many women, especially those from low-income households or who are most vulnerable, simply walking away from their rightful share of super assets.”
Many of those women are victims of domestic and financial abuse.
Research by Women’s Legal Service Victoria [WLSV] found that 87 per cent of a cohort of financially vulnerable women going through the court system had experienced family violence, and 84 per cent of those had experienced economic abuse.
Financially vulnerable women are often in a ‘Catch 22’ situation when going through divorce.
In many cases the only family asset to draw on is superannuation, but gaining access to that can be all but impossible for two reasons.
If partners do not cooperate it can be extremely hard for women to get details of where superannuation is held and how much is there.
“A major barrier is that women don’t know the names and balances of [former partners’ super funds],” said Mary Delahunty, impact chief with HESTA.
“If you don’t know where the balance is, you have to go to funds to find out and some charge for that.”
Once the location of funds is established there is an often complex process to split balances according to terms of a financial settlement.
“It can be a very onerous process because forms can be very complex. Each fund will have a different form and they may have to be lodged in different places,” Ms Delahunty said.
If there are more than one super accounts, the difficulty is magnified.
“There is no plain language and even for those of us who are in the superannuation industry it can be difficult to understand,” Ms Delahunty said.
Even a lawyer was moved to tears of frustration
“We came upon a woman crying in the Family Court registry and asked her what was wrong. She was a personal injuries lawyer whose partner had left her with three children and despite the fact that she was a trained professional she could not do the paperwork [to split super] so couldn’t navigate the process herself,” said Tania Clarke, WLSV policy adviser.
“The complexity means that people need help and that comes with a cost,” Ms Delahunty said.
The potential cost and difficulty means that for many women, gaining access to the super they are owed after a break-up becomes impossible.
In a case funded by WSLV, a woman was trying to gain access to $42,000 in super.
“We got pro-bono advice but worked out that had she had to pay for it the cost would have been 126 per cent of the superannuation balance,” Ms Clarke said.
“For many women superannuation is the only asset they can claim from their former partner, yet we know that they are walking away from accessing it because the super splitting system is just too costly and complex to navigate.”
Two necessary reforms
HESTA and WLSV are calling for two reforms to make the process of splitting superannuation balances easier.
The first would be to allow the Australian Taxation Office to give details of partners’ super accounts to aid financial settlements.
Secondly “we need all forms used to split super to be standardised and simplified and able to be lodged in the same place,” Ms Delahunty said.
That would make it possible for the process to be completed by the parties without the need for expensive advice.
“As much as possible keeping lawyers out of the process is what we are aiming at,” said Ms Clarke.
“Making access to superannuation splitting easier will mean a lesser financial and emotional burden on family violence survivors and less industry and court time wasted trying to process a superannuation split. It’s a win-win for all involved in the system.”
HESTA is working with the superannuation industry to develop a standard, industry-wide form.
But for that to be implemented, it would need the agreement of all fund trustees, the courts and those managing administrative processes.
Currently lawyers often decline to represent vulnerable women over superannuation splits because they fear they won’t get paid, Ms Clarke said.
Nicholes Family Law principal Sally Nicholes said simplification of paperwork and giving ATO powers to disclose super details “would be a terrific advance”.
The New Daily is owned by Industry Super Holdings