Many defined benefit funds such as PSS, CSS, Military Super, UniSuper etc. are required to provide information for matrimonial property settlements, but don’t offer a valuation service. QSuper will provide the value for a standard defined benefit member, but present it in such a manner that the lawyer is left wondering if it is the correct value.
QSuper does not use the standard family law methods and factors for valuing defined benefit entitlements. It is quite a generous scheme and one of the features is that defined benefit members can swap across to an accumulation category. Consequently, they applied to the Attorney General and had a special method approved. This can be found in the legislative instrument The Family Law (Superannuation) (Methods and Factors for valuing particular superannuation interests) Approval 2003 Part 1, Item 2, Item 1. In a nutshell, this says the value to be used is that amount which would be credited as a start to an accumulation account had the member requested a change in category.
For a member older than age 55, this would be salary for superannuation purposes times the accrued benefit multiple. When the member is younger than 55, there is some discounting. The benefit has the employee contribution account separated and the residual employer financial amount has a discount factor applied. The discount formula applied to the salary times accrued multiple is [1/1.0288 ^ (55 – Member Age)].
QSuper will implement a Court Order or agreement on a clean break basis. They will open an Accumulation Account for the former spouse that allows a variety of investment options. The former spouse also has the option to rollout the amount to another complying superannuation fund. The member’s benefits are proportionally reduced in the defined benefit category by the amount allocated to the former spouse.
If you have any questions about the value of defined benefit entitlements for family law purposes, please don’t hesitate to contact us.