Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2006

Administered by Attorney-General's Department

Legislation au F2006L01724 In force Legislative Instrument

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EXPLANATORY STATEMENT

 

FAMILY LAW (SUPERANNUATION) (INTEREST RATE FOR ADJUSTMENT PERIOD) DETERMINATION 2006

 

ISSUED BY AUTHORITY OF THE AUSTRALIAN GOVERNMENT ACTUARY

 

 

In this instrument the Australian Government Actuary makes a number of determinations under regulation 45D of the Family Law (Superannuation) Regulations 2001 (the FLS Regulations) relating to the adjustment of entitlements of divorced or separated spouses under certain orders or agreements splitting particular kinds of future superannuation benefits made in property settlements under the Family Law Act 1975 (the Act).

 

The determinations relate to orders or agreements providing for a base amount split of future superannuation benefits, one of two kinds of splits that can be made under the Act of most types of superannuation, payable in respect of a defined benefit superannuation interest or an interest in a self managed superannuation fund. 

 

Under a base amount split, a base amount is:

 

  • allocated by the court before making an order; or
  • specified in the agreement by the spouses;

and is then adjusted, on an annual basis (or for a part year, where necessary), until:

  • superannuation benefits are payable to the spouse – the member spouse – who has the superannuation interest; or
  • the member spouse’s interest is split, at some earlier time, under the Superannuation Industry (Supervision) Regulations 1994, the Retirement Savings Regulations 1997, or pursuant to the governing rules of the relevant superannuation fund or scheme in accordance with regulation 14G of the FLS Regulations. 

The entitlement of the spouse – the non-member spouse – for whose benefit the order or agreement has been made, when any of those events occurs, is linked to the adjusted base amount under the order or agreement at that time.

A defined benefit superannuation interest is one, essentially, where the benefits payable in respect of the interest are linked to the member’s period of membership and salary on cessation of membership of the fund or scheme in which the interest is held.

A self managed superannuation fund is a fund with fewer than 5 members that satisfies certain conditions under the Superannuation Industry (Supervision) Act 1993.

Where the interest that is subject to an order or agreement is a defined benefit superannuation interest or an interest in a self managed superannuation fund, regulation 45D of the FLS Regulations provides for the Australian Government Actuary to determine:

  • the interest rate for the adjustment of a base amount for any 12 month adjustment period that is a financial year (subregulation 45D(3));
  • the method by which the interest rate is to be calculated for any adjustment period that is less than 12 months that begins and ends within a financial year (subregulation 45D(4)); and
  • the method by which the interest rate is to be calculated for any adjustment period that begins in one financial year and ends in the following financial year (subregulation 45D(6)).

In paragraph (a) of the instrument, the Australian Government Actuary determines, under subregulation 45D(3) of the FLS Regulations, that the interest rate is 0.070 where the adjustment period is the financial year beginning on 1 July 2006.  This rate is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary times earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the February 2006 quarter.

In paragraph (b) and Schedule 1 of the instrument, the Australian Government Actuary determines, under subregulation 45D(4) of the FLS Regulations, the method for calculating the interest rate where the adjustment period is less than 12 months and begins and ends in the 2006/2007 financial year.  The method provides for the calculation of a rate by reference to a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary times earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the February 2006 quarter.

In paragraph (c) and Schedule 2 of the instrument, the Australian Government Actuary determines, under subregulation 45D(6) of the FLS Regulations, the method for calculating the interest rate where the adjustment period is exactly 12 months and begins in the 2005/2006 financial year and ends in the 2006/2007 financial year. 

In paragraph (d) and Schedule 3 of the instrument, the Australian Government Actuary determines, under subregulation 45D(6) of the FLS Regulations, the method for calculating the interest rate where the adjustment period is less than 12 months and begins in the 2005/2006 financial year and ends in the 2006/2007 financial year.

The methods determined under subregulation 45D(6) of the FLS Regulations provide for the calculation of rates by reference to the following rates:

  • a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary times earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the February 2005 quarter; and
  • a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary times earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the February 2006 quarter.

Consultation on the content of the instrument was undertaken under section 17 of the Legislative Instruments Act 2003 with the Attorney-General’s Department by way of exchange of correspondence and discussions.

 

Overview

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2006, issued under the authority of the Australian Government Actuary, addresses the need to regulate the interest rates applied to adjustments of entitlements in future superannuation benefits in property settlements under the Family Law Act 1975. This instrument was enacted to ensure that the adjustment of base amounts for divorced or separated spouses, particularly in relation to defined benefit superannuation interests or self-managed superannuation funds, is conducted in a fair and consistent manner. The Family Law (Superannuation) Regulations 2001 empower the Australian Government Actuary to determine these interest rates, with the objective of aligning them with economic indicators such as the percentage change in full-time adult ordinary times earnings in Australia. The determinations provide specific interest rates and methods for calculating these rates for various adjustment periods, ensuring that the adjustments reflect economic conditions accurately and transparently.

Scope and Application

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2006 applies to orders and agreements that pertain to the division of superannuation benefits in the context of property settlements under the Family Law Act 1975. This legislation specifically targets the calculation of interest rates for adjusting base amounts allocated to divorced or separated spouses under certain types of superannuation splits. It applies to both defined benefit superannuation interests and interests in self-managed superannuation funds, ensuring that these assets are fairly divided in accordance with the law. The regulation's application is national, falling under the jurisdiction of the Commonwealth and impacting the financial arrangements within family law matters across Australia. Notably, this Determination does not specify exclusions or thresholds but is subject to the broader parameters set by the Family Law (Superannuation) Regulations 2001 and related superannuation legislation. The Australian Government Actuary's determinations under this instrument provide a structured approach to calculating interest rates, ensuring consistency and fairness in the adjustment process.

Key Provisions

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2006 sets out specific interest rates and methods for adjusting base amounts in property settlements under the Family Law Act 1975. The Australian Government Actuary determines these rates under regulation 45D of the Family Law (Superannuation) Regulations 2001. For the financial year beginning 1 July 2006, the interest rate is set at 0.070, which is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary times earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the February 2006 quarter (paragraph (a)). For adjustment periods less than 12 months within the 2006/2007 financial year, the interest rate is calculated based on the same criteria, as detailed in paragraph (b) and Schedule 1. For periods exactly 12 months beginning in the 2005/2006 financial year and ending in the 2006/2007 financial year, the rates are determined by reference to the percentage change in full-time adult ordinary times earnings for the years ending with the February 2005 and February 2006 quarters (paragraph (c) and Schedule 2). For periods less than 12 months beginning in the 2005/2006 financial year and ending in the 2006/2007 financial year, the rates are similarly calculated as outlined in paragraph (d) and Schedule 3. The Act imposes specific obligations on the parties involved in property settlements under the Family Law Act 1975. Courts and spouses must adhere to the determined interest rates and calculation methods for adjusting base amounts of future superannuation benefits. Courts must allocate a base amount before making an order, while spouses must specify the base amount in their agreement. These adjustments must be made annually or for a part year as necessary, ensuring that the non-member spouse’s entitlement is linked to the adjusted base amount when benefits are payable or the interest is split. The obligation to comply with these provisions is paramount to ensure fair and accurate adjustments of entitlements. Breach of the provisions set out in this determination could lead to civil consequences for non-compliance. While the legislation does not explicitly state penalties, any deviation from the prescribed interest rates or calculation methods could result in disputes or legal challenges during property settlements. This could potentially lead to additional costs and delays in resolving the matter. Courts may also need to address any inaccuracies in the application of these provisions, which could further impact the involved parties. It is important for legal practitioners to ensure strict adherence to the specified rates and methods to avoid such outcomes.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.