Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2009

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Legislation au F2009L02414 In force Legislative Instrument

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EXPLANATORY STATEMENT

 

FAMILY LAW (SUPERANNUATION) (INTEREST RATE FOR ADJUSTMENT PERIOD) DETERMINATION 2009

 

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 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 0.082 where the adjustment period is the financial year beginning on 1 July 2009.  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 2009 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 2009/2010 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 2009 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 2008/2009 financial year and ends in the 2009/2010 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 2008/2009 financial year and ends in the 2009/2010 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 time earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the February 2008 quarter; and
  • a rate that is 2.5 percentage points above the percentage change in the original estimate of full-time adult ordinary time earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the February 2009 quarter.

In November 2008, the Australian Bureau of Statistics released revised estimates of average weekly earnings.  The retrospective revisions affected the original estimate average weekly earnings series which are used in calculating the interest rates for family law purposes.  In particular, the annual percentage change in full-time adult ordinary time earnings to February 2008 was increased from 4.8 to 5.2.  This revision would potentially affect both the 2008 and 2009 Determinations.  Given the administrative cost and confusion that a retrospective adjustment to the 2008 Determination would cause, there is no intention to revise the interest rate determined for the 2008-09 financial year.

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 2009 was enacted to provide clarity and consistency in the adjustment of entitlements of divorced or separated spouses under certain orders or agreements splitting future superannuation benefits in property settlements under the Family Law Act 1975. This legislation, issued by authority of the Australian Government Actuary, addresses the need to specify the interest rates and calculation methods for adjusting base amounts in defined benefit superannuation interests or self-managed superannuation funds as required by regulation 45D of the Family Law (Superannuation) Regulations 2001. The determinations aim to mitigate confusion and administrative costs by setting specific rates and methods based on changes in full-time adult ordinary times earnings, as reported by the Australian Bureau of Statistics. The objective is to ensure equitable treatment of entitlements in the context of evolving economic conditions.

Scope and Application

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2009 applies to orders or agreements that involve the splitting of future superannuation benefits, specifically those pertaining to defined benefit superannuation interests or interests in self-managed superannuation funds, under the Family Law Act 1975. These orders and agreements are typically made in the context of property settlements during divorce or separation. The determinations made by the Australian Government Actuary under the Family Law (Superannuation) Regulations 2001, specify the interest rates to be used for adjusting the base amounts allocated to these superannuation interests over various periods. The Act applies nationally across Australia, as it pertains to the regulation of superannuation under Commonwealth law, though it operates in conjunction with state and territory laws in the context of family law matters. The Act does not explicitly state any exclusions or exemptions, but its application is inherently limited to the types of superannuation interests and the circumstances described. The methods for calculating interest rates may be further refined or specified through subordinate instruments, though the current Determinations detail specific rates and methods for particular financial years.

Key Provisions

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2009, issued under the authority of the Australian Government Actuary, primarily addresses the adjustment of entitlements of divorced or separated spouses in property settlements involving future superannuation benefits. This instrument makes determinations pursuant to regulation 45D of the Family Law (Superannuation) Regulations 2001 (FLS Regulations) regarding the interest rates applicable to base amount splits of future superannuation benefits. A base amount split involves setting a base amount, which is either allocated by the court or specified in the agreement, and then adjusting this amount annually until the superannuation benefits are paid or the superannuation interest is split. The entitlement of the non-member spouse is linked to the adjusted base amount at the time of these events. The Australian Government Actuary is mandated to determine the interest rates for these adjustments. For the financial year starting on 1 July 2009, the determined interest rate is 0.082, 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 2009 quarter. For shorter adjustment periods within the 2009/2010 financial year, the method of calculating the interest rate is also specified, with the rate again being 2.5 percentage points above the relevant earnings change. For adjustment periods spanning the 2008/2009 to 2009/2010 financial years, the interest rates are determined based on the percentage changes in full-time adult ordinary time earnings for the years ending with February 2008 and February 2009, plus 2.5 percentage points. The obligations imposed by this legislation primarily fall on the Australian Government Actuary, who must determine the interest rates for the adjustment periods as specified. These determinations must be made in accordance with the FLS Regulations and based on the changes in full-time adult ordinary times earnings as published by the Australian Bureau of Statistics. The Australian Government Actuary must also ensure that the methods for calculating these interest rates are clearly defined, particularly for periods that do not align with the standard financial year. There are no specific obligations or requirements imposed on the parties or entities governed by this Act beyond what is stipulated in the FLS Regulations. There are no explicit offences, penalties, or civil/criminal consequences mentioned for breaches of this Determination. However, non-compliance with the stipulated interest rate adjustments could potentially lead to disputes in property settlements, as the accuracy and timely application of these rates are crucial for the fair distribution of superannuation benefits. Any disputes arising from the application of these rates would likely be resolved within the context of family law proceedings, potentially involving the courts for interpretation or enforcement of the terms set out in the FLS Regulations.

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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.