Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2020

Administered by Attorney-General's Department

Legislation au F2020L00627 In force Legislative Instrument

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EXPLANATORY STATEMENT

FAMILY LAW (SUPERANNUATION) (INTEREST RATE FOR ADJUSTMENT PERIOD) DETERMINATION 2020

ISSUED BY AUTHORITY OF THE AUSTRALIAN GOVERNMENT ACTUARY

  1.                 In this instrument the Australian Government Actuary made a number of determinations under regulation 45D of the Family Law (Superannuation) Regulations 2001 (FLS Regulations). The determinations relate to the adjustment of superannuation entitlements of separated and divorced spouses, and of separated de facto couples (except in Western Australia as at the date of the making of this instrument). The entitlements are provided under certain orders or agreements that split particular kinds of future superannuation benefits made in property settlements under the Family Law Act 1975 (Family Law 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 Family Law Act of most types of superannuation), payable in respect of a defined benefit superannuation interest or an interest in a self-managed superannuation fund.
  2.                 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 who has the superannuation interest (‘the member spouse’); 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.

3.                   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.

4.                   A defined benefit superannuation interest is one which satisfies the definition at regulation 5 of the FLS Regulations. It is typically one 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.

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

6.                   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)).

7.                   Consultation on the content of the instrument was undertaken under section 17 of the Legislation Act 2003 (LA) with the Attorney-General’s Department by way of exchange of correspondence and discussions.

8.                   The Determination commenced on 1 July 2020.

9.                   The Determination is a legislative instrument for the purposes of the LA.

10.              In accordance with table item 3 in section 9 of the Legislation (Exemptions and Other Matters) Regulation 2015, the Determination is not subject to disallowance, as it is an instrument (other than a regulation) relating to superannuation.

11.              Details of the Determination are as follows:

Section 1 — Name of Determination

12.              Section 1 provides that the title of the instrument is the Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2020.

Section 2 — Commencement

13.              Section 2 provides that the instrument commences on 1 July 2020.

Section 3 – Authority

14.              Section 3 provides that the instrument is made under regulation 45D of the Family Law (Superannuation) Regulations 2001 (the FLS Regulations).

Section 4 — Definition

15.              Section 4 provides that in this instrument where the term regulations is used it means the FLS Regulations.

Section 5 — Adjustment period – financial year

16.              In section 5 of the instrument, the Australian Government Actuary determines, under subregulation 45D(3) of the FLS Regulations, that the interest rate is 0.057 where the adjustment period is the financial year beginning on 1 July 2020. This rate 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 November 2019 reference period.

Section 6 — Adjustment period – less than 12 months within financial year

17.              In section 6 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 financial year beginning on 1 July 2020. 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 time earnings for all persons in Australia as published by the Australian Bureau of Statistics for the year ending with the November 2019 reference period.

Section 7 — Adjustment period – 12 months not within financial year

18.              In section 7 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 financial year beginning on 1 July 2019 and ends in the financial year beginning on 1 July 2020.

Section 8 — Adjustment period – less than 12 months not within financial year

19.              In section 8 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 financial year beginning on 1 July 2019 and ends in the financial year beginning on 1 July 2020.

20.              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 November 2018 reference period. This rate applies for that part of the adjustment period that is in the financial year beginning on 1 July 2019; 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 November 2019 reference period. This rate applies for that part of the adjustment period that is in the financial year beginning on 1 July 2020.

 

Overview

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2020 was enacted to address the issue of setting interest rates for the adjustment of superannuation entitlements in property settlements under the Family Law Act 1975. The Determination was made by the Australian Government Actuary under regulation 45D of the Family Law (Superannuation) Regulations 2001. It aims to provide a consistent and fair method for adjusting the base amounts for superannuation interests, particularly in the context of defined benefit superannuation and self-managed superannuation funds, ensuring that these adjustments are linked to the economic conditions as reflected in the Australian Bureau of Statistics’ estimates of full-time adult ordinary time earnings. This Determination is a legislative instrument issued by authority and commenced on 1 July 2020, and it is not subject to disallowance as it pertains to superannuation under the Legislation (Exemptions and Other Matters) Regulation 2015.

Scope and Application

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2020 applies to superannuation entitlements of separated and divorced spouses, as well as separated de facto couples, excluding those in Western Australia, as at the date of the making of this instrument. The determinations pertain to the adjustment of future superannuation benefits made in property settlements under the Family Law Act 1975, particularly those orders or agreements providing for a base amount split of future superannuation benefits, whether it is a defined benefit superannuation interest or an interest in a self-managed superannuation fund. The scope of this instrument is nationwide, as it operates under the authority of the Commonwealth of Australia and is applicable across all states and territories except Western Australia. The instrument is not subject to disallowance as it is a legislative instrument relating to superannuation. The Australian Government Actuary determines the interest rates for various adjustment periods, including periods that are a financial year, less than 12 months within a financial year, exactly 12 months not within a financial year, and less than 12 months not within a financial year, with these rates being calculated based on specific economic data from the Australian Bureau of Statistics.

Key Provisions

The Family Law (Superannuation) (Interest Rate for Adjustment Period) Determination 2020 (sections 5 to 8) primarily addresses the interest rates applicable to the adjustment of superannuation entitlements for separated and divorced spouses, and separated de facto couples. Under this instrument, the Australian Government Actuary has made specific determinations regarding the interest rates for adjusting base amounts of superannuation entitlements, which are payable under certain orders or agreements made in property settlements under the Family Law Act 1975 (Family Law Act). The interest rates are determined for different adjustment periods, including full financial years, periods less than 12 months within a financial year, and periods spanning two financial years. The Act imposes several obligations on the parties involved in superannuation entitlements under property settlements. Courts or parties must allocate or specify a base amount for the superannuation interest before making an order or agreement. This base amount is then subject to annual adjustments, or more frequent adjustments if necessary, until the superannuation benefits are paid out or the interest is split under relevant regulations or fund rules. Additionally, the Australian Government Actuary is tasked with determining the interest rates for these adjustments based on specific criteria, such as the percentage change in full-time adult ordinary time earnings as reported by the Australian Bureau of Statistics. Failure to comply with the provisions of this Determination could potentially lead to disputes or inaccuracies in the calculation and payment of adjusted superannuation entitlements. However, the Determination itself does not explicitly outline specific offences, penalties, or consequences for non-compliance. It is likely that any breaches would be addressed under the broader provisions of the Family Law Act 1975 or the Family Law (Superannuation) Regulations 2001, which may include court-ordered penalties or other legal remedies for non-compliance. The Determination is effective from 1 July 2020 and is not subject to disallowance, as it falls under the category of superannuation-related instruments exempt from disallowance under the Legislation (Exemptions and Other Matters) Regulation 2015. This ensures that the Determination can take effect without the need for parliamentary approval, streamlining the process for updating and applying the relevant interest rates in superannuation settlements.

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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.