Australian couples will now be able to split their superannuation contributions after January 1, 2006, with legislation ratifying the move passed by the Senate.
Under the new laws a fund member will be allowed to request, at the end of the financial year, that his or her previous year’s superannuation contributions be split with their spouse. The option will only apply to accumulation interests and will be a voluntary measure for superannuation funds.
Women and non-working spouses are two groups set to benefit from the legislation that will effectively make superannuation available for people outside of the workforce.
“The splitting of superannuation contributions will assist many families and will be of particular benefit to women,” Assistant Treasurer Mal Brough said.
“Splitting will allow non-working spouses to have superannuation assets under their own control and to have their own income in retirement,” he added.
AMP Financial Services managing director Craig Dunn agreed women would be better off under the new rules.
“This is a welcome boost, especially for women, whose superannuation balances are usually significantly lower than that of their male counterparts,” he said.
The change to the superannuation laws carry with them considerable tax benefits, with couples now being able to access two reasonable benefit limits and two eligible termination payment tax free thresholds.
The Investment and Financial Services Association (IFSA) welcomed the passing of the legislation as it allows couples to approach their retirement savings together.
“We know most couples approach retirement planning together, so it makes sense to allow a couple to better balance their superannuation contributions. Now they can plan their superannuation together,” IFSA deputy chief executive John O’Shaughnessy said.
The Association of Superannuation Funds of Australia (ASFA) also welcomed the move even though it would have preferred a different model be used.
“We would have preferred even more for there to be a split of benefits at the end on the basis of simplicity, less administration, and delivering the greatest benefit for fund members, but it’s certainly welcome what the Government did do,” ASFA principal researcher Ross Clare said.
