Superannuation Legislation Amendment (Family Law) Act 2003

The Act introduces several defined terms that are critical to understanding how the splitting regime operates under the Judges’ Pensions Act. A member spouse is the judge or former judge who holds the superannuation interest under the Judges’ Pensions Act. A non-member spouse is the other spouse in the relationship (including a former spouse, because spouse means a person who is or was married to the member spouse). The family law superannuation legislation is defined by reference to Part VIIIB of the Family Law Act 1975 (Cth) and the Family Law (Superannuation) Regulations 2001 (Cth). This means that the substantive rights of parties to split superannuation are created by Commonwealth law, and the Act merely provides the state-level machinery to implement those splits against a state-defined interest. A payment split is given the same meaning as in the Commonwealth legislation: it is the division of a superannuation interest between spouses following a splitting order or superannuation agreement. A flagging order or flag lifting agreement delays the operation of a split until a later event. The Act also defines a family law superannuation entitlement as an operative entitlement of a non-member spouse under a superannuation agreement, flag lifting agreement, or splitting order in respect of the member spouse’s superannuation interest. The family law superannuation payment is the amount payable to or in respect of the non-member spouse under Part 3A. Complying superannuation fund includes a regulated superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth) or the First State Superannuation Fund (a NSW public sector fund). RSA means a retirement savings account under the Retirement Savings Accounts Act 1997 (Cth). FTC is defined by reference to the First State Superannuation Act 1992, and appears to be the trustee or administrator of that fund. Superannuation interest means an interest that a judge, retired judge, or any other person has as a member or beneficiary of the scheme under the Judges’ Pensions Act. The Act also defines accrued benefit multiple in section 15E as the period of judicial service in years and parts of years. This factor is used under the family law superannuation legislation to calculate the split amount. For a widow or widower of a former judge, the accrued benefit multiple is the same as the former judge’s. These definitions collectively create a clear interface between state pension law and Commonwealth family law, but they also impose a compliance burden on the parties and the Minister to correctly classify interests and calculate amounts.

The Act directly affects three categories of persons. First, it affects member spouses , judges and retired judges who are beneficiaries of the superannuation scheme established under the Judges’ Pensions Act. For these individuals, the Act removes any immunity their superannuation interest might have had from family law splitting. A member spouse’s benefit can now be reduced to satisfy a family law superannuation entitlement, even if the pension was already in payment before the split occurred. The member spouse also bears the risk that the benefit reduction may be applied to preserved or deferred benefits, not just current pensions. Second, the Act affects non-member spouses , current or former spouses of judges who obtain a splitting order or enter into a superannuation agreement under Commonwealth family law. The Act gives these individuals a direct right to receive payment or have an amount rolled over to a complying superannuation fund or RSA. However, the non-member spouse’s ability to receive a cash payment is limited: under section 15C(4), the Minister may pay cash only if the member spouse is already in receipt of a pension or the non-member spouse has satisfied a condition for payment or release that would apply if the fund were a complying superannuation fund. Otherwise, the payment must be transferred or rolled over. If the non-member spouse fails to nominate a fund within the prescribed period, the amount is transferred to FTC for crediting to the First State Superannuation Fund. Third, the Act affects the Minister (currently the New South Wales Minister for Finance, or such other minister as may be responsible for the Judges’ Pensions Act) and FTC as the administrator of the First State Superannuation Fund. The Minister is the primary decision‑maker: he or she must take action upon written notice of a family law superannuation entitlement, determine the value of the entitlement, and exercise discretion under section 15D to reduce the member spouse’s benefit. The Minister may also charge costs. FTC receives default transfers when a non-member spouse does not nominate. The Act also indirectly affects complying superannuation funds and RSAs that accept rollovers, as they must comply with the Commonwealth superannuation legislation when holding benefits for non-member spouses. Legal personal representatives are also affected: section 3 of Schedule 2 inserts a reference to family law superannuation payments into section 16 of the Judges’ Pensions Act, so that payments to a legal personal representative in certain cases now include those payments. Finally, taxpayers bear the ultimate cost, because the Minister’s expenses in administering splits and any unrecovered costs are drawn from the Consolidated Fund under regulations made under section 15F(j). From a free-market perspective, the Act creates a state-administered mechanism that overrides the member spouse’s property rights by mandating a split, but it also gives the non-member spouse a measure of choice by allowing nomination of a complying fund.

The Act imposes a clear duty on the Minister under section 15C(3): upon written notice by a member spouse, non-member spouse, or any other person or court of a family law superannuation entitlement, the Minister must take action. The Minister has two options: pay or release to the non-member spouse an amount equal to the value of the entitlement (less any costs chargeable), or transfer or roll over that amount to a complying superannuation fund or RSA nominated by the non-member spouse. The Minister’s duty is triggered only if the entitlement is “operative” , meaning the splitting order or agreement is in force and the three conditions in section 15C(2) are met: the non-member spouse has an operative entitlement, the member spouse is in receipt of a pension or eligible for a lump sum, and the entitlement has not already been paid or waived. The Minister has a right to charge costs, the amount of which is not specified in the Act but presumably will be prescribed by regulations. The non-member spouse has a right to nominate a complying superannuation fund or RSA for the rollover, but that right is constrained by time: if the non-member spouse fails to nominate within the prescribed period, or if the nominated fund or RSA does not accept the nomination, the Minister must transfer the payment to FTC for crediting to the First State Superannuation Fund. This default mechanism reduces the non-member spouse’s choice and potentially forces the benefit into a public sector fund that may not align with the spouse’s preferences. The non-member spouse also has a right to a cash payment, but only if the member is in receipt of a pension or the non-member satisfies a condition for release that would apply in a complying fund (s 15C(4)). Otherwise, the payment must be a rollover. The member spouse has a right to have the benefit reduced only to the extent necessary to give effect to the split; the reduction is authorised by section 15D, but it is a power of the Minister (“may reduce”) rather than an automatic reduction. The member spouse also has a right to notice of the entitlement, but the Act does not explicitly require the Minister to notify the member spouse before reducing the benefit , only that written notice from a spouse or court triggers the action. Both spouses have a right to have the value determined in accordance with the regulations and the family law superannuation legislation (s 15C(6)). Section 15B creates a duty on the part of any person administering the Judges’ Pensions Act not to make a payment that would contravene a flagging order or payment split, and also to make any payment required by the family law superannuation legislation. This overrides the normal payment rules in the Judges’ Pensions Act. The rights and duties under this Part are therefore heavily mediated by regulations, which may prescribe periods, fees, calculation methods, and additional circumstances for offers or payments (s 15F). The significant grant of rule-making power to the executive creates uncertainty for parties, as key operational details are left to delegated legislation.

The Superannuation Legislation Amendment (Family Law) Act 2003 does not itself create any criminal penalties, civil penalties, or infringement notices. It is machinery legislation that amends the Judges’ Pensions Act to enable compliance with Commonwealth family law orders and agreements. Enforcement of the splitting regime therefore relies primarily on the family law superannuation legislation. If the Minister fails to comply with a duty under section 15C (for example, by not making a payment or transfer upon receiving a valid written notice), the non-member spouse could potentially seek remedies under the Family Law Act 1975 or through the federal courts, because the splitting order or agreement is made under Commonwealth law and the Act is expressly intended to facilitate that law. The Family Law Act provides for enforcement of orders through the Federal Circuit and Family Court of Australia, including contempt proceedings for wilful disobedience. In addition, if the Minister fails to reduce a benefit under section 15D or miscalculates the reduction, the member spouse or non-member spouse may have a right to seek judicial review of the Minister’s decision under administrative law principles. The Act itself provides no statutory cause of action for breach of its duties. The only enforcement lever mentioned in the source text is the Minster’s power to charge costs, which may serve as a deterrent against abuse or delay. The absence of a penalty regime may reduce compliance costs for the state, but it also means that a non-member spouse has limited recourse if the Minister delays or fails to act. Practically, a non-member spouse would need to rely on the original splitting order or agreement and the general law of enforcement of court orders. The Act also imposes no penalty on a non-member spouse for failing to nominate a fund, but the consequence is that the amount goes to FTC by default. For the member spouse, there is no penalty for failing to notify the Minister of a split; the Act allows any person (including the non-member spouse or the court) to give notice. From a deterrence perspective, the lack of penalties may be appropriate because the split is court-ordered or agreed voluntarily, and the state’s role is purely administrative. However, it also means that the Minister has a duty that is enforceable only through external mechanisms, which may be slow and costly for parties.

The Act is explicitly designed to interact with Commonwealth family law superannuation legislation. Section 15A defines family law superannuation legislation as Part VIIIB of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001. Sections 15B, 15C, 15D, and 15E all refer to that legislation for the meaning of terms and for the calculation of amounts. The Act does not recreate the splitting regime; it merely creates a state-level interface so that a superannuation interest under the Judges’ Pensions Act can be split in accordance with Commonwealth law. Without this Act, a splitting order under the Family Law Act might have been ineffective against a state judicial pension because the Judges’ Pensions Act contained no provision for recognising such splits. The Act removes that conflict by providing that nothing in the Judges’ Pensions Act prevents a payment required by the family law superannuation legislation (s 15B). The Act also interacts with other Commonwealth legislation. Complying superannuation fund is defined by reference to the Superannuation Industry (Supervision) Act 1993, and RSA by reference to the Retirement Savings Accounts Act 1997. These definitions ensure that rollovers to the non-member spouse go to funds that meet Commonwealth prudential and regulatory standards. The Act also interacts with the First State Superannuation Act 1992 by defining the First State Superannuation Fund and FTC. Notably, the Act does not amend the First State Superannuation Act; it merely uses it as a default recipient of amounts when a non-member spouse fails to nominate. The Judges’ Pensions Act itself is a state Act, but this amendment ensures its provisions are not inconsistent with Commonwealth law, thus avoiding a potential constitutional issue under section 109 of the Constitution (inconsistency of laws). The Act also interacts with regulations made under the Judges’ Pensions Act: section 15F grants a broad power to make regulations for a wide range of matters, from elections and payments to calculations and benefit reductions. These regulations may themselves interact with other state legislation, such as the State Records Act or the Public Finance and Audit Act, but those interactions are not specified in the source. The Act does not interact with the Superannuation Guarantee (Administration) Act 1992 or the Income Tax Assessment Act 1997 in any direct way, but the tax treatment of splits would be governed by Commonwealth tax law independent of this Act. For legal practitioners and accountants, the key interaction is that this Act creates a state-specific set of procedures that must be followed in addition to the Commonwealth regime. A practitioner advising a judge or a judge’s spouse must ensure that any splitting order or agreement is correctly notified to the Minister and that the non-member spouse nominates a qualifying fund within the prescribed time, otherwise the default transfer to FTC occurs.

The Superannuation Legislation Amendment (Family Law) Act 2003 received assent on a date not specified in the source, but it is numbered Act 2003-077. Commencement was staggered: the Act itself commenced on the date of assent, except for certain schedules which were to commence by proclamation. Schedules 1 [2]-[4], 2, 5, 6, 7, 10, 11 and 12 were proclaimed to commence on later dates. Schedule 13 [2] was deemed to have commenced on 29 November 2002, a retroactive commencement. Since then, many schedules have been repealed. Schedule 1 was repealed by Act 2011 No 27, Schedule 4. Schedule 3 was repealed by Act 2005 No 64, Schedule 3. Schedules 4, 8, 9, and 13 were also repealed by Act 2005 No 64, Schedule 3. Schedules 2, 5, 6, 7, and 10-12 were repealed or amended by Act 2011 No 27, Schedule 3.13 or Schedule 4. The net effect is that Schedule 2 , the amendment to the Judges’ Pensions Act , is the only schedule that remains substantially in force, though it too was amended by Act 2011 No 27, Schedule 3.13 (which appears to have made minor textual amendments). The original Schedule 2 amendments were themselves inserted by the 2003 Act and have not been further amended except for the 2011 update. The Act also amended the Acts specified in other schedules, but those amendments are now repealed and no longer have legal effect. The Act’s title , “Superannuation Legislation Amendment (Family Law) Act 2003” , suggests it had a broader scope than just judges’ pensions, but the repeal of most schedules means that its surviving legacy is narrow. This amendment history is important for practitioners: when advising on the splitting of a judge’s superannuation, one must refer to the current text of the Judges’ Pensions Act as amended, not the original 2003 Act. The regulations made under section 15F may also have been amended over time. The Act’s longevity (over 20 years) without major challenge indicates that the mechanism has been stable, but the concentration of remaining effect in a single schedule may lead to it being overlooked by researchers.

The source text does not reference any litigation concerning the Act or the inserted Part 3A. There are no reported cases noted in the legislation itself. Given that the Act is machinery and merely facilitates Commonwealth family law splitting, any litigation would likely arise under the Family Law Act 1975 or the Family Law (Superannuation) Regulations 2001. For instance, a dispute about the valuation of a judge’s superannuation interest or the calculation of the split amount would be adjudicated by the Federal Circuit and Family Court of Australia, applying the Commonwealth regulations and possibly referring to the Judges’ Pensions Act definitions (such as the accrued benefit multiple in s 15E). It is possible that a non-member spouse has challenged a decision of the Minister under section 15C, for example, if the Minister delayed payment, charged excessive costs, or incorrectly calculated the value. Such a challenge would be an administrative law matter in the New South Wales Supreme Court or the Civil and Administrative Tribunal, but no such cases are recorded in the source. The absence of litigation may suggest that the Act has operated without controversy, or it may reflect the small number of judges’ divorces and the fact that splitting is often negotiated by agreement rather than litigated. However, the lack of case law also means that ambiguities in the Act , such as what constitutes a “operative” entitlement or the scope of the Minister’s discretion to reduce benefits , remain judicially untested. Practitioners should be cautious: the Act gives the Minister broad powers, and any dispute may require judicial clarification.

Several provisions of the Act contain traps for the unwary. First, the definition of spouse in section 15A includes a person who “is or was married to” the member. This means that a former spouse (even from a marriage that ended decades ago) can qualify as a non-member spouse if there is an operative splitting order or agreement. Second, section 15C(4) restricts the non-member spouse’s ability to receive cash. Even if the member spouse is not yet in receipt of a pension, the non-member spouse can only get cash if they have satisfied a condition for payment or release that would apply if the fund were a complying superannuation fund. In practice, this means that a non-member spouse who is under preservation age may be forced to roll over the amount into a complying fund, losing access to the funds until a condition of release is met. Third, if the non-member spouse fails to nominate a complying superannuation fund or RSA within the prescribed period, the amount goes to FTC for crediting to the First State Superannuation Fund (s 15C(5)). This is a default that the non-member spouse may not want, because that fund is a NSW public sector fund with its own rules and possibly less flexibility. The prescribed period is not set out in the Act itself (it is to be prescribed by regulations), so timing is crucial. Fourth, section 15D(3) expressly allows the Minister to reduce a pension even if payment of the pension first commenced before the payment to the non-member spouse. This means that a retired judge who has been receiving a pension for years can still have that pension reduced when a split occurs later. The Act gives no grandfathering protection. Fifth, the Minister is empowered under section 15D(1) to reduce benefits “in accordance with the regulations and any applicable provisions of the family law superannuation legislation”. The regulations under section 15F(l) specifically allow the commutation of pensions for the purpose of reduction. This could mean that a part of a pension is converted to a lump sum to facilitate the split, which may have adverse tax or cashflow consequences for the member spouse. Sixth, section 15F(j) allows regulations to charge payments from the Consolidated Fund, meaning the state bears some of the cost of administration, but the Minister can also charge costs to the non-member spouse (s 15C(3)(a)). The amount of these costs is not defined in the Act and could be substantial. Seventh, the notice requirement in section 15C(3) is triggered on written notice by “a member spouse or a non-member spouse, or by any other person or court.” This means that a third party , such as the trustee of the judge’s estate or a lawyer , could give notice and initiate the process without the non-member spouse’s direct involvement. This could lead to premature or erroneous splitting. Finally, the Act does not require the Minister to give the member spouse an opportunity to be heard before reducing the benefit. The lack of procedural fairness protections is a potential ground for challenge, but it is also a compliance cost saver for the state.

Compliance with Part 3A of the Judges’ Pensions Act as inserted by this Act involves several steps for both the Minister and the parties. For the non-member spouse who has obtained a splitting order or entered into a superannuation agreement, the first step is to ensure that the entitlement is “operative” under the family law superannuation legislation. Once operative, the non-member spouse (or the member spouse, or any other person or court) must give written notice to the Minister. The notice should include enough detail to identify the splitting order or agreement and the value of the entitlement. The Act does not prescribe the form of notice, but it would be prudent to include a certified copy of the order or agreement. The non-member spouse should also consider nominating a complying superannuation fund or RSA to receive the rollover. This nomination must be made within the period prescribed by the regulations (currently not specified in the Act, so practitioners must check the current regulations under the Judges’ Pensions Act). If no nomination is made in time, the amount will be transferred to FTC and credited to the First State Superannuation Fund, which may not be the non-member spouse’s preferred option. The non-member spouse should also confirm whether they satisfy a condition for cash payment under section 15C(4). If they are under preservation age and the member is not yet in receipt of a pension, cash payment is unlikely, and a rollover will be required. The Minister, upon receiving a valid notice, must determine the value of the entitlement in accordance with the regulations and the family law superannuation legislation (s 15C(6)). The Minister must then choose between payment or rollover, having regard to the non-member spouse’s eligibility for cash. The Minister may charge costs, the amount of which should be specified in regulations or administrative practice. After making the payment or transfer, the Minister must reduce the member spouse’s benefit under section 15D. This reduction can apply to pensions, preserved benefits, and deferred benefits. The Minister should calculate the reduction in accordance with the regulations and the family law superannuation legislation. The Minister should also ensure that no payment is made that would contravene a flagging order (s 15B(a)). For the member spouse, compliance is largely passive: they must be aware that their benefit may be reduced without their consent, and they should ensure that any notice given to the Minister is accurate. From an administrative perspective, the Minister should maintain records of all notices, payments, and reductions, and should have procedures in place to handle defaults (where a non-member spouse fails to nominate). The regulations under section 15F may prescribe additional compliance steps, such as the form of elections, the period for payment, and the calculation of fees. Practitioners should regularly check the regulations for updates. The key compliance burden falls on the state, but the costs of delay or error are borne by the parties. From a free-market perspective, the system could be improved by allowing non-member spouses more flexibility in choosing the form of benefit and by requiring the Minister to provide procedural fairness.