General Provisions for Assessing Superannuation

Principles for assessing superannuation assets

DVA's assessment of a pensioner's superannuation assets depends on:

• whether the superannuation assets are in the accumulation phase or draw down phase, and
• the pensioner's age.

Assessment in the accumulation phase

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No income or asset value is assessed from superannuation in the accumulation phase where the person is below pension age. If the person has reached pension age, the superannuation is assessed under the income and assets tests as a financial asset.     

Exemption from assessment after reaching pension age

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Superannuation in the accumulation phase may be exempted from the assets test in certain limited circumstances. Delegation to exempt superannuation in these circumstances is held by the National Manager, Rehabilitation and Entitlements Policy Group. Exemptions are only allowed where the person cannot access their superannuation due to:

• a legislative preclusion (eg court order),
• a contractual preclusion (eg conditions of release not met),
• the fixed term not having expired for contracts entered into before 20 August 1996 (only if the original contract has not expired),
• the rules of the fund as at 20 August 1996 preventing release (the exemption would only apply to the balance as at 20 August 1996),
• the superannuation being a traditional endowment or life superannuation contract entered into before 20 August 1996 and not having been varied since (the exemption would only to apply to the balance and additional amounts specified in the contract as at 20 August 1996).

Assessment in the drawdown phase

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The income and asset value of superannuation in the drawdown phase is assessed according to the income stream rules. This also applies if the superannuation is in the drawdown phase and the person is below pension age.    

Assessment of whole of life superannuation policies

Whole of life superannuation policies are subject to the same rules as other superannuation funds. However, whole of life conventional life insurance products are treated differently.     

The assessable asset value of whole of life superannuation policies is the accumulated superannuation benefit shown on the pensioner's latest statement of account. The amount payable from the policy in the event of the death of the insured party is not relevant.

Splitting of superannuation interests on separation

A superannuation interest in the accumulation phase may be split where members of a couple separate and one or both members of the couple have a superannuation interest. The split may be made under a superannuation agreement or a court order. The options available for splitting a superannuation interest are:

• Pay a lump sum to the non-member spouse
• Create a new superannuation interest in the non-member spouse's name in the same superannuation fund
• Transfer or roll-over a lump sum to a retirement savings account or another superannuation fund in the non-member spouse's name.

Regardless of the option chosen for splitting a superannuation interest, the non-member is not entitled to receive any further payments. Different rules apply to superannuation interests in the drawdown phase.    

Deprivation not to apply on splitting superannuation interest

The deprivation rules do not apply to the splitting of a superannuation interest pursuant to an agreement or a court order.