By Dan Blackman
One of the most frequent questions I get asked by separating couples is “how does the Family Law Value differ from the total benefit amount on the annual member statement?”.
Like all things about defined benefit schemes, there is no simple answer!
Instead, there is an excessive amount of legislation, prescribed methodologies and actuarial factors that come together to effectively determine the present value of the defined benefit interest.
Importantly, there is no one-size fits all answer as the actual valuation depends on a lot of different things, including the nature of the various components that make up the benefit and the length of the service period.
“… the Family Law Value can be higher or lower than the amount given on the member statement…”
However, two relatively consistent influences are age and gender.
So, I thought rather than try to explain how the separate factors and methodology work, it might easier to provide a case study to highlight the effects of both age and gender on the Family Law Value.
This real-life example shows a Public Sector Superannuation Scheme (PSS) member whose annual member statement lists a total benefit of $524,703 from 14 years of contributory service. The relevant information about the benefit is as follows:
| Type of interest | Growth Phase |
| First day of membership | Pre-1999 |
| Years of service | 14 |
| Average salary | $145,814 |
| Benefit multiple (ABM) | 3.58269 |
| Excess contributions multiple | 0.0519 |
| Member contributions (AMC) | $133,690 |
| Productivity contributions (APC) | $35,355 |
| Transfer amount (ATA) | $2,293 |
| Early Release Deduction Amount (ERDA) | $0 |
| Surcharge debt | $0 |
Applying these assumptions as constants with the only variables being age (from 35 to 65) and gender, the resulting Family Law Valuations range from:
- $365,462 to $608,797 for males, and
- $370,185 to $641,089 for females.
In this particular case, we can see that the Family Law Value can be higher or lower than the amount given on the member statement and it increases from age 35 to age 65.
The example also demonstrates how the higher life expectancy for females influences the final value.
While the results above relate specifically to the PSS, similar trends can be expected for contributing members of the other Australian Government defined benefit schemes, including the Commonwealth Superannuation Scheme (CSS), Military Superannuation and Benefits Scheme (MSBS or MilitarySuper), and the Defence Force Retirement and Death Benefits (DFRDB) Scheme.