Understanding Family Law Defined Benefit Interests

The valuation of defined benefit interest in family law is a difficult and complicated feature of the Family law (Superannuation) Regulations 2001.

The family law valuation of almost all common defined benefit interests is based on the general principle of:

Fund multiple x Number of Years x Current Salary x Present value Discount

This can, for example been in the formula for the valuation of lump sum defined benefit interest in the growth phase:

ABM  x  Salary  x  Fy+m

where

ABM: is accrued benefit multiple (fund multiple x years service)

Salary: being salary for superannuation purposes at date of valuation

Fy+m: being the present value discount based on the number of years to retirement.

The family law value of a defined benefit interest will increase over time because of the effect of the three factors:

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