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Expert Report on the Valuation of Superannuation Interests for Family Law Property Settlement

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Cover & identification

In the matter of A & B — Application for property orders, Federal Circuit and Family Court of Australia

Member
Mr A (redacted)
Spouse
Ms B (redacted)
Cohabitation date
14 March 2009
Separation date
22 September 2023
Valuation date
30 September 2023
Fund
Industry-wide accumulation, Balanced option (held throughout)
Instructing solicitor
(redacted) — by letter dated 1 October 2023
Author
Yiannis (John) Tellyros, AIAA — Consulting Actuary

Section 1

§1Letter of instructions

We were instructed in writing on 1 October 2023 to prepare an independent actuarial report quantifying:

  1. The value at the valuation date of Mr A's superannuation interest in the Fund.
  2. The component of that interest attributable to contributions and earnings made before cohabitation, expressed in present-value terms — i.e. the s.79(4)(a) initial-contribution figure.
  3. A sensitivity range around (2) so the Court can assess the robustness of the figure to reasonable assumption stress.
  4. Indicative outcomes if a base-amount split of $130,000 were ordered under Part VIIIB of the Family Law Act 1975.

Section 2

§2Expert declaration

I have read the Expert Witness Code of Conduct contained in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, Schedule 1. I agree to be bound by it. My duty is to assist the Court impartially on matters relevant to my expertise. That duty overrides any obligation to the party who has retained me.

Section 3

§3Author qualifications

The report is signed by Yiannis (John) Tellyros, Associate of the Actuaries Institute of Australia (AIAA) and Consulting Actuary, with more than fifteen years of practice across superannuation valuation, defined-benefit liability work and Family Law expert engagements. Full CV is attached at Appendix A.

Section 4

§4Executive summary

Total interest at valuation date

$612,000

s.79(4)(a) figure (central)

$224,600

Sensitivity range (±1.0% net)

$198,400 – $254,900

Mr A's superannuation interest at 30 September 2023 is $612,000. Of that, $224,600 is attributable, on a central-assumption basis, to the balance he held at cohabitation rolled forward at the actual net-of-fees returns of the Balanced option for each year held. A ±1.0% per-annum stress on net returns yields a defensible range of $198,400 – $254,900. The matrimonial component of the interest is the residual — approximately $387,400 centrally.

Section 5

§5Background and agreed facts

Cohabitation commenced on 14 March 2009, on which date Mr A held a closing balance of $78,400 in the Fund's Balanced option. He has held that option continuously to the valuation date with no fund switches or rollovers. Concessional contributions throughout the period were employer SG only; no salary sacrifice or non-concessional contributions were made. Insurance premiums were deducted from the account on the standard schedule disclosed in the PDS.

Section 6

§6Materials considered

  • Member statements, FY2009 to FY2023 (annual)
  • ATO MyGov contribution and transaction history
  • Fund's Annual Reports, FY2009–FY2023
  • Fund Product Disclosure Statements covering the period
  • APRA Heatmap return series for the Balanced option
  • Letter of instructions dated 1 October 2023
  • Affidavits filed in the proceedings (factual matrix only)
  • Family Law (Superannuation) Regulations 2001

Section 7

§7Methodology

For accumulation interests we apply an actual-history roll-forward. The cohabitation balance is the anchor. For each financial year between cohabitation and the valuation date we apply the Fund's published net-of-fees crediting rate for the specific investment option held, deduct attributable administration and asset-based fees on the same pro-rata basis the Fund applied them, and reconcile to the closing balance disclosed on each member statement. Post-cohabitation contributions, rollovers and government co-contributions are stripped out and treated as marital growth. The s.79(4)(a) figure is the grossed-up cohabitation balance at the valuation date.

We do not use a generic CPI, term-deposit, or "balanced fund" reference rate. The figure produced is the actual investment performance of the actual money the member brought into the relationship, after the actual fees the Fund actually charged. See /methodology for the underlying technical note.

Diagram 1 — End-to-end flow

How the cohabitation balance is reconstructed

  1. 01

    Anchor at cohabitation

    Take the member-statement closing balance on the cohabitation date as B₀ — the only figure the s.79(4)(a) amount grows from.

  2. 02

    Strip post-cohab money

    Identify and remove every employer SG, salary-sacrifice, NCC and rollover received after cohabitation; those flow to the marital pool.

  3. 03

    Apply actual net returns

    For each year held, multiply the prior balance by the Fund's published crediting rate for the specific investment option (1 + rₜ).

  4. 04

    Deduct attributable fees

    Apply admin and asset-based fees on the same pro-rata basis the Fund applied them, year by year, on the running anchor balance.

  5. 05

    Reconcile each year

    Tie out to the closing balance on every annual member statement; flag and document any year where option-level data is unpublished.

  6. 06

    Roll to valuation date

    The grossed-up balance at the valuation date is the s.79(4)(a) figure. Apply ±1% net stress to obtain the defensible range.

Recursion (per financial year)

Bt = Bt−1 × (1 + rt) − ft

Bt = anchor balance at year-end · rt = Fund's published net-of-fees crediting rate for the option held that year · ft = attributable admin and asset-based fees not already netted in rt. Post-cohabitation contributions are excluded from Bt.

Diagram 2 — Per-year cycle

How investment returns are applied each financial year

The closing balance becomes next year's opening balance — repeated for every year held.

STEP 1

Opening balance

Bₜ₋₁

STEP 2

Apply rₜ

× (1 + rₜ)

STEP 3

Deduct fees

− fₜ

STEP 4

Reconcile

to statement

STEP 5

Closing balance

Bₜ

Loop: the closing balance Bt feeds the next year's opening balance Bt → Bt′ for the following financial year, until the valuation date is reached.

Section 8

§8Assumptions and limitations

Every figure in this report rests on a small set of explicit, disclosed assumptions. They are listed here so any reader — opposing solicitor, mediator, or judge — can see exactly what was taken as given, and challenge any of it. Each assumption is reproduced in the working paper at Appendix B with the underlying source document referenced line by line. Plain-English definitions for the terms in bold appear in the §15 glossary.

  • Crediting rates published by the Fund for the Balanced option are taken as the best evidence of net-of-fees investment return for the period.
  • Where a year's option-level return was not separately published, the MySuper default return was used as a substitute and the year is flagged in the working paper at Appendix B.
  • Insurance premiums and administration fees are treated on the basis disclosed in each year's PDS without independent re-derivation.
  • The report assumes the factual matrix in the affidavits is correct; we have not independently verified factual assertions outside the documentary trail.

What the working paper contains

Appendix B is the year-by-year audit trail behind the s.79(4)(a) figure. It is what makes every chart in this report reproducible.

  • Opening balance for each financial year, sourced from the corresponding member statement (page reference recorded).
  • The Fund's published net-of-fees crediting rate for the specific investment option held that year, with the source URL or PDS page.
  • Administration and insurance fees disclosed for that year, applied on the same basis the Fund applied them.
  • Post-cohabitation contributions and rollovers identified and stripped out — these flow to the marital pool, not the s.79(4)(a) figure.
  • Closing balance reconciled to the next year's member statement, with any reconciling difference explained in a footnote.
  • Years where option-level return data was unavailable, with the substitute used (typically the MySuper default) flagged.
  • Sensitivity working: the same year-by-year table re-run at the central rate ±1.0% p.a. to produce the §10 range.

Any party can replicate every number in §§9–10 by walking down Appendix B with a calculator. That is the test the report is built to pass.

Section 9 — Calculation

§9Pre-cohabitation balance reconstruction

Chart assumptions register

Inputs used to generate the charts in §§9, 10 and 12 — captured in the printed report so any reader can reproduce or challenge each figure.

§9 — Roll-forward

Pre-cohabitation balance reconstruction

Cohabitation date
FY 2009
Separation date
FY 2023
Years modelled
14 yrs
Anchor balance
$78,400
Growth rate (net)
7.80% p.a.
Post-cohab. contributions
excluded

§10 — Sensitivity

s.79(4)(a) figure under stress

Central return
7.80% p.a.
Stress band
±1.00% p.a.
Low scenario
$196,931
Central scenario
$224,377
High scenario
$255,341
Stress applied
uniform, all years

§12 — Splitting outcome

Effect of base-amount split

Husband — before
$612,000
Wife — before
$224,000
Base-amount split
$130,000
Husband — after
$482,000
Wife — after
$354,000
Other assets
held constant

Where these inputs differ from the figures in the narrative, the assumptions panel below was adjusted before printing. Reset to defaults restores the values used throughout the body of this report.

Adjust the assumptions

Charts in §§9, 10 and 12 update instantly. Narrative text uses the original sample figures.

s.79(4)(a) central

$224,377

Sensitivity range

$196,931 – $255,341

Years modelled

14 years

The chart below traces the cohabitation balance of $78,400 forward to $224,600 at the valuation date, applying actual net returns for each financial year. Year-end values reconcile to the closing balances on the member statements within rounding.

Roll-forward of the cohabitation balance

Anchor balance compounded at actual fund-and-option net returns; post-cohabitation contributions excluded.

Illustrative numbers. The reconstruction uses unit-price or crediting-rate history for the specific investment option held throughout the period.

Explain this chart

What it shows

The cohabitation-date balance carried forward to the valuation date using only the investment return earned each financial year — no further contributions, withdrawals, fees outside the option's net-of-fees return, or insurance premiums layered in.

Key assumptions

  • Anchor balance at cohabitation date used as the only starting capital.
  • Returns are the actual published net-of-fees returns for the specific investment option held in each year.
  • Contributions, rollovers and withdrawals after cohabitation are excluded from this line.

Dates used

  • Start: cohabitation date (anchor balance).
  • End: valuation date used in the s.79(4)(a) calculation.
  • Each X-axis tick is a financial year-end (30 June).

What the range means

This chart shows a single central path, not a range. The corresponding ±1.0% p.a. sensitivity band is plotted in §10.

How to read it

The shaded area is the value attributable to the pre-cohabitation contribution as it grows over time. It is the starting figure used in the s 79(4) contribution-assessment exercise — not the final entitlement.

Section 10 — Calculation

§10s.79(4)(a) figure and sensitivity

We provide a defensible range around the central figure rather than a single number. The chart applies a ±1.0% per-annum stress to net returns across the entire period — a standard sensitivity bound for actual-history reconstructions where every year's published return is observed and reconciled.

Initial-contribution figure under low / central / high return assumptions

Central figure uses the Fund's actual net-of-fees returns; ±1.0% per-annum stress applied uniformly.

The Court is the decision-maker. The report supplies the quantified evidence; weight at the s 79(4) contribution-assessment stage is for the bench.

Explain this chart

What it shows

The s.79(4)(a) initial-contribution figure under three return scenarios. The dashed line marks the central estimate; the bars to either side show how the figure moves if every year's net return were 1% lower (Low) or 1% higher (High) than what the Fund actually earned.

Key assumptions

  • Same anchor balance and date inputs as §9.
  • ±1.0% p.a. stress is applied uniformly across every year in the projection.
  • All other variables (contributions, fees, balance at separation/valuation) are held constant.

Dates used

  • Cohabitation date — start of the roll-forward.
  • Valuation date — end of the roll-forward and the date the figure is expressed as.

What the range means

The Low–High band is a defensible sensitivity range, not a confidence interval. It bounds the figure for plausible variation in net returns; the central bar remains the primary opinion.

How to read it

Use the central bar as the headline number for negotiation. Quote the Low–High range when the other side challenges the return assumption — the answer doesn't change materially across the band.

Section 11 — Where applicable

§11Defined benefit valuation components

For comparative illustration only, the chart below shows how a defined-benefit Family Law value is constructed under Schedule 2 of the Family Law (Superannuation) Regulations 2001, where the relevant scheme uses an Accrued Benefit Multiple × Final Average Salary structure. Approved scheme factors override these defaults where applicable. (This case is an accumulation-only matter; included to show the report's DB capability.)

Build-up of a DB Family Law value

ABM × FAS gives a gross lump sum; the Family Law value is that figure discounted to valuation date net of tax and benefit timing.

Illustrative components for a typical public-sector DB scheme. See /defined-benefit-methodology for the technical note.

Explain this chart

What it shows

How a defined-benefit Family Law value is built up: the gross accrued lump sum (ABM × FAS), then the adjustments for discounting, tax and benefit timing, ending in the Family Law value used for splitting.

Key assumptions

  • Calculation under Schedule 2 of the Family Law (Superannuation) Regulations 2001.
  • ABM × FAS structure assumed; approved scheme factors override these defaults where they apply.
  • Illustrative scheme — this matter is accumulation-only; included to demonstrate DB capability.

Dates used

  • Valuation date — the date the Family Law value is expressed as.
  • Member's accrued service to that date drives the ABM input.

What the range means

Negative bars are deductions (discounting, tax). The Family Law value bar is the net result, not a midpoint.

How to read it

Read top-to-bottom: gross entitlement is reduced step-by-step until you arrive at the final value usable for a base-amount or percentage flag.

Section 12 — Indicative outcomes

§12Effect of a $130,000 base-amount split

For instruction (4), a $130,000 base-amount split would move $130,000 from Mr A's interest to Ms B's interest. The chart shows each party's super position before and after, in present-value terms, holding all other assets constant.

Each party's super position before and after the split

Indicative outcome only — the just-and-equitable assessment under Stanford remains for the Court.

Direct input to a base-amount or percentage flag under Part VIIIB. Tax timing and preservation rules are addressed in the working paper.

Explain this chart

What it shows

Each party's superannuation interest immediately before and immediately after a $130,000 base-amount split, holding all other assets and liabilities constant.

Key assumptions

  • Base-amount split of $130,000 transferred from Mr A's interest to Ms B's interest.
  • Present-value terms; tax timing and preservation are not netted off here (covered in the working paper).
  • No further contributions, withdrawals or returns between the splitting and operative dates.

Dates used

  • Operative date — when the splitting flag takes effect under Part VIIIB.
  • Valuation date — the date balances are expressed as.

What the range means

Outcome is shown as a single point estimate per party. Sensitivity around the underlying s.79(4)(a) figure is in §10 and would shift both bars by the same amount.

How to read it

Bar pairs are read side-by-side: navy is the position now, gold is the position after the split. The difference between any party's two bars equals the $130,000 transfer.

Section 13

§13Conclusions and opinion

  1. The total interest at the valuation date is $612,000.
  2. The s.79(4)(a) initial-contribution figure is $224,600 on a central-assumption basis.
  3. The defensible range under a ±1.0% per-annum return stress is $198,400 – $254,900.
  4. A $130,000 base-amount split would result in Mr A holding $482,000 and Ms B holding $354,000 in superannuation, in present-value terms.

These figures are quantified evidence for the Court. Weight at the s 79(4) contribution-assessment and s 79(5) factors stages, and the s 79(2) just-and-equitable test (Stanford v Stanford), remain for the bench.

Section 14

§14Authorities applied — mediation-ready

Each authority below is grouped by the issue it bears on, with a plain-English principle, where it lands in this report, and how to use it at mediation. Citations are in standard Family Law form so they can be lifted straight into a position paper.

Framework for s.79 property orders

How the report's numbers fit the structured discretion the Court (and any mediator) must work through.

Hickey & Hickey

(2003) FLC 93-143

Sequential analysis under s 79: identify and value the pool, assess contributions under s 79(4), consider s 79(5) factors, then apply the s 79(2) just-and-equitable test (Stanford v Stanford (2012) 247 CLR 108).

In this report
Pool identification and valuation are settled by the report's figures. The contribution-assessment stage under s 79(4) is informed by the s.79(4)(a) figure and the sensitivity range.
At mediation
Use the s 79 sequential analysis as the agenda — Stanford threshold, then s 79(4) contributions, then s 79(5) factors, then the s 79(2) just-and-equitable check. Don't argue percentages until the pool and contributions are agreed on the page in front of you.

Stanford v Stanford

(2012) 247 CLR 108

Court must be satisfied it is just and equitable before altering existing interests.

In this report
The report quantifies the existing interest and its non-marital component — supporting, but never pre-empting, that threshold.
At mediation
Anchor opening positions to existing interests, then negotiate departures. Avoids 50/50 starting-point traps.

Mallet v Mallet

(1984) 156 CLR 605

No mathematical formula or presumption of equality.

In this report
Outputs are quantified evidence and a defensible range — not a recommended split.
At mediation
Counters '50/50 because long marriage' shortcuts. Discretion sits with parties (and the bench), informed by the figures.

Initial contributions and the s.79(4)(a) figure

How weight is given to what each party brought into the relationship — and how it can erode.

Pierce & Pierce

(1998) FLC 92-844

Weight of an initial contribution can erode over a long relationship.

In this report
The reconstruction timeline and sensitivity range let parties model that erosion on evidence, not impression.
At mediation
Frames a graduated discount on the initial-contribution figure rather than 'all-or-nothing' arguments.

Williams & Williams

(2007) FLC 93-340

Initial contributions remain a relevant factor even in long marriages.

In this report
Supports keeping the s.79(4)(a) figure in view across the whole relationship, with appropriate weighting.
At mediation
Useful where the other side argues the initial contribution should be ignored entirely.

Jabour & Jabour

[2019] FamCAFC 78

Initial-contribution weight is a holistic, not arithmetic, exercise.

In this report
Reinforces presenting the figure as a defensible range with disclosed assumptions, not a single bright-line number.
At mediation
Encourages negotiating around the range rather than fighting over the central point estimate.

Post-separation contributions and timing

Why the report isolates contributions and earnings across cohabitation, separation and the valuation date.

Bonnici & Bonnici

(1992) FLC 92-272

Post-separation contributions are weighed differently from contributions made during cohabitation.

In this report
Each period — pre-cohab, cohab-to-separation, separation-to-valuation — is reported as a discrete segment.
At mediation
Lets parties carve out post-separation accruals cleanly, instead of arguing over a blended balance.

Trevi & Trevi

[2018] FamCAFC 173

Care needed when treating post-separation effort, especially where children's primary care has shifted.

In this report
Segment-level transparency lets s 79(5) factors and post-separation adjustments be argued on the actual figures.
At mediation
Useful where one party has continued contributing to super while solo-parenting after separation.

Defined benefit and unsplittable interests

How DB and other illiquid interests are handled separately from realisable assets.

Coghlan & Coghlan

(2005) FLC 93-220

Two-pool approach: DB / illiquid interests can be assessed separately from realisable property.

In this report
Where applicable, DB values are presented as their own pool — not netted against cash and real estate.
At mediation
Stops the other side from demanding immediate cash equivalent to a non-commutable DB value.

Preston & Preston

[2022] FedCFamC1A 157

Modern application of the two-pool approach to public-sector DB interests.

In this report
Cited where the report values a defined-benefit interest under Schedule 2 of the FL(S)R 2001.
At mediation
Reinforces presenting DB outcomes as a base-amount split or flag, not a dollar-for-dollar offset.

Expert duty and the use of valuation evidence

Why the report stays in its lane — quantified evidence, not advocacy.

Makita (Australia) Pty Ltd v Sprowles

(2001) 52 NSWLR 705

Expert opinion must disclose the reasoning, assumptions and facts on which it depends.

In this report
Every input, return series and assumption is disclosed in §§7–8 and Appendices B–E.
At mediation
Makes the figures hard to attack as 'a number plucked from the air' across the table.

Federal Circuit and Family Court of Australia (Family Law) Rules 2021, Sch 1

Expert Witness Code of Conduct

Paramount duty is to assist the Court impartially; that duty overrides instructions.

In this report
Acknowledged at §2 of the report. The author is not an advocate for either party.
At mediation
A single, jointly-instructable report carries materially more weight than two duelling experts.
Open the full case-law library

Section 16

§16Appendices

  • Appendix A — Author CV and AIAA credentials
  • Appendix B — Year-by-year working paper
  • Appendix C — Fund crediting-rate series
  • Appendix D — Letter of instructions
  • Appendix E — Sensitivity working
  • Appendix F — Glossary of actuarial terms

Signed and dated

AIAA, on behalf of Family Law Super — 5 October 2023.

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