Cherokee & Cherokee [2025] FedCFamC1A 191: Clarity on DFRDB Pensions and Defined-Benefit Super in Family Law

Family law practitioners have long struggled with the treatment of defined-benefit superannuation pensions, particularly those under the Defence Force Retirement and Death Benefits (DFRDB) scheme. The recent appellate decision in Cherokee & Cherokee [2025] FedCFamC1A 191 (Christie J) provides welcome clarification.

While the case does not announce a new principle, it brings together the existing authorities - notably Preston & Preston [2022] FedCFamC1A 157 and Semperton & Semperton [2012] FamCAFC 132 - and explains, with precision, how courts should approach superannuation interests that are defined-benefit pensions in payment.

The message is clear: these pensions are property, but treating them as if they were a lump sum asset for division can produce injustice. The key is not their legal character, but the practical exercise of discretion in determining what is “just and equitable.”

The background

The parties’ marriage in Cherokee lasted just over six years. At separation, both held superannuation entitlements, but of very different kinds. The husband, a retired Defence Force member, was already receiving his DFRDB pension - a non-commutable defined-benefit pension paying a fixed income for life. The wife, meanwhile, had her own defined-benefit superannuation through a public sector fund, but her interest remained in the growth phase, not yet paying.

At trial, the wife sought a splitting order over the husband’s DFRDB pension based on an actuarial value of approximately $2.87 million. The husband opposed that order, contending the pension should be treated as a financial resource rather than property.

The trial judge agreed with him, classifying the DFRDB as a financial resource and excluding it from the asset pool. Yet the judge included the wife’s defined-benefit fund - a structurally similar interest - as an asset with a capitalised value. That inconsistent approach ultimately led to the successful appeal.

The appeal: property, income, and double counting

On appeal, Justice Christie confirmed that section 90XC(1) of the Family Law Act 1975 (Cth) makes clear that a superannuation interest “is to be treated as property”. That treatment enables, but does not compel, a court to make a splitting order. The real question is whether doing so is just and equitable in the circumstances of the case.

Importantly, the Court emphasised that a defined-benefit pension - especially one already in payment - may simultaneously have the characteristics of property, a financial resource, and an income stream. Its proper classification depends on what best reflects the justice of the case.

The trial judge had treated the DFRDB as a “financial resource” and concluded that this meant a split was legally unavailable. That, Justice Christie said, was an error. The Court may decline to split such a pension, but not because it cannot - only because doing so would not be just and equitable.

The judgment also addressed the problem of double counting. If the DFRDB’s actuarial (capitalised) value were included in the pool and the husband’s ongoing pension payments were also considered under s 79(5) as income, the same benefit would be assessed twice - first as capital, then again as income. That outcome would be plainly unfair.

The outcome: excluding the pension but acknowledging its value

Justice Christie re-exercised the discretion and declined to make a splitting order over the husband’s DFRDB pension. The decision was not based on legal incapacity but on fairness: the pension was almost entirely earned before the relationship, was non-commutable, and was the husband’s primary source of income at age 59.

Instead, both parties’ defined-benefit interests (the husband’s DFRDB pension and the wife’s public sector fund) were excluded from the divisible pool, to avoid inconsistency and double counting.

The Court then rebalanced the remaining property and accumulation super pool, adjusting the wife’s entitlement upward to ensure a just and equitable outcome. The husband’s obligation to pay her $400,000 was increased to $813,808, with a corresponding costs certificate granted in her favour under the Federal Proceedings (Costs) Act 1981 (Cth).

Practical lessons for practitioners

The significance of Cherokee lies in its clear guidance on how to handle defined-benefit pensions in family law cases. It reinforces several key points:

First, defined-benefit pensions in payment, including DFRDB pensions, are property. However, the court retains a broad discretion to decline to split them if doing so would be inequitable, particularly where the pension:

• was largely accrued before the relationship;

• is non-commutable (i.e., cannot be converted to a lump sum);

• is the member’s sole income source in retirement; or

• would otherwise be double counted if its capital value were added to the pool.

Second, if the pension is treated as an income stream rather than a capital asset, the court should record that reasoning explicitly and then adjust other property or superannuation interests (for example, an accumulation fund) to achieve fairness.

Third, consistency matters. If one party’s defined-benefit interest is excluded from the asset pool to avoid double counting, the other’s should generally be treated the same way, or reasons must be given for any difference.

Finally, practitioners should remember that the exercise under s 79 remains fundamentally about justice and equity, not about arithmetic or mechanical equality. As Christie J noted, “The fact that a superannuation pension is more properly considered as an income stream does not make it unsplittable, albeit it may persuade a judicial officer to exercise the discretion in that manner.”

In plain language: why this area confuses everyone

Superannuation comes in two broad types - accumulation funds and defined-benefit funds.

Most people have accumulation super. You and your employer make contributions, the money is invested, and what you get at retirement depends on how much went in and how well it performed. If you split that in family law, you’re just transferring a share of an account balance.

A defined-benefit fund works differently. It doesn’t have an individual balance you can cash out. Instead, it promises a guaranteed lifetime income, based on your years of service and final salary. That promise has a notional capital value - what actuaries calculate the lifetime income is “worth” - but you can’t actually access that amount.

In family law, this creates a dilemma. If you add the “capitalised value” to the property pool, you’re counting money that doesn’t really exist. But if you ignore it entirely, you risk overlooking a significant benefit.

The courts try to solve this by treating the pension as property in theory, but in practice as an income stream - particularly where it’s already paying and can’t be converted to a lump sum. In those cases, the pensioner keeps their income, and the other party is compensated from other assets or super.

That’s what happened in Cherokee. The DFRDB pension was property, but it stayed with the husband as income, while the wife received a greater share of other assets to even things out.

Why Cherokee matters

Cherokee is likely to become one of the go-to authorities for practitioners dealing with military or public sector defined-benefit pensions. It clarifies that these pensions are capable of being split, but that inclusion of their capital value is not mandatory, and in many cases would be misleading.

The decision invites a more nuanced, fact-driven approach: to look beyond labels of “property” or “financial resource” and to focus on how the pension functions in the parties’ real financial lives.

As family lawyers, that means framing submissions that help the Court articulate why a split would or would not be just and equitable, rather than debating whether the pension “counts.”

Key citation:Cherokee & Cherokee [2025] FedCFamC1A 191 (Christie J) - appeal allowed, husband’s DFRDB pension held to be property but not split; overall adjustment increased wife’s entitlement from $400,000 to $813,808.

By Ashleigh Morris, Family Law Barrister at Victorian Bar.

For briefing enquiries, please email a.morris@vicbar.com.au or contact Patterson's List on 03 9225 7888.