Umar wrote:is there a physical system to destroy object and shatter them into pieces?
Not that I know. You would need to somehow link multiple pieces together, and then shatter them by adding forces in various directions. To further optimize things, it should normally be one object only, but turn into this linked object group only on impact (when it is supposed to explode).
As long as there are a small number of pieces (2-3), this effect shouldn't be too laggy.
A simpler way would be to make an animation of the explosion, and then just activate the animation on impact.