Is my ex-wife entitled to half my British military pension? | USAEMALL.com

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Having served as an officer in the British army for 25 years, my pension is my most valuable asset. My wife and I have made the sad decision to divorce. She insists that she is entitled to half my pension but I feel this is unfair because I served for 15 years before we got married. Can this be taken into account?

Richard Scott, a partner in the family team at HCR Law, says it is understandable that you might feel aggrieved at the thought of sharing your army pension on an equal basis when a large part of it was built up before you were married. It’s a scenario that my clients are often faced with.

Apportionment is the term used when an element of the pensions accrued before marriage (or cohabitation) and potentially post separation is ringfenced and excluded from any pension sharing calculations on divorce. It’s a particularly complex area which has been open to much legal debate and judicial discretion over recent years. Whether you will be able to successfully run an apportionment claim will depend on the circumstances of your case. 

Historically, apportionment arguments have been very successful in family law proceedings as it was considered unfair to share the non-matrimonial element of the pension accrual but there was a change in approach when the Pension Advisory Group (PAG), a group of professionals specialising in divorce, published its report in 2019.

This report recommended that the “needs in retirement” of spouses was the crucial factor for the court to consider, not the specific dates of the pension accrual. This provided family lawyers and judges with a strong steer away from ringfencing and apportionment and recommended that, in most cases, all of a couple’s pensions were in the pot for division. This guidance sat uncomfortably with many, and apportionment arguments are still successfully run in divorce cases today.

Helpfully, an update on the PAG report, called PAG 2, published in late 2023, provides some avenues to justify apportionment arguments in short marriage cases and also in cases where there is a significant proportion of non-matrimonial pension accrual. This could be good news for a case such as yours.

In terms of practical steps, you should request the cash value of your pension benefits, known as the CETV (cash equivalent transfer value) and, if possible, a summary of your pension contribution history. You should also seek advice from a solicitor who is adept at dealing with pensions cases. They will be able to recommend an expert who can provide a report containing apportionment calculations.

In the first instance, I would recommend that you try to reach an out-of -court agreement with your wife. Your solicitor should be able to help with this and perhaps recommend a mediator if you will both agree to mediation or another non-court method. If you cannot reach an agreement, you will need to put forward an apportionment argument. The court will then look at all the circumstances of your case, including the length of your marriage and your wife’s needs when making a decision.

Is a family office the best way to leave a business?

I’m building a property investment business and want it to be left to my three children and their descendants. Will a family office be the right route?

Jonathan Kropman, private client partner at law firm JMW Solicitors in London, says a family office can work for the situation you describe if you keep it simple. Often, the same dedicated person runs the properties and administration. Other family offices are organised to provide asset and strategic management, oversee income distribution and reinvestment, tax reporting and legal compliance. Some outsource these functions to multi-family offices with ready set up systems.   

If you decide to go down the family office route, your analysis of how to proceed with appointing your chosen operators should not ignore the economics coupled with planning for when you no longer work. The managers of the family office should be carefully chosen, and I would generally advise taking personal recommendations given the importance to the family of the responsibility they hold. 

Economics includes cost-benefit ratio as well as tax erosion. Preparation for after you no longer run the business means putting in place a robust contract to control your family office providers with appropriate terms and conditions and lines of reporting. Alone, a family office does not assure the passing of the business to your descendants. You also need to plan the passing of the ownership of the business.

If any of your children are not yet adults, trusts have merits. Others look to hold assets in a family investment company where different classes of shares enable founders to be issued with management/voting shares instead of shares with income and return of capital rights which can be issued to the next generation. Careful analysis of tax implications should precede putting a family investment company in place or choosing a trust ownership arrangement.

Experience shows structures should not be inflexible to changes in laws or family relationships and attitudes. The family office management, properly chosen and with suitable governance, can be useful to navigate family tensions or, where as time passes, assist orderly extraction of value for family members wishing to part ways without undue disruption to those who do not want to leave. Remember much will turn on how ownership of the underlying rights are held and how these pass by the wills of the founders.

The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.

Do you have a financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to [email protected].