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Military pensions and property settlements

14 November 2023

When should an asset not form part of the property pool? In some cases, when it’s a military pension.

In a recent case, a judge was found to have made an error by counting a military pension twice during a property split – firstly, as a capitalised asset, and then, secondly, as a future source of income.

The couple married in 2006 and divorced in 2020. They had four young children together, who primarily lived with their mother after the couple separated.

The husband qualified for a military pension after his medical discharge from the armed services in 2010. He served for more than 27 years, and the pension was only ever payable to the husband whilst his medical condition justified it.

During the proceedings, the wife sought 52.5 percent of the parties’ property and superannuation, with the husband seeking 57.5 percent.

The wife did not contend for the military pension to be counted as an asset at its capitalised value and anticipated its treatment as only an income stream.

However, the judge assessed the pension as being a capitalised asset, and also as a future source of income.

The military pension ought not to have been notionally identified as an asset, when it was not, as it could neither be commuted nor alienated. It was no more than a right, entirely personal to the husband, to receive defined income whilst he was medically unfit.

When military pensions are involved in a property settlement, courts sometimes cordon the pension into its own separate property pool.

However, while superannuation interests can be split between a couple during a divorce, there are some interests that are generally considered to be “unsplittable” including a lifetime pension or fixed-term pension. That can include military pensions, and pensions from other services, such as the police force.

This is a complex area of law. If you need advice on what is or isn’t part of the property pool in your separation, get in touch with Michael Lynch Family Lawyers today.

Phone our office on: (07) 3221 4300 or email: [email protected]

2024-02-16T09:51:39+10:00

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