I would also remove their criminal records, the Country pardoned Turing so why not these guys and girls. I do agree though with the consensus these folks knew the rules when they joined up, but equally agree with the fact that people change as they get older and hence would find themselves trapped in a culture where it was frowned upon, heck I wouldn’t ever eat cooked carrots as a nipper, but love them now.
and I totally agree with the blackmail statement, it was only blackmail able because it was illegal in the military.
As for restoration of pensions, I agree, but do you restore it to time served, or time originally signed on for, as they were in a way unable to qualify for the full period due to being ejected from the forces.