There's nothing to prevent you from taking your military gratuity and investing that in an assurance or pension fund. As to whether you wanted to invest in offshore/hedge funds, well.. that would depend entirely on your attitude to risk. But there are far safer ways of avoiding tax, legally and safely.. and do you really want to risk your financial future on derivatives? Ask SocGen what they think right now about that. As to the pension, no idea.. sorry. I can't see there being much difference in the final figures either way though. You will be taxed on your pension though, when you get it, the amount will depend on your income. Again though, there are far better ways of mitigating tax and saving than simply sticking ot all in a pension fund. Traditional pension funds linked to annuities currently aren't doing so well because interest rates are so low. Have a chat with your financial guru, spread your risk and also, spread your pot with different fund managers - they'll all have a different outlook and that should smoothe out any wrinkles. DON'T GO TO YOUR BANK.