Well, I retired about 3 years before my NRD as a Spec Aircrew Sqn Ldr on AFPS75 terms and decided to maximise the pension rather than take the maximum lump sum. After index-linking kicked in in early 2006, I now get the princely sum of £20000 per annum after tax..... Which is OK as a basic income, augmented by the odd bit of tax-declared income from other sources.
Of course flying pay wasn't pensionable, nothing was being done to compensate those who had <5 years to NRD and couldn't transfer to AFPS05, so with the RAF beginning its death spiral it was time to pull the black and yellow handle in 2003; I could have commuted a huge amount, but decided that the security of a reasonable pension was preferable - and bolleaux to the doom saying actuaries who think that everyone who leaves HM forces will pop their clogs within a couple of years of retiring!
Those who are very brave might spot some good shares to snap up right now - my (inherited) portfolio has taken a bit of a battering, as have the PEP and ISA, so as soon as they come up to my target figure again once the greed of city bankers and other white collar criminals has been expunged, I shall flog the lot and move everything to join my more conservative sums invested in major British bank savings accounts. Less interest income, but far less risk!!
Of course there's always the chance of a decent tax free win on Ernie!