I cannot see that when you leave the services and hand in your ID, they couldn't hand you a replacement for your ID card that allows you to possibly use the facilities / shopping etc, similar to the current one, but with "Retired" emblasoned across it.. Simple and probably really cheaper to administer. After all if they are going to start doing driving licences ( and ID's for those without one,) surely the easiest system is at your point of departure, I realise it would only work for those still serving, but it would probably be a cheaper option. ....
Or is that too sensible?.