The Gurkhas said they had been the victims of age discrimination
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Three ex-Gurkha soldiers have lost a High Court challenge to the British government over a pensions deal.
Kumar Shrestha, Kamal Purja and Sambahadur Gurung said they had been treated unlawfully and unfairly.
They said years of service for Gurkhas who signed up before July 1997 but retired after that date were valued at between 24% and 36% of British rates.
But Mr Justice Ouseley ruled that the Ministry of Defence's pension valuation had been "justified and proportionate".
Medical grounds
The court battle followed an offer by the MoD in March 2007 to transfer Gurkhas' pensions from the existing Gurkha Pension Scheme (GPS) into one of the mainstream Armed Forces Pension Schemes (AFPS).
The three men involved in bringing the case argued that the deal discriminated against them on the grounds of age.
Gurkhas, who come from Nepal, have served in the British army for more than 200 years and have won 13 Victoria crosses.
Solicitor Philippa Tuckman, of law firm Bolt Burdon Kemp, who represented the three men, said she was "saddened" by the result and intended to appeal.
She added that a Gurkha who retired in 2007 on medical grounds with 17 years' service would receive £4,650 a year, but a British soldier in the same position would be given about £6,400.
"Gurkhas have served in theatres of war, in danger and in hardship," she said.
"They should be valued for it, not penalised."
At the time of the deal, ministers argued that satisfying the demands of all former Gurkhas would be "unaffordable" and have ramifications throughout the public sector.
Following the judgement, an MoD spokesman said: "The Ministry of Defence welcomes the ruling, which confirms that the recent pensions transfer offer to serving and eligible retired Gurkhas was fair and reasonable."
He added that the transfer offer had been taken up by almost all serving Gurkhas, and that 73% of eligible retired Gurkhas had switched to the AFPS.
The Brigade of Gurkhas is based at Shorncliffe, near Folkestone, Kent, although one infantry battalion has its barracks in Brunei.
The brigade was stationed in Hong Kong until the former British colony was given back to China in 1997.
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