Mr Keetch says troops may have missed out on £500m
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Former members of the armed forces may have missed out on pension payments worth more than £500m in recent years, according to Paul Keetch MP.
The Liberal Democrat defence spokesman is calling for an inquiry into the Ministry of Defence (MoD) practice of ordering early retirement.
The MP for Hereford said on Monday that an investigation should be made into the MoD's use of "manning control points".
They are a device that can be used to give troops notice to leave the forces before completing the 22 years for which they signed up, leading to a loss of full pension entitlement.
Legal action
Mr Keetch added that he has documents which that show the policy was created in part to save money.
More than 2,500 servicemen and women have left the forces under the scheme in the last 15 years.
Some of the troops affected are considering legal action against the MoD to claim their full pensions.
Mr Keetch told BBC Hereford and Worcester that they should not have to go to court to get justice.
"It seems ridiculous that, once again, our soldiers and sailors and airmen are having to resort to the law in order to get the kind benefits and the kind of rights that any decent employer would give them.
"This government's moved a long way so far - it just needs to move that bit further.
"I think an inquiry would sort this out and save the MoD and save the soldiers the trouble of going to court and, obviously, save the expense of that as well."