Gurkha veterans lost a High Court test case battle with the Ministry of Defence over pensions today.
Soldiers who retired before 1 July, 1997 accused the MoD of discriminating against them on the grounds of nationality and age.
Pension rules were altered in 2007 to give Gurkha soldiers equal pension rights with their UK counterparts.
They were handed the option of transferring into the UK Armed Forces pension schemes, leading to marked improvements in their retirement income.
But the British Gurkha Welfare Society said about 25,000 men who retired before July 1997 were denied the opportunity to transfer, leaving them with only a third of the income of UK-based soldiers.
Their pension scheme paid substantially lower benefits based on the cost of living in Nepal, the homeland to which veterans traditionally retired.
Lawyers for the veterans argued in the High Court that the failure to give all retired Gurkhas, who now had the right to settle in the UK, equal pension rights amounted to unlawful discrimination on grounds of nationality and age, in breach of the Human Rights Act and EU discrimination laws.
Mr Justice Burnett, sitting in London, spoke of the "high regard" the British people had for the Brigade of Gurkhas and their admiration for the Gurkhas as individuals.
But he rejected all the grounds of challenge and ruled the MoD had not acted unlawfully.
The British Gurkha Welfare Society's general secretary, Chhatra Rai, said after the ruling that the society would be seeking leave to appeal.
He commented: "It is very regrettable that the Gurkhas were yet again forced to take the British Government to court and disappointing that we did not win the case, though we have understood that this was not likely to be the end of the road.
"The approach of the MoD makes no sense since it is clear that considerable cost savings could be made if Gurkhas would feel less pressure to settle in the UK as this would also put less pressure on the British welfare system.
"Improving our pension is a no brainer as the maths is easy to do.
"The Ministry of Defence estimates the cost of putting in place future equal monthly pension payments to this group of Gurkhas at costing the UK Government £75 million a year.
"However, the Government has estimated that the settlement policy will cost between £300 million and £400 million a year in welfare and healthcare provision for veterans and dependants moving to the UK.
"Notwithstanding the savings that could be made by increasing the future monthly pension payments for Gurkhas, this is above all a moral issue as the majority of Gurkha veterans in this group are now becoming increasingly old and fragile and do not have the level of English necessary to find a job.
"Most of these Gurkhas are therefore not able to work in their old age to supplement their pension."
George Howarth, Labour MP (Knowsley North and Sefton East) and primary sponsor of a parliamentary motion supporting an improved Gurkha pension, said: "The fact that this small but significant group of veterans are still discriminated against shows that there is still more to do to ensure that the Gurkhas are treated properly and fairly."
Ann Widdecombe, Conservative MP (Maidstone & The Weald) and long- time champion of the Gurkhas, commented: "The Gurkhas have always been an integral part of the British Armed Forces, fighting the same wars and carrying out the same duties as British soldiers.
"It is an injustice to give these veterans a pension based on their country of origin instead of the country in whose Army they loyally served."
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