I have so many more questions brought about by this question but I will limit myself to two, if OP doesn't mind.. First, why did John Paul Jones retire in France? He's an American hero of the Revolutionary War, seems strange he didn't get some nice rewards to include a house and pension. Second, why was he receiving a pension from the Imperial Russian Navy?

Kinda related follow up: I read that Lafayette received a pension paid by the United States government while he was in an Austrian prison. How did that work?

I cannot speak on General LaFayette's pension nor Russia's pension system but the British Army had an extensive pension program set up through the Royal Chelsea Hospital since the late 1600s. In addition, the British army in this time period of the 18th century had pension systems for officers as well. Officers would not have used the Chelsea as a means of pension since their commission almost guaranteed a half-pay once the army discharged them. This only counted for officers under the Regular establishment and not any officer commissioned in a colonial or provincial regiment, and, until later in the nineteenth century, an Irish regiment. Mostly enlisted and non-commissioned officers applied for the Royal Chelsea Hospital which had two categories: In-Pensioner and Out-Pensioner. They are obviously named, with In-Pensioner meaning the soldier had to stay in the hospital to receive the pension, something soldiers coveted after discharge, and Out-Pensioner allowed the soldier to return to their home while receiving a pension.

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Early in the eighteenth century Out-Pensioners still had to return to Chelsea at least once a year, unless they had a letter written by the colonel of their former regiment, to receive their pension. Often soldiers in the early eighteenth century had to wait over a year for their pay to arrive, in arrears no less, and this pushed soldiers to turn to moneylenders. This changed in 1754 when they made the practice of going to money lenders or other agents illegal and diverted the pay to the Collectors of Excise ran under the Chelsea Hospital. By the mid to late eighteenth century, soldiers received their pension from local authorities under the guidance of the Collectors. Justices of the Peace and parishes held some responsibilities of handing out the pensions. The army encouraged discharged soldiers to return to their homes that they had been enlisted from since they held records of their families and locations on there. By returning to their former homes, the army could have an easier time of sending pensions for the soldiers distributed through local authorities. In addition, soldiers that had enlisted into the regular army would automatically eligible for a pension, whether they served in North America, West/Indies, India, etc.

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Officers would have received their pay by post, something they had gotten used to while in the military and through the paymaster. Even if overseas, they received their half pay from shipment. I will admit that none of the primary sources have revealed if the pay amounted to species or solely a receipt for it, but they received an annual sum - half their rank's worth. Even while in Paris for the last few years, Paul Jones would have received his pension by post as France did have a Russian ambassador at the time.

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