One who is honourably discharged from service

One word substitute is Emeritus.

Emeritus: (of the former holder of an office, especially a university professor) having retired but allowed to retain their title as an honour.
Honorary: conferred as an honour, without the usual requirements or functions.
Sinecure: a position requiring little or no work but giving the holder status or financial benefit.
Retired: having left one's job and ceased to work.