(1) If:
(a) a person's invalidity pay, worked out having regard to section 49N, is cancelled under section 62; and
(b) after that cancellation, the person becomes entitled to retirement pay or invalidity pay;
the rate of the person's retirement pay or invalidity pay mentioned in paragraph (b) is to be reduced in accordance with section 49N.
(2) However, for the purpose of the formula in subsection 49N(2), the amount of the release authority lump sum is reduced by the amount of any reductions made because of the previous application of section 49N to the invalidity pay before it was cancelled.