Yes there was retirement. I assume they get a pension.
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As for rank... the highest would have to be whatever rank commands the biggest PS formation. If an officer gets promoted even higher, he could be assigned to the higher rung in the chain of command that could include other non PS units.
Gen. Wainwright is an example. When he first returned to the Philippines he commanded the Philippine Division. When war started he was the North Luzon Force commander. When MacArthur left, he was the USFIP commander.