Freshly pardoned Flynn commits sedition!

Well, if that’s the case then why wasn’t he tried under UCMJ instead of federal court.
That is normal. DOD overwhelmingly allows retirees subject to the UCMJ to be handled in civilian courts rather than exercise their jurisdiction. Sometimes they even allow still active members to be handled in civilian courts when there is mixed jurisdiction. The military CAN legally assert jurisdiction. It is relatively rare that they do so for retirees.

Retired military personnel are not subject to the UCMJ. Yes, if reactivated they would again be subject to the UCMJ - but the jurisdiction would begin at the re-activation date.
From AR 27-10, Military Justice
(3) Retirees. Retired members of a regular component of the Armed Forces who are entitled to pay are subject to the provisions of the UCMJ (see UCMJ, Art. 2(a)(4)). Retirees are subject to the UCMJ and may be tried by court-martial for violations of the UCMJ that occurred while they were on active duty or, while in a retired status. Department of the Army policy provides that retired Soldiers subject to the UCMJ will not be tried for any offense by any courts-martial unless extraordinary circumstances are present.
Flynn is retired from a regular component and drawing pay. He could legally wind up in front of a court martial for something as minor as smoking a joint while retired where recreational marijuana is legal. By policy, the Army is almost certainly going to choose to ignore that.

For something like an actual violation of Article 94, which I agree with you this looks like it falls short of, the Army might choose to get involved. That is the kind of case the policy leaves the door open for.
 
Is a pension considered 'pay' for that purpose? Or is 'pay' something else, like working in some other capacity, civilian contractor, consultant, etc.?
 
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