Sasserine Marine Corps
SMC personel are allowed to have 1 magical item for each body slot. Potions, scrolls, and wands, (expendable magic items), are the exception.
When on mission, if an improved item is encountered, a soldier may claim possession of the new item. If he/she already has a magic item in the slot the new one belongs to, he/she must relinquish one (and will always choose to turn in the lesser one). This is the battlefield upgrade, and although it happens in the middle of a mission, it isn’t permanent until the end of that mission (next level).
When a new level is attained, and no magic items were found, the military makes some recovered items available under the same rules. If you take a sword, you give a sword. This is possible because some other military unit in the SMC had already turned in old magic to replace their battlefield upgrades.
We use the Character Wealth By Level chart (table 5-1), in the DMG on page 135 as a limit to what is available on mission (commensurate with the danger level of the mission) or from the military stores (a 2nd level private wouldn’t be offered a Staff of the Magi, but he might be offered a +1 sheild and the like).
This chart is meant to be the upper limit of wealth for a character, not a credit account. A PC of 3rd level should have a maximum of 2,700 gp, and going to 4th should only grant him/her another 2,700gp to have a max total of 5,400gp. We instead grant ourselves an additional 5,400gp upon reaching 4th level to represent the maximum cost of any 1 item available (either on mission or from stores). So turning in an item to get a more powerful one is not cost effective if you do it for the same item slot every level, or even every other level. However, by cycling through our item slots, we can become very well equipped for our level.
It is true that as a freelance adventurer, you can sell what you no longer use to recover some of the value towards greater items, but then there’s no guarantee that you’ll get anything from your adventures. In the military upgrades are part of the deal. All basic needs, housing, food, clothing, medical attention, are met by the SMC, and the families of those who serve are considered a higher class of citizen, no matter what district or background they come from.