AFAIK soldiers never loose their experience. If they are retrained the inexperienced recruits are added to the unit lowering average unit's valour. I don't know how morale works because it's hard to track. I always thought that when a unit is retrained, new soldiers are added and all veterans' statistics are upped to the level of the new ones (if necessary). If veterans have higher statistics, they stay unchanged. I don't have any proof of it but if you try to retrain full unit (recruited before province being upgraded with e.g. master level building), the unit's parameters are visibly upped to match the new, higher standard.
Attack and armor bonuses work differently. You can check it by trying to combine two units, one "naked" and other with some bonuses. If you add "naked" soldiers to the better equipped unit, all soldiers become better equipped. The bonuses in the better equipped unit are not lowered/averaged but visibly stay the same as before. You can use this little trick to upgrade some old but decimated veteran unit for free. Soldiers carry over their valour (and probably morale) and get new swords and armors for free :).
btw The cost of retraining equals the cost of a new unit, no matter how many soldiers are added. You can even retrain full unit (for armor, valour, etc. bonuses) and you still pay full cost.
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