38-856

38-856. Benefit increases

A. Effective July 1 of each year, each retired member or survivor of a retired
member is entitled to receive a permanent increase in the base benefit equal to the
amount determined pursuant to this section if either:

1. The retired member or the survivor of a retired member was receiving benefits on
or before July 31 of the two previous years.

2. The retired member or survivor of a retired member was fifty-five years of age
or older on July 1 of the current year and was receiving benefits on or before July 31 of
the previous year.

B. The monthly amount of a permanent increase provided by subsection A is
determined as follows:

1. Determine the excess investment earnings on the net assets of the fund.

2. Determine the excess investment earnings account balance.

3. Determine the actuarial present value, as of June 30 of the preceding calendar
year, of a five dollar per month increase in the amount of each pension eligible for an
increase.

4. Add the amounts determined in paragraphs 1 and 2 of this subsection then divide
by the amount determined in paragraph 3 of this subsection.

5. From the quotient obtained in paragraph 4 of this subsection, drop any fraction.

6. Multiply the number obtained in paragraph 5 of this subsection by five dollars.

C. The excess investment earnings on the net assets of the fund are equal to the
total assets of the fund less any amount allocated to the excess investment earnings
account multiplied by one-half of the positive difference, if any, between the total
return of the system and nine per cent. The excess investment earnings on the net assets
of the fund are zero if the total return of the system is less than or equal to nine per
cent.

D. As used in this section, total return and the net assets of the fund are the
amounts published in the annual report of the system for the fiscal year ending June 30
of the calendar year preceding the July 1 of the increase.

E. All excess investment earnings on the net assets of the fund are available for
benefit increases as provided in this section. Any excess investment earnings on the net
assets of the fund from any year which are not used for benefit adjustments for that year
are available for future benefit increases in the following years. Earnings on the
excess investment earnings account balance at the rate of the total return as published
in the annual report of the system shall be added each year to the excess investment
earnings account and shall be available for future benefit increases.

F. The maximum benefit increase under this section is limited to the equivalent of
four per cent of the average normal benefit being received on the preceding June 30.