(1) (a) Any member covered by the statewide defined benefit plan who has completed at least twenty-five years of active service and has attained the age of fifty-five years shall be eligible for a normal retirement pension subject to adjustment pursuant to paragraph (b) of this subsection (1). The annual normal retirement pension shall be two percent of the average of the member's highest three years' base salary multiplied by the member's years of service, not to exceed twenty-five.

(b) The board shall determine after each annual actuarial valuation if the cost of all benefits established by this part 4 for members covered under this section and the cost of a normal retirement pension beginning at age fifty-five for members then eligible may be fully funded on an actuarially sound basis without necessitating an increase in the eight percent employer and eight percent member contributions made pursuant to section 31-31-402 or such higher member contribution rate established pursuant to section 31-31-408 (1.5)(a). If the board cannot so determine, it shall order that the normal retirement pension commence such number of months as are actuarially supportable, from one to sixty, after age fifty-five for members who have completed at least twenty-five years of active service and are otherwise eligible in accordance with the board's determination. The determination of the board shall be conclusive in the absence of fraud. A pension commenced after age fifty-five pursuant to this paragraph (b) shall not be subject to annual review. If a court determines that this paragraph (b) is invalid, the age of retirement to be eligible for any normal retirement benefit shall be age sixty except for persons receiving a benefit at the time of the court's decision.

(2) (a) If in any year the board determines pursuant to this part 4 that the cost of the benefits described in paragraph (b) of subsection (1) of this section, excluding the benefit described in section 31-31-405, may not be fully funded on an actuarially sound basis without necessitating an increase in the eight percent employer and eight percent member contribution made pursuant to section 31-31-402 or such higher member contribution rate established pursuant to section 31-31-408 (1.5)(a), the board shall not increase such employer or member contributions unless:

(I) The board has terminated the benefit described in section 31-31-405; and

(II) The board has transferred all funds in the stabilization reserve account to the actuarial account as required by section 31-31-405 (1) and (2), except such funds as are attributable to the separate retirement account of any member who has terminated service after at least five years of credited service.

(b) Nothing in this subsection (2) shall be construed to prohibit the board from utilizing the provisions of section 31-31-405 to provide the benefit described in said section in any subsequent year when the total amount of additional deposits to the new hire benefits account exceeds the amount needed to meet the benefit liabilities funded by the actuarial account pursuant to section 31-31-405.

(c) Nothing in this subsection (2) shall be construed to require the reduction of benefits below the level sustainable by the higher member contribution rate established pursuant to section 31-31-408 (1.5)(a).

(3) Any member retiring and eligible for a normal retirement pension as provided by subsection (1) of this section may elect to defer receipt of such pension until attaining the age of sixty-five years. In the case of such election, the annual deferred retirement pension shall be the actuarial equivalent of the normal retirement pension.

(4) Any member covered by the statewide defined benefit plan who has completed at least thirty years of active service or has attained the age of fifty years and who is not receiving benefits pursuant to section 31-31-803 may elect to retire from active service and shall be eligible for an early retirement pension. The annual early retirement pension for a member shall be the benefit, as determined by the board, that the member would have received at normal retirement reduced on an actuarial equivalent basis to reflect the early receipt of the benefit.

(5) (a) A member eligible for a normal, deferred, or early retirement pension may elect to receive one of the following pension options in lieu of a pension computed in accordance with subsection (1), (3), or (4) of this section:

(I) Option 1. A reduced pension payable to the member and upon the member's death, all of such reduced pension to be paid to the member's designated beneficiary for life;

(II) Option 2. A reduced pension payable to the member and upon the member's death, one-half of such reduced pension to be paid to the member's designated beneficiary for life;

(III) Option 3. A reduced pension payable jointly to the member and the member's designated beneficiary and, upon the death of either, one-half of such reduced pension to be paid to the survivor for life.

(b) A member shall be considered to have elected option 1 and retired on the day before the member's death if the member is eligible for a normal or early retirement pension and dies:

(I) Before making an election as provided in paragraph (a) of this subsection (5);

(II) Before the first pension payment has been deposited or otherwise negotiated or sixty days from the date of issuance of such check, whichever occurs first; and

(III) Is survived by a spouse, a dependent child, or a designated beneficiary.

(c)

(I) After an election has been made of any of the options provided in paragraph (a) of this subsection (5) and the first pension payment has been deposited or otherwise negotiated by the member, or sixty days from date of issuance of the check have elapsed, whichever occurs first, the election shall be irrevocable. The member's beneficiary designation shall also be irrevocable at such time unless the member's marital status changes as the result of dissolution of marriage, marriage, remarriage, or in the event of the death of a beneficiary. In such case, the member may designate a new beneficiary; except that, in cases of dissolution of marriage, this provision shall only apply to any final dissolution of marriage decree of a member entered on or after July 1, 1990.

(II) Notwithstanding subparagraph (I) of this paragraph (c), an unmarried member who receives a single life annuity at the time benefits commence and whose marital status subsequently changes as the result of marriage or remarriage may elect one of the options provided in paragraph (a) of this subsection (5) within one hundred eighty days of the date of the marriage or remarriage or January 1, 2008, whichever date is later. If, after such selection of a different payment option, the member subsequently dies within one hundred eighty days following the marriage or remarriage, the only survivor benefit payable to the member's designated beneficiary shall be the difference between the single life option amount payable to the member prior to marriage or remarriage and the amount of the reduced benefit that was actually paid to the deceased member after the marriage or remarriage and prior to the member's death.

(d) The joint pension benefits provided by this subsection (5) shall be calculated as the actuarial equivalent of the normal or early retirement pension otherwise payable as provided in subsections (1), (3), and (4) of this section. In the event of a change in beneficiary designation pursuant to paragraph (c) of this subsection (5), the joint pension benefits payable shall be recalculated so as to be the actuarial equivalent of the remainder of the original pension benefits based upon the member's initial beneficiary designation, if any. In the event of a change in option elected pursuant to subparagraph (II) of paragraph (c) of this subsection (5), the joint pension benefits payable shall be recalculated so as to be the actuarial equivalent of the remainder of the original pension benefits payable to the member immediately prior to the change in option.

(6) If the total amount of pension benefits paid as provided in this section is less than the amount of the member's accumulated contributions at the time of death, the difference shall be paid to:

(a) The member's estate if no pension payment was made pursuant to subsection (5) of this section; or

(b) The survivor's estate if pension payments were made pursuant to subsection (5) of this section.

(7) All service of a member who is employed by successive employers shall be aggregated for determining eligibility and benefits provided by this section if the service for each employer was rendered while the employer covered its members under the statewide defined benefit plan established by this part 4. The service of a member who is employed by successive employers shall be aggregated for determining eligibility and benefits provided by the statewide defined benefit plan established by this part 4 if the service for any employer was rendered while the employer did not cover its members under the statewide defined benefit plan established by this part 4 only on the basis of agreements made with the board.

(8) The board may promulgate rules to allow members who are eligible to receive any type of retirement benefits to defer receipt of the benefits to the extent permitted under section 401 (a)(9) of the federal "Internal Revenue Code of 1986", 26 U.S.C. sec. 401 (a)(9), as amended, and the regulations promulgated pursuant to section 401 (a)(9).