(a) As used in this Code section, the term:

(1) "Annual compensation" means compensation during the determination period. Such term shall include any cost-of-living adjustment in effect for a calendar year if the determination period begins with or within such calendar year.

(2) "Determination period" means the plan year or such other consecutive 12 month period over which compensation is otherwise determined under the public retirement or pension system.

(b) The annual compensation of a plan member during any plan year beginning on or after January 1, 2002, which exceeds $200,000.00, as adjusted for cost-of-living increases in accordance with Section 401(a)(17)(B) of the federal Internal Revenue Code, shall not be taken into account in determining benefits or contributions due from the public retirement or pension system for any plan year. If the determination period consists of fewer than 12 months, the annual compensation limit shall be an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short determination period and the denominator of which is 12. If the compensation for any prior determination period is taken into account in determining a plan member's contributions or benefits for the current plan year, the compensation for such prior determination period shall be subject to the applicable annual compensation limit in effect for the prior period.

(c) The annual compensation of a plan member during any plan year beginning on and after January 1, 1996, and before January 1, 2002, which exceeds $150,000.00, as indexed as provided in Section 401(a)(17)(B) of the federal Internal Revenue Code, shall be disregarded for purposes of computing contributions to or benefits due from the public retirement or pension system.