(a) Payments.--The following apply:

(1) Payments of pensions shall only be a charge on the firefighters pension fund and shall not be a charge on any other fund under the control, or in the treasury, of the city.

(2) The basis of the pension of a member shall be determined by the monthly salary of the member at the date of vesting under section 14320.1 (relating to limited vested benefit for firefighters) or retirement or the highest average annual salary which the member received during any five years of service preceding retirement, whichever is higher, whether for disability or by reason of age or service, and, except as to service increments provided for in subsection (b), shall be one-half the annual salary of the member at the time of vesting under section 14320.1 or retirement computed at the monthly or average annual rate, whichever is higher.

(3) For payment of pensions to members for permanent injury incurred in service and to families of members killed or who die in service, the amount and commencement of the payment of pensions shall be fixed by regulations of the board of managers. These regulations shall not take into consideration the amount and duration of workers' compensation allowed by law. Payments to surviving spouses of members retired on pension or killed in service on or after January 1, 1960, or who die in service on or after January 1, 1968, shall be the amount payable to the member or which would have been payable had the member been retired at the time of the member's death.

(a.1) Home rule and optional charter plans.--The provisions of subsection (a)(2) shall not apply to a city, whether operating under an optional charter adopted in accordance with the act of July 15, 1957 (P.L.901, No.399), known as the Optional Third Class City Charter Law, or under a home rule charter adopted in accordance with 53 Pa.C.S. Pt. III Subpt. E (relating to home rule and optional plan government), which had pension plans in effect prior to June 19, 2002, that provided pensions in an amount greater than 50% of salary.

(b) Service increment.--In addition to the pension which is authorized to be paid from the firefighters pension fund under this chapter and notwithstanding the limitations placed upon the pensions and upon contributions under this chapter, every contributor entitled to the pension shall also be entitled to the payment of a service increment in accordance with and subject to the conditions imposed under this chapter.

(1) A service increment shall be the sum obtained by computing the number of whole years after having served the minimum required by this chapter during which a contributor has been employed by the city and paid out of the city treasury, including credit for military service as provided in section 14321 (relating to retirement and final discharge), and multiplying the number of years by an amount equal to 0.025% of the retirement allowance which has become payable to the contributor in accordance with the provisions of this chapter. In computing the service increment, no employment after the contributor has reached 65 years of age shall be included and no service increment shall be paid in excess of $100 per month.

(2) After September 18, 1968, each contributor shall pay into the pension fund a monthly sum in addition to the contributor's pension contribution which shall not exceed the sum of $1 per month, provided that the service increment contribution shall not be paid after a contributor has reached 65 years of age.

(3) Any individual who is a member of the department on September 18, 1968, and who has reached 65 years of age shall have the individual's service increment computed on the years of employment prior to the member reaching 65 years of age.

(4) Service increment contributions shall be paid at the same time and in the same manner as pensions and may be withdrawn in full, without interest, by individuals who leave the employment of the city, subject to the same conditions by which retirement contributions may be withdrawn, or by individuals who retire before becoming entitled to any service increment.

(5) All members of the fire department who are now contributors to the pension fund and all those employed by the city after September 18, 1968, if required to become contributors to the pension fund, shall be subject to the provisions of this chapter.

(6) After June 19, 2002, a city may agree to make service increment payments in excess of $100 per month as long as the payments do not exceed $500 per month, and, in computing the service increments, no employment after the contributor has reached 65 years of age shall be included, provided that any agreement to provide an increase in service increment payments shall include a proportionate increase in the amount each contributor shall pay into the retirement fund under paragraph (2), not to exceed $5 per month.