(a) Ordinance.--In accordance with this subchapter, an ordinance creating a fund may provide for a limited vested benefit if it would conform to section 305 of the act of December 18, 1984 (P.L.1005, No.205), known as the Municipal Pension Plan Funding Standard and Recovery Act.

(a.1) Vesting.--Under a limited vested benefit, if a member of the fund terminates employment before reaching the date which would have been the member's earliest retirement date had the member continued employment by meeting the minimum age and minimum period of continuous service requirements but after having completed 12 years of full-time service, the member shall be entitled to vest the member's retirement benefits subject to the following conditions:

(1) The member must file with the management board of the fund a written notice of the member's intention to vest.

(2) The member must include in the notice the date the member intends to terminate the member's service as an employee.

(3) The termination date shall be at least 30 days later than the date of notice to vest.

(4) The member must be in good standing with the city on the date of notice to vest.

(5) The board shall indicate on the notice to vest the rate of monthly pay of the member as of the date of the notice to vest or the highest average annual salary which the member received during any five years of service preceding the date, whichever is higher.

(b) Collection.--Upon reaching the date which would have been the member's earliest retirement date had the member continued the member's employment with the city, the member shall notify the board, in writing, that the member desires to collect the member's pension. The amount of retirement benefits the member is entitled to receive under this section shall be computed as follows:

(1) The initial determination of the member's base retirement benefits shall be computed on the salary indicated on the notice to vest.

(2) The portion of the base retirement benefits due the member shall be determined by applying to the base amount the percentage that the member's years of service actually rendered bears to the years of service which would have been rendered had the member continued to be employed by the city until the member's earliest retirement date.