§ 17.1. Post-retirement benefit increases on or after July 1, 2007, and before June 30, 2013.

(a) Scope.

This section applies to retirement benefit increases determined on or after July 1, 2007, and before June 30, 2013.

(b) "Single-premium paid-up annuity" defined..

In this section, "single-premium paid-up annuity" means the actuarially determined value of a payment stream for the life of a retiree.

(1) As of June 30, 2007, and each succeeding June 30, a member or beneficiary that has been on the Retirement System payroll for the purpose of receiving periodic benefit payments for a period of not less than 12 consecutive months shall receive a post-retirement benefit increase beginning in January of the following year.

(2) For purposes of this section, a beneficiary of a deceased member is deemed to have been on the Retirement System payroll from the date the deceased member originally joined the payroll.

(3) A beneficiary of a former retired member is eligible to receive any percentage increase under this section that the retired member was eligible to receive.

(d) Amount of benefit increase.

(1) "CPI limit" defined.

"CPI limit" means the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U) for the U.S. City Average for All Items, 1982-84=100, for a fiscal year ending June 30.

(2) Calculation.

As of January 1, 2008, and each subsequent January 1, an eligible retiree or beneficiary shall receive an increase in periodic benefits, which shall be calculated as the sum of:

(i) a guaranteed increase of 1.5%; and

(ii) an earnings increase determined under paragraph (3) of this subsection.

(3) Earnings Increase Account.

(i) The Board of Trustees shall establish a bookkeeping account entitled the Earnings Increase Account for the sole purpose of determining whether an earnings increase is payable.

(ii) The establishment of the Earnings Increase Account neither requires nor allows for the segregation of any Retirement System assets.

(iii)(A) If the actuary engaged by the Board determines that there is a balance in the Earnings Increase Account as of the preceding June 30, that balance shall be allocated to provide an earnings increase to eligible retired members and beneficiaries, effective as of the following January 1.

(B) The earnings increase shall be calculated as a percentage increase that can be provided by the balance in the Earnings Increase Account sufficient to fund a single-premium paid-up annuity, using regular interest after commencement of benefits for valuation purposes on the June 30 preceding the effective date of the increase.

(C) The percentage increase calculated under subparagraph (iii)(B) of this paragraph (3) may not exceed an amount that, when added to the guaranteed increase provided under paragraph (2)(i) of this subsection, exceeds the CPI limit.

(iv) As of January 1, 2008, and each subsequent January 1, any balance in the Earnings Increase Account resulting from the CPI limit as of the preceding June 30 shall be carried forward in the Account to the next June 30 by crediting the balance with the average annual market value asset rate of return, as determined under subsection (e)(1)(i) of this section.

(e) Earnings Increase Account transfers.

(1) As of July 1, 2007 and each subsequent July 1, a transfer to the Earnings Increase Account will be made in the amount of the positive difference between:

(i) 100% of the dollar-weighted average investment return on the market value of assets calculated for a fiscal year ending June 30, up to the regular interest before benefits commence, based on the portion of assets attributable to meet the obligation for participants in pay status; and

(ii) the regular interest after benefit payments commence, on the portion of assets attributable to meet the obligation for participants in pay status.

(2)(i) In this paragraph (2), "normal cost" means the amount determined annually by the actuary for the funding of benefits earned during a plan year in accordance with the funding method in effect. If an aggregate cost method is in effect, the calculation will use the entry-age normal cost funding method.

(ii) Market value of assets attributable to meet the obligation for participants in pay status shall be determined as of June 30 to be equal to the product of:

(A) the ratio of present value of benefits for participants in pay status over the present value of benefits for all participant benefits; and

(B) the sum of:

1. the market value of assets attributable to participants not in pay; and

2. the present value of future normal cost.

(f) Administration of benefit increases.

(1) The guaranteed benefit increase provided by subsection (d)(2)(i) of this section may not be less than any corresponding guaranteed post-retirement benefit increase provided by the Fire and Police Employees Retirement System to its members.

(2) Any benefit increase provided under this section shall be funded as a single-premium paid-up annuity.

(3) It is intended that any benefit increase continue for the lifetime of the eligible member and any beneficiary, consistent with any option elected under § 6 or § 9 of this article.

(4) The guaranteed benefit increase provided by subsection (d)(2)(i) of this section is effective as of each January 1, regardless of the investment performance of the Retirement System's investment funds.

(5) The post-retirement benefit increase provided by this section shall be payable in the same form as post-retirement benefit payments being received by the eligible person.

(6) Each eligible person shall receive an equal percentage additional increase.