The Board of Trustees of the Nebraska State Colleges shall have power, in its discretion, to provide retirement benefits for present and future employees of the board, subject to the following: (1) The cost of such retirement benefits shall be funded in accordance with sound actuarial principles with the necessary contributions for both past service and future service being treated in the budgets in the same way as any other operating expense, (2) the state contribution under such retirement plan shall be (a) the amount established by the board before any agreement for reduction of salary or wage earnings, and (b) pursuant to an agreement for reduction of salary or wage earnings, the amount of the reduction of salary or wage earnings, (3) each employee’s contribution shall be the amount established by the board and shall not be required to exceed the state’s contribution under subdivision (2)(a) of this section, except that in lieu of making such contribution, each such employee may enter into an agreement for reduction of salary or wages for the purchase by the board of annuity contracts for such employee, under the provisions of the Internal Revenue Code, but the amount of the reduction of salary or wages allowable under this subdivision may not include credit for service prior to January 1, 1973, (4) continued contributions to the system shall be made until the date of retirement as provided in section 85-606, and (5) the retirement benefits of any employee for service prior to the effective date of any retirement plan established under the provisions of this section shall be those provided under the retirement plan then in force which benefits shall not be abridged. The investment for such a retirement plan shall be made by the state investment officer, but the state investment officer shall not change the type of investment for such retirement plan without the approval of the Board of Trustees of the Nebraska State Colleges.