Effective July 1, 1955, a death benefit is provided for employees and annuitants, in addition to other annuities and benefits, payable upon death of the employee while (a) in actual salary status or within 60 days thereof; (b) on an approved leave of absence, without salary, if death occurs within 60 days from the date he was in salary status; (c) receiving ordinary or duty disability benefit; or within 60 days from the date of termination of such benefit payments. Upon death of an annuitant the death benefit is payable if the annuity was granted and became effective on or after the employee’s attainment of age 50. The death benefit is also payable upon death of an employee whose annuity was determined at age 65 or over and the employee and employer’s contributions were transferred to the annuity reserve. No death benefit is payable unless application for the annuity was made within 60 days from the date of withdrawal from service.
     This death benefit shall be payable to the surviving spouse as defined in Section 12-123.1 of the employee or annuitant; but if no spouse survives, payment shall be made according to the last written designation filed with the board prior to death by the employee or annuitant. If no such designation was filed, payment shall be made to the executor or administrator of the estate of the employee or annuitant, or if the estate is under the amount required under law for opening an estate, payment shall be made to the person filing a small estate affidavit as prescribed by law.
     Upon death on or after January 1, 1980 and before January 1, 1990, prior to retirement on annuity, the amount of benefit shall be $2,000 payable upon death of the employee during the first year of membership in the Fund, $3,000 upon death during the second year of membership, $4,000 upon death during the third year of membership, $5,000 upon death during the fourth year of membership and $6,000 upon death during the fifth year of membership or over. Upon the death of an employee on or after January 1, 1990, prior to retirement on annuity, the amount of benefit shall be $3,000 upon death during the first year of membership in the Fund, $4,000 upon death during the second year of membership, $5,000 upon death during the third year of membership, and $6,000 upon death during the fourth through tenth years of membership. Upon the death, on or after January 1, 1983, of an employee prior to retirement with 10 or more years of service, the amount of benefit shall be $10,000.
     Upon death of an employee while on retirement, occurring on or after January 1, 1980, the benefit computed according to the foregoing formula, subject to the aforesaid maximum, shall be reduced $1,500 for each year or fraction of a year that the employee was on retirement, provided that the minimum benefit payable on account of death of a retirant shall be $1,500. Upon the death of an employee who retired on or after January 1, 1983, with at least 10 years of service, the $10,000 benefit shall be reduced to $6,000 if death occurs during the first year of retirement, and shall be reduced $1,500 for each year or fraction of a year thereafter that the employee was retired, provided that the minimum benefit payable shall be $1,500. Upon the death, on or after January 1, 1990, of an employee while on retirement, the minimum benefit payable shall be $3,000.
     The board shall establish rules to govern the administration of this benefit.