1. Each member who retires on or after August 28, 1989, shall receive each year an increase in the amount of benefits received by the member during the preceding year equal to the increase in the consumer price index calculated in the manner hereinafter provided not to exceed two percent in any year. The total increase in the amount of benefits received pursuant to the provisions of this subsection shall not exceed fifty percent of the initial benefit which the member received upon retirement.

2. For the purposes of this section, any increase in the consumer price index shall be determined by the board in May of each year, based upon the consumer price index for the preceding calendar year over the consumer price index for the calendar year immediately prior thereto. Any increase so determined shall be applied by the board in calculating any benefit increases that become payable under this section for the twelve-month period beginning with the June first immediately following such determination.

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3. An annual increase shall be payable monthly beginning on a date specified by the board. Nothing in this section shall be construed to prohibit a member from waiving his right to receive the annual increase provided pursuant to this section. The waiver shall be final as to the annual increase waived.