In addition to the powers to adopt pension plans as set forth in this act, a State association may subject to the approval of the commissioner, contract to make pension payments to retired officers and employees; provided, however, that said officers or employees have been employed by the State association for the minimum time periods as set forth in this act for eligibility to receive pension payments.

Without limiting the generality of the type of contract, every such contract adopted by a State association shall contain the following provisions:

(a) That in no event shall payments provided for under a contract exceed the maximum payments as limited for officers or employees covered under a pension plan or plans in operation in the association, unless said payments under such plan are, in the opinion of the board of directors, determined to be inadequate.

(b) That the amount of the payments, provided for under said contract, shall be subject to reduction in the event said payments exceed that portion of the net income of the State association, which said payments bore to the average net income of the State association for the 3 years immediately preceding the commencement of said payments; such reduction in said payments shall be proportionate to the decrease in net income. Net income for this purpose shall mean net income as defined in section 7 of this act, less any amounts required to be placed in reserve accounts under the provisions of this act.

(c) That the board may terminate such payments at any time.

(d) That where the contracting State association is an insured association such payments shall automatically terminate in the event of a default as defined in Title IV of the National Housing Act.

L.1963, c. 144, s. 59. Amended by L.1975, c. 29, s. 3, eff. March 5, 1975.