An employee of such employer who, by reason of his service, is a member of any other governmental retirement system shall not participate in this retirement system on that part of his compensation so covered. Should such employer for any reason become financially unable to make the normal and accrued liability contributions payable on account of its employees’ membership in the retirement system then such employer shall be deemed to be in default and a certificate to this effect shall be sent by the board of trustees to the employer and to the State Commissioner of Banking and Insurance. All members of the retirement system, who were employees of such employer at the time of default, shall thereupon be entitled to discontinue membership in the retirement system and to a refund of their previous contributions upon demand made within 90 days thereafter. As of a date 90 days following the date of such certificate of default, the actuary of the retirement system shall determine by actuarial valuation the amount of the reserves held on account of each active member and pensioner of such employer and shall credit to each such member and pensioner the amount of reserve so held. The reserve so credited, together with the amount of the accumulated deductions of each active member shall be used to provide a paid up deferred annuity beginning at age 60 for him, and the reserve of each pensioner shall be used in providing such part of his existing pension as the reserve so held will provide, which pension, together with his annuity, shall thereafter be payable to him. The rights and privileges of both active members and pensioners of such employer shall thereupon terminate except as to the payment of the deferred annuities so provided for the previous active members and the annuities and the pensions, or parts thereof, provided for the pensioners.

L.1954, c. 84, p. 519, s. 69.