declining increase.

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A. As used in this section:

(1)     “cost-of-living adjustment hurdle rate” means the investment rate of return required to fund a cost-of-living adjustment in excess of one-half percent, as determined by the association’s actuaries;

(2)     “funded ratio” means the ratio of the actuarial value of the assets of the fund to the actuarial accrued liability of the association for payments from the fund, as determined by the association’s actuaries;

(3)     “preceding calendar year” means the full calendar year preceding the July 1 on which pensions are being adjusted; and

(4)     “smoothed investment rate of return” means a calculation made by spreading the difference between the expected actuarial value in investment income and the actual market value investment income over a smoothing period, as determined by the association’s actuaries.

B. A qualified pension recipient is eligible for a cost-of-living pension adjustment. A qualified pension recipient is:

(1)     a normal retired member who has been retired for at least two full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

(2)     a normal retired member who has attained the age of sixty-five years and has been retired for at least one full calendar year from the effective date of the member’s latest retirement prior to July 1 of the year in which the pension is being adjusted;

(3)     a disability retired member who has been retired for at least one full calendar year from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted;

(4)     a survivor beneficiary who has received a survivor pension for at least two full calendar years; or

(5)     a survivor beneficiary of a deceased retired member who otherwise would have been retired at least two full calendar years from the effective date of the latest retirement prior to July 1 of the year in which the pension is being adjusted.

C. Except as provided in Subsections F, G and H of this section, during fiscal years 2021, 2022 and 2023, a qualified pension recipient shall receive an annual, non- compounding, additional payment. The amount of the payment shall be determined by multiplying the amount of annual pension payments, inclusive of all cost-of-living adjustments prior to fiscal year 2021, by two percent.

D. Beginning May 1, 2023 and no later than each May 1 thereafter, the retirement board shall certify to the association the:

(1)     funded ratio as of June 30 of the preceding calendar year; and

(2)     smoothed investment rate of return as of June 30 of the preceding calendar year.

E. Except as provided in Subsections F, G and H of this section, beginning July 1, 2023 and each July 1 thereafter, immediately following the retirement board’s certification of the funded ratio and smoothed investment rate of return, the cost-of-living adjustment to a qualified pension recipient payable pursuant to the Public Employees Retirement Act shall be determined as an amount equal to the smoothed investment rate of return on the actuarial value of assets on June 30 of the preceding calendar year less the cost-of-living adjustment hurdle rate, as determined by the association’s actuaries, multiplied by the funded ratio on June 30 of the preceding calendar year or five-tenths percent, whichever is greater, and subject to the following conditions:

(1)     if the funded ratio of the fund is less than one hundred percent on June 30 of the preceding calendar year, the amount of the adjustment made pursuant to this subsection shall not exceed three percent;

(2)     if the funded ratio of the fund is equal to or greater than one hundred percent on June 30 of the preceding calendar year, the adjustment made pursuant to this subsection shall not exceed five percent;

(3)     notwithstanding the provisions of this subsection, a qualified pension recipient shall receive a minimum annual cost-of-living adjustment of five-tenths percent; and

(4)     the amount of increase shall be determined by multiplying the amount of pension, inclusive of all prior adjustments, by the cost-of-living adjustment as determined by this subsection.

F. For a normal retired member who worked for at least twenty-five years under one or more applicable coverage plans and whose annual pension benefit, after all previous annual cost-of-living adjustments, is equal to an amount not greater than twenty-five thousand dollars ($25,000), the pension benefit shall be increased by two and one-half percent each July 1. The amount of the increase shall be determined by multiplying the amount of pension, inclusive of all prior adjustments, by two and one-half percent.

G. For a disability retired member whose annual pension benefit, after all previous annual cost-of-living adjustments, is equal to an amount not greater than twenty-five thousand dollars ($25,000), the pension benefit shall be increased by two and one-half percent each July 1. The amount of the increase shall be determined by multiplying the amount of pension, inclusive of all prior adjustments, by two and one-half percent.

H. For a normal retired member who has attained the age of seventy-five years prior to July 1, 2020, the pension benefit shall be increased by two and one-half percent each July 1. The amount of the increase shall be determined by multiplying the amount of pension, inclusive of all prior adjustments, by two and one-half percent.

I. A qualified pension recipient may decline an increase in a pension by giving the association written notice of the decision to decline the increase at least thirty days prior to the date the increase would take effect.