(1) Effective July 1, 1966, there is hereby established a Supplemental Allowance Program to be administered by the Board as part of the System and to provide supplemental allowances for eligible members as hereinafter provided.

(2) The State shall participate in the Supplemental Allowance Program as outlined in this section as of July 1, 1966. Any other employer may, in its discretion, participate in the Supplemental Allowance Program by making application to the Board to so participate and by complying with the requirements of this section and the rules and regulations adopted by the Board for its implementation. Such application shall be made and the employer’s participation in the program shall be effective in a manner similar to that provided for applications for and admission to the System as set forth in § 9-11-40, except item (2).

(3)(a) Any member who is employed as a police officer by a participating employer on the employer’s participation date and whose rate of salary or compensation on such date exceeds four hundred dollars per month, shall become a participant in the program on that date, shall be eligible for a supplemental allowance as outlined in this section and shall make supplemental contributions pursuant to item (9) below; except that such member in the employ of a participating employer on such employer’s participation date may, within a period of one month following such date, irrevocably elect not to participate in such program by filing with the Board, on a form prescribed by it, a notice of his election not to make such supplemental contributions and a duly executed waiver of the supplemental allowance which would otherwise be payable to him pursuant to this section.

(b) Any member who is employed as a police officer by a participating employer on the employer’s participation date and whose salary or compensation on such date is not in excess of four hundred dollars per month shall become a participant in this program as of the first day of the calendar month in which his rate of salary or compensation first exceeds four hundred dollars per month.

(c) Any person who is first employed as a police officer by a participating employer after the employer’s participation date shall, as a condition of his employment, become a participant in this program as of the first day of the calendar month in which his rate of salary or compensation first exceeds four hundred dollars per month.

(4) Upon retirement, a member who has participated in the Supplemental Allowance Program will receive a supplemental allowance which shall be a monthly retirement allowance equal to the sum of (a) and (b) below:

(a) An allowance which is the actuarial equivalent of the member’s accumulated supplemental contributions; and

(b) An amount equal to the allowance provided in (a) above.

(5) Upon the death of a member prior to his retirement and prior to his withdrawal of contributions on his ceasing to be a police officer under item (7) below, the amount of his accumulated supplemental contributions, if any, shall be paid to such person as he shall have nominated by written designation filed with the board, otherwise to his estate.

(6) Upon the death of a beneficiary who has not elected an optional form of allowance in accordance with item (8) below, a lump-sum amount shall be paid to such person as he shall have nominated by written designation filed with the board, otherwise to his estate. Such lump-sum amount shall be equal to the excess, if any, of his total accumulated supplemental contributions at the time his allowance commenced over the sum of the supplemental allowance payments made to him during his lifetime.

(7) Should a member cease to render service as a police officer to an employer, except by reason of death or retirement, his aggregate supplemental contributions, if any, shall be paid to him in the manner and pursuant to the time limitations set forth in § 9-11-100.

(8) Anything in this section to the contrary notwithstanding, a member who participates in the Supplemental Allowance Program may, in a manner similar to that set forth in § 9-11-150, elect to convert the supplemental allowance otherwise payable on his account after his retirement into an allowance of equivalent actuarial value, in accordance with one of the options therein set forth.

(9) Each member participating in the Supplemental Allowance Program shall make monthly supplemental contributions equal to six percent of the portion of the monthly salary or compensation in excess of four hundred dollars received by him during his participation in the program.

In addition, each such member may irrevocably elect, within a period of one month following his date of participation, to contribute the amount which would have resulted had he, during each month of his credited service prior to his date of participation, made a contribution to the System equal to two percent of the portion of his rate of monthly salary or compensation in excess of four hundred dollars during the month immediately preceding his date of participation in the program and had such contributions been accumulated with interest at the rate of four percent per annum. If the member elects to make such additional voluntary contributions they shall be made within twelve months after his participation in the Supplemental Allowance Program commences, in such manner as the Board may deem reasonable.

(10) As of the employer’s participation date and as of each July first thereafter the Board shall certify to each employer participating in the Supplemental Allowance Program the amount of employer supplemental contribution due the System. The amount of employer contribution payable during the first such period shall be equal to an estimate of the total amount of supplemental contributions that will be made by the participating members employed by that employer during the ensuing period up to the subsequent July first. However, the portion of such members’ contributions which is in respect to service prior to the participation date shall be excluded from such estimate. The amount of employer contributions in any subsequent period shall be computed in a similar manner but the resulting amount shall be adjusted by the difference between the estimated amount of such member contributions and the amount of such contributions actually made. The estimate of the amount of contributions that will be made by the members during a period shall be based on the most recent payroll information available as of the date of the certification.

The participating employer shall make an additional level annual contribution for a period of ten years subsequent to its participation date. Such additional contributions shall, in total, be sufficient to liquidate an amount equal to the total contributions by its participating members with respect to their service prior to the employer’s participation date. For the purpose of calculating this additional contribution an interest rate of four percent per annum shall be used.

Any forfeitures shall be used to reduce the contributions otherwise payable by a particular participating employer, and will not be applied to increase the benefits of any participating member.