Notwithstanding Section 21329, the adjustments in allowances for local members provided by this article for the time commencing on and after the annual adjustment date following the date specified by the contracting agency in its contract shall be subject to the following limitations:

(a) No adjustment shall be made for any year for which the adjustment is less than 1 percent of the base allowance.

(b) No monthly allowance in any year may exceed an amount equal to the base allowance increased by 3, 4, or 5 percent per year compounded for the number of years intervening between the end of the base year and the beginning of the calendar year in which the adjustment is made. A contracting agency shall designate the applicable percentage and may amend its contract to increase the percentage.

(c) No monthly allowance in any year shall be less than the base allowance.

(d) No adjustment shall be made in any year in which the actuarial interest rate is less than 5.25 percent.

However, the adjusted allowances in years following the year in which the contract of an agency subject to this section is terminated may not exceed the adjusted allowance in the year of contract termination or the amount determined in accordance with subdivision (b) of Section 21329, whichever is the greater.

For the purposes of this section, all contributions, liabilities, actuarial interest rates, and other valuation factors shall be determined on the basis of actuarial assumptions and methods that, in the aggregate, are reasonable and that, in combination, offer the actuary’s best estimate of anticipated experience under this system.

The additional employer contributions required as a result of making this section applicable shall be computed as a level percentage of member compensation. The additional contribution rate required, at the time this section is added to a contract, shall not be less than the sum of (1) the actuarial normal cost and (2) the additional contribution required to amortize the increase in accrued liability attributable to benefits elected under this section over a period of not more than 30 years from the date this section becomes effective in the public agency’s contract.

This section shall not apply to any contracting agency, unless and until the agency elects to be subject to this section by amendment to its contract made in the manner prescribed for approval of contracts or, in the case of contracts made after January 1, 1975, by express provision in the contract making the contracting agency subject to this section.

(Repealed and added by Stats. 1995, Ch. 379, Sec. 2. Effective January 1, 1996.)