(a) Upon service retirement, a member shall receive an allowance which shall consist of:

(1) An annuity which shall be the actuarial equivalent of the member's accumulated contributions at the time of retirement; and

(2) An annual pension which, together with the annuity set forth in paragraph (1) of this subsection, shall provide a total allowance equal to 2 percent of the member's average compensation over the two consecutive years of membership service producing the highest such average, multiplied by the number of the member's years of creditable service, not to exceed 40. The computation of average compensation for the purposes of this paragraph shall be subject to the requirements of subsection (d) of this Code section.

(a.1) The minimum allowance to be received by any member upon retirement shall not be less than $17.00 per month for each year of creditable service, not to exceed 40 years of creditable service.

(b) In the case of any member who has less than 30 years of creditable service and if such member has not reached the age of 60 years upon retirement, the service allowance set forth in subsection (a) of this Code section shall be reduced by the lesser of one-twelfth of 7 percent for each month by which his age at the time of retirement is below 60 years or by 7 percent for each year or fraction of a year by which the member has less than 30 years of creditable service at the time of retirement. This reduction shall not apply in calculating the service allowance for disability retirement or death. Any member who retired with 30 or more years of creditable service and whose retirement benefits were reduced because such member retired at an age below the normal retirement age in effect at the time such member retired shall be entitled to an adjusted retirement benefit based upon a calculation made without the application of the age reduction factor. Any member retiring with less than 30 years of creditable service or who has not obtained the age of 60 at the time of retirement shall not become eligible for postretirement benefit adjustments as provided in Code Section 47-3-126 until such time as the member reaches the age of 60 or would have obtained 30 years of creditable service, whichever occurs earlier.

(c) To the extent that the necessary funds are appropriated for such purpose by the General Assembly, the board of trustees shall increase the retirement benefits of beneficiaries under this chapter when the retirement benefit formula provided for in paragraph (2) of subsection (a) of this Code section is changed to result in an increase in retirement benefits. The basis for such increase shall be the average percentage of increase in retirement benefits which results from the change in the retirement benefit formula. This subsection shall apply to all changes in the retirement benefit formula which have become effective since June 30, 1975, and those which may become effective at any time after June 30, 1977, for all beneficiaries under this chapter who retired on or before June 30, 1977. Any member who retires at any time after June 30, 1977, shall receive the benefit adjustment provided for in this subsection only for those changes in the retirement benefit formula which become effective after his retirement. If the General Assembly at any time appropriates some but not all of the funds necessary to fund the benefit adjustments provided for in this subsection, then the benefit adjustment otherwise payable under this subsection shall be reduced pro rata by the board of trustees in accordance with the funds actually appropriated by the General Assembly for such purpose.

(d) No more than two increases in compensation granted during the two consecutive years on which average compensation is based under paragraph (2) of subsection (a) of this Code section shall be considered in the computation of such average compensation. For those members who are not employees of the Board of Regents of the University System of Georgia, that part of any such increase in compensation which exceeds a percentage equal to the average annual increase in compensation granted to classroom teachers by appropriations of the General Assembly, plus 2 1/2 percent of compensation received at the time the annual increase granted by appropriations becomes effective, shall not be considered in the computation of average compensation. For those members who are employees of the Board of Regents of the University System of Georgia, that part of any such increase in compensation which exceeds a percentage equal to the average annual increase in compensation granted to academic personnel employed by said board of regents by appropriations of the General Assembly, plus 2 1/2 percent of compensation received at the time the annual increase granted by appropriations becomes effective, shall not be considered in the computation of average compensation.