Subd. 1. Refund of payments.

A member who has not received other benefits under this chapter is entitled to a refund of payments made by salary deduction, plus interest, if the member is separated, either voluntarily or involuntarily, from state service that entitled the member to membership. In the event of the member's death, if there are no survivor benefits payable under this chapter, a refund is payable to the last designated beneficiary on a form filed with the director before death, or if no designation is filed, the refund is payable to the member's estate. Interest must be computed at the rate of six percent a year, compounded annually. To receive a refund, application must be made on a form prescribed by the executive director.

Subd. 2. Death; payment to spouse and children.

If a member serving actively as a member, or a member or former member receiving the disability benefit before attaining age 65 or reaching the five-year anniversary of the effective date of the disability benefit, whichever is later, provided by section 352B.10, subdivisions 1 and 2, dies from any cause before attaining age 65 or reaching the five-year anniversary of the effective date of the disability benefit, whichever is later, the surviving spouse and dependent children are entitled to benefit payments as follows:

1. (a) A member with at least three years of allowable service is deemed to have elected a 100 percent joint and survivor annuity payable to a surviving spouse only on or after the date the member or former member became or would have become 55.
2. (b) The surviving spouse of a member who had credit for less than three years of service shall receive, for life, a monthly annuity equal to 50 percent of that part of the average monthly salary of the member from which deductions were made for retirement.
3. (c) The surviving spouse of a member who had credit for at least three years service and who died after becoming 55 years old, may elect to receive a 100 percent joint and survivor annuity, for life, notwithstanding a subsequent remarriage, in lieu of the annuity prescribed in paragraph (b).
4. (d) The surviving spouse of any member who had credit for three years or more and who was not 55 years old at death, shall receive the benefit equal to 50 percent of the average monthly salary as described in clause (b) until the deceased member would have become 55 years old, and beginning the first of the month following that date, may elect to receive the 100 percent joint and survivor annuity.
5. (e) Each dependent child shall receive a monthly annuity equal to ten percent of that part of the average monthly salary of the former member from which deductions were made for retirement. A dependent child over 18 and under 23 years of age also may receive the monthly benefit provided in this section, if the child is continuously attending an accredited school as a full-time student during the normal school year as determined by the director. If the child does not continuously attend school but separates from full-time attendance during any part of a school year, the annuity shall cease at the end of the month of separation. In addition, a payment of $20 per month shall be prorated equally to surviving dependent children when the former member is survived by one or more dependent children. Payments for the benefit of any qualified dependent child must be made to the surviving spouse, or if there is none, to the legal guardian of the child. The maximum monthly benefit for any one family must not be less than 50 nor exceed 70 percent of the average monthly salary for any number of children.
6. (f) If the member dies under circumstances that entitle the surviving spouse and dependent children to receive benefits under the workers' compensation law, the workers' compensation benefits received by them must not be deducted from the benefits payable under this section.
7. (g) The surviving spouse of a deceased former member who had credit for three or more years of allowable service, but not the spouse of a former member receiving a disability benefit under section 352B.10, subdivision 2, is entitled to receive the 100 percent joint and survivor annuity at the time the deceased member would have become 55 years old. If a former member dies who does not qualify for other benefits under this chapter, the surviving spouse or, if none, the children or heirs are entitled to a refund of the accumulated deductions left in the fund plus interest at the rate of six percent per year compounded annually.

Subd. 2a. Applications for survivor benefits.

An application for benefits under this section must be filed in the office of the system in a form and manner prescribed by the executive director. The benefit shall begin to accrue the day following the date of death but shall not be retroactive for more than six months before the date the application is filed.

Subd. 3. Refund; effect.

When any member or former member accepts a refund, all existing service credits and all rights and benefits to which the member or former member was entitled before acceptance of the refund terminate.

Subd. 4. Reentry into state service.

When a former member, who has become separated from state service that entitled the member to membership and has received a refund of retirement payments, reenters the state service in a position that entitles the member to membership, that member shall receive credit for the period of prior allowable state service if the member repays into the fund the amount of the refund, plus interest on it at an annual rate of 8.5 percent compounded annually, at any time before subsequent retirement. Repayment may be made in installments or in a lump sum.

Subd. 5. Death of annuitant or beneficiary.

If a retired member who did not select an optional annuity under section 352B.08, subdivision 3, dies or if the last eligible recipient of an optional annuity under section 352B.08, subdivision 3, dies and the total amounts paid as an annuity are less than the accumulated member contributions under section 352B.02, subdivision 1a, to the credit of the retired member on the date of retirement, the surviving spouse, or if none, the former member's surviving children in equal shares, or if none, the last recipient's estate is entitled, upon application, to a refund. The refund is equal to the balance of accumulated member contributions under section 352B.02, subdivision 1a, remaining after subtracting the total amount of benefits paid to the decedent.