As of the end of each calendar year, the increase in the ratio of the Consumer Price Index to the index as of the prior December thirty-first must be determined, and if the increase equals or exceeds percent, the retirement allowance must be increased by four percent. If the increase in the index is less than four percent, the retirement allowances, as determined above, must be increased by a percentage equal to the increase in the index. The increase in retirement allowances commences the July first immediately following the December thirty-first that the increase in ratio was determined.

All increases in retirement allowances must be granted to those beneficiaries in receipt of a retirement allowance on July first immediately preceding the effective date of the increase. The increase in allowances is effective only if the additional liabilities on account of the increase in allowances do not require an increase in the employer rate of contribution. Any increase in allowance granted pursuant to this section is permanent, irrespective of any subsequent decrease in the Consumer Price Index, and must be included in determining any subsequent increase.

The allowance of a surviving annuitant of a beneficiary whose allowance is increased under this section, when and if payable, must be increased by the same percent.

For purposes of this section, "Consumer Price Index" means the Consumer Price Index for Wage Earners and Clerical Workers as published by the United States Department of Labor, Bureau of Labor Statistics.