As of the end of each calendar year commencing with the year ending December 31, 1974, the increase in the ratio of the Consumer Price Index to such Index as of December 31, 1973, or the most recent December thirty-first subsequent thereto as of which an increase in retirement allowances was granted, must be determined, and if the increase equals or exceeds three percent, the retirement allowance, exclusive of any part thereof derived from accumulated additional contributions, of each beneficiary in receipt of an allowance as of December 31, 1973, or the most recent December thirty-first subsequent thereto as of which an increase was granted, must be increased by four percent. If the increase in the index is less than three 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 must commence the July first immediately following the December thirty-first that the increase in ratio was determined.

Beginning with the calendar year ending December 31, 1981, 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 after the first five such increases shall become 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 hereunder 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 must, when and if payable, be increased by the same percent.

For purposes of this section, "Consumer Price Index" means the Consumer Price Index (all items-United States city average), as published by the United States Department of Labor, Bureau of Labor Statistics.