§ 510. Escalation of benefits. a. Service retirement, disability and
survivor benefits shall be subject to annual escalation as provided in
this section.

b. The term "full escalation date" shall mean:

1. The first day of the month following the date on which a member
attains age sixty-five, with respect to service retirement benefits for
general members and their beneficiaries.

2. The first day of the month following the date on which a member
completes or would have completed twenty-five years of credited service,
with respect to service retirement benefits for police/fire members and
their beneficiaries, New York city uniformed correction/sanitation
revised plan members and their beneficiaries or investigator revised
plan members and their beneficiaries.

3. The first day of the month following the date on which a disability
retiree first becomes eligible for a disability benefit, with respect to
members eligible for ordinary or accidental disability benefits and
their beneficiaries.

4. The first day of the month following the date on which a
beneficiary first eligible for a death benefit becomes eligible for such
benefit, with respect to ordinary and accidental death benefits which
are paid other than as a lump sum.

c. If the payment of benefits commences on the full escalation date,
the benefit shall be increased annually at an escalation rate equal to
the lesser of three percent or the increase in the cost-of-living index
as provided in subdivision d hereof. In the event of a decrease in the
cost-of-living index, the annual benefit shall be decreased by the
lesser of three percent or the amount of the decrease in the
cost-of-living index, as provided in subdivision d, provided that the
benefit, in any event, shall not be reduced below the benefit payable at
the initial commencement date. For each month that the benefit
commencement date precedes the full escalation date, the escalation rate
shall be reduced by one thirty-sixth, and there shall be no escalation
where benefits commence more than three years prior to the full
escalation date.

d. Cost-of-living index changes shall be computed on a cumulative
basis so that any increases or decreases not reflected in an adjustment
to the benefit level shall be carried forward and applied in subsequent
years. Benefits shall be escalated commencing with the payment due for
the month of April, based on the cost-of-living index as of December
thirty-first of the preceding year. If the initial benefit commencement
date is May first or later, the initial escalation adjustment for the
following April shall be reduced by one-twelfth for benefits commencing
on May first, plus a further reduction of one-twelfth for each month the
initial benefit commences thereafter.

e. If a member elects to defer the service retirement benefit, after
separation from service, for the purpose of becoming eligible for annual
escalation, the benefit so deferred shall be escalated at the full
escalation rate until the deferred payment date, and thereafter shall be
subject to annual escalation as provided in this section.

f. Notwithstanding any other provision of this article, the escalation
of any service retirement, disability or death benefit payable in the
form of a pension with respect to an elective member shall not result in
any increase in the initial benefit payable until such elective member
completes or would have completed (had such member continued in service)
ten years of creditable service after the date of election of coverage
under this article.

g. Notwithstanding any other provision of this article, the annual
escalation provided in this section shall not apply to the performance
of duty disability retirement provided for in section five hundred
seven-b of this article.

h. Notwithstanding any other provision of this article, the annual
escalation provided in this section shall not apply to the performance
of duty disability retirement provided for in section five hundred
seven-c of this article.

i. Notwithstanding any other provision of this article, the annual
escalation provided in this section shall not apply to the ordinary
disability benefit for New York city enhanced plan members provided for
in subdivision c-1 of section five hundred six of this article or the
accidental disability benefit for New York city enhanced plan members
provided for in paragraph three of subdivision c of section five hundred
seven of this article. Such members who receive such ordinary disability
benefit or accidental disability benefit shall have a cost-of-living
adjustment for such benefit, which shall be computed in the same manner
as provided for by section 13-696 of the administrative code of the city
of New York.