(a) Determination of Cost of Living Adjustments. The Board, before May 1 of each year commencing with the year 1981, shall determine the percentage of the annual increase or decrease in the cost of living as of March 1 of that year from March 1 of the preceding year as shown by the Consumer Price Index for All Urban Consumers as published by the Bureau of Labor Statistics or such other index as the Federal Government may develop to replace the All Urban Consumers Index for the area in which the City is located. If any such index were not to reflect the cost of living as of a particular March 1, then the index for the closest preceding date shall be used.
(b) Annual Cost of Living Adjustments. Commencing as of July 1 of the year in which the Board shall determine the percentage of increase or decrease in the cost of living, the monthly amounts of all pensions granted pursuant to the provisions of this Tier 3, shall be increased or decreased by reason of such determined percentage of increase or decrease in the cost of living, not to exceed an increase or decrease of 3% in any given year. Pensions which became payable before July 1, but subsequent to the preceding July 1, will be adjusted on a prorated basis whereby one twelfth of the annual adjustment shall be applied for each completed month since such pension commenced. In no event shall pensions adjusted hereunder ever be decreased below the amount received by the Beneficiary when such pension first became payable to him or her.
(c) Discretionary Cost of Living Adjustments. To the extent that the annual cost of living adjustments provided by subsection (b) hereof are less than the annual change in the cost of living as determined in subsection (a) hereof, the Council may grant discretionary cost of living adjustments, in addition to the annual cost of living adjustments provided by subsection (b) hereof, subject to the following conditions and requirements:
(1) No More Than Every Three Years. Discretionary adjustments may not be provided more frequently than once every three years, counting from the effective date of this section and, after a discretionary adjustment has once been made, counting from the date the last discretionary adjustment became effective.
(2) Limit of Adjustments. Discretionary adjustments shall not exceed one-half of the difference between the percentage of the annual increases in the cost of living, as determined pursuant to the provisions of subsection (a) of this section, and the annual adjustments made pursuant to subsection (b) of this section for each of the preceding three years. Discretionary adjustments shall be allocated to each of the three years for which an adjustment is made.
(3) Pensions Eligible for Adjustment. Discretionary adjustments herein provided shall be applied to pensions granted pursuant to Sections 1504, 1506 and 1508 subject to the following limitations: If a pension became payable on or after the July 1 immediately preceding the effective date of such adjustment, it shall not be so adjusted; and any pension which shall have become payable at a time within the three year period (but prior to the immediately preceding July 1) shall be prorated on a monthly basis to the number of completed months for which the pension was received, provided that pensions paid pursuant to Section 1508(a)(3), (4) or (5), or Section 1508(c), (e) or (f), shall be adjusted by basing eligibility on the date upon which the Retired Plan Member’s pension became effective.
(4) Report to Council Prior to Adoption by Ordinance. Discretionary cost of living adjustments may be provided only by ordinance. Ordinances providing discretionary adjustments may not be finally adopted until the Council has first obtained and published a report from the actuary or actuaries of the Fire and Police Pension Plan – Tier 3 indicating the present value of the liabilities that will be created by the proposed discretionary adjustment. This report must identify the annual funding cost of amortizing this liability over a 30 year period utilizing the funding procedure adopted by the Board.
(5) Vote by Council. Ordinances adopted pursuant to this subsection must be by not less than two-thirds of the membership of the Council, subject to the veto of the Mayor and re-adoption by the Council by not less than three-fourths of the membership of Council. No such ordinance may be finally adopted by the Council until the expiration of at least 30 days after its first presentation to the Council, nor until after a public hearing has been held thereon. Ordinances adopted pursuant to this subsection, shall be published no later than November 30 and shall become effective January 1.
(6) Prospective Application. All adjustments provided in this subsection are to be applied prospectively only and shall not be understood to permit retroactive adjustments of pensions.