A member may elect to receive his or her benefits under the terms of this chapter according to the provisions of any one of the following options:
(1) Option one. A member may elect to receive his or her benefits in a retirement allowance payable throughout his or her life.
(2) Option two. A member may elect to receive on retirement the actuarial equivalent (at that time) of his or her retirement allowance in a reduced retirement allowance payable throughout life, with the provisions that if the member dies before he or she has received in payment of his or her annuity the amount of his or her accumulated contributions, as they were at the time of his or her retirement, the balance shall be paid to such person, if any, as he or she shall nominate by written designation duly acknowledged and filed with the department; otherwise, to his or her executors or administrators.
(3) Option three. A member may elect at any time prior to receipt of his or her first monthly installment of retirement compensation, to receive a reduced retirement compensation with the provision that the surviving spouse shall continue to draw such reduced retirement compensation so long as he or she shall live. The amount of such reduced retirement compensation shall be the actuarial equivalent of the amount of such retirement otherwise payable.
(4) Option four. A member may elect at any time prior to receipt of his or her first monthly installment of retirement compensation, to receive a reduced retirement compensation with the provision that the surviving spouse shall continue to draw one-half of such reduced retirement compensation so long as he or she shall live. The amount of such reduced retirement compensation shall be the actuarial equivalent of the amount of such retirement otherwise payable.
(5)(a) If a member continues in service beyond the date he or she is first eligible for service retirement and does not, prior to his or her death, elect Option three or Option four, his or her spouse may, at the option of the spouse, receive either the accumulated contributions of the member at date of death or the reduced retirement compensation to which the beneficiary would have been entitled under Option three, calculated on the assumption that the member retired on his or her date of death and died immediately subsequent thereto; provided that the spouse of any member who died between July 1, 1955, and June 30, 1957, both dates inclusive, is entitled to full benefits under this subsection, and further provided that for all persons who become members of the system on or after July 1, 1963, the amount of such retirement allowance otherwise payable to the member at his or her date of death shall be determined on the basis of his or her normal retirement age as defined in s. 238.07.
(b) A member who elects Option three or Option four shall, on a form provided for that purpose, designate his or her spouse as beneficiary to receive the benefits which continue to be payable upon the death of the member. After such benefits have commenced under Option three or Option four, the retired member may change the designation of his or her spouse as beneficiary only twice. If such a retired member remarries and wishes to make such a change, he or she may do so by filing with the department a notarized change of spouse designation form and shall notify the former spouse in writing of such change. Upon receipt of a completed change of spouse designation form, the department shall adjust the member’s monthly benefit by the application of actuarial tables and calculations developed to ensure that the benefit paid is the actuarial equivalent of the present value of the member’s current benefit. The consent of a retired member’s formerly designated spouse as beneficiary to any such change shall not be required.
(6) Notwithstanding any provision in this chapter to the contrary, the following provisions shall apply to any member of the retirement system who has accumulated at least 10 years of service and dies prior to retirement:
(a) If the deceased member’s surviving spouse has previously received a refund of the member’s accumulated contributions made to the retirement system, such spouse may pay to the department an amount equal to the sum of the amount of the deceased member’s contributions previously refunded and regular interest compounded annually on the amount of such refunded contributions from the date of refund to the date of payment to the department, and by so doing be entitled to receive the monthly retirement benefit provided in paragraph (c).
(b) If the deceased member’s surviving spouse has not received a refund of the deceased member’s accumulated contributions, such spouse shall, upon application to the department within 30 days of the death of the member, receive the monthly retirement benefit provided in paragraph (c).
(c) The monthly benefit payable to the spouse described in paragraph (a) or paragraph (b) shall be the amount which would have been payable to the deceased member’s spouse, assuming that the member retired on the date of his or her death and had selected the option in subsection (3), such benefit to be based on the ages of the spouse and member as of the date of death of the member. The benefit shall commence on the first day of the month following the payment of the aforesaid amount to the department, if paragraph (a) is applicable, or on the first day of the month following the receipt of the spouse’s application by the department, if paragraph (b) is applicable.
(7) The surviving spouse or other dependent of any member whose employment is terminated by death shall, upon application to the department, be permitted to pay the required contributions for any service performed by the member which could have been claimed by the member at the time of his or her death. Such service shall be added to the creditable service of the member and shall be used in the calculation of any benefits which may be payable to the surviving spouse or other surviving dependent.
(8) Upon the death of a retired member or beneficiary who is receiving monthly benefits under this chapter, the monthly benefits shall be paid through the last day of the month of death and shall terminate, or be adjusted, if applicable, as of that date in accordance with the optional form of benefit selected at the time of retirement.