A. The purpose of this act¹ is to provide an orderly means whereby employees of the participating employers who qualify by reason of age, or condition, and service, as herein set forth, may be transferred to inactive service without prejudice and without inflicting undue hardship upon the employees transferred, and to enable such employees to accumulate deferred income reserves for themselves and their dependents to provide for old age, death, and inactive service, and for the purpose of effecting economy and efficiency in the administration of governmental affairs.

B. The System is established as a qualified governmental retirement plan under Sections 401(a) and 414(d) of the federal Internal Revenue Code.² The Board shall administer the System in order to comply with the applicable provisions of the federal Internal Revenue Code.³