(1) During the lifetime of an individual employed by a city creating a fund and board in accordance with this subchapter, the individual shall be entitled to receive 50% of the amount which would constitute the highest average annual salary or wages which the individual received during the last or any five years of the individual's employment by the city as a pension annually, which shall be paid in semi-monthly payments.

(2) Should an individual with 20 or more years of service be dismissed, voluntarily retired or be in any manner deprived of the individual's position or employment before attaining 60 years of age and upon continuing a monthly payment to the fund equal to the last amount due and paid monthly while in active service, the individual shall be entitled to the pension, notwithstanding that the individual has not attained 60 years of age at the time of the individual's separation from the service of the city, but the pension shall not commence until the individual has attained 60 years of age.

(3) If any employee becomes totally and permanently disabled after 10 years of service and before attaining 60 years of age, the individual shall be entitled to the pension. Proof of total and permanent disability shall consist of the sworn statement of three practicing physicians, designated by the board, that the employee is in a permanent condition of health which would permanently disable the individual from performing the duties of the individual's position or office.

(1) Upon attainment of the age at which Social Security benefits are payable by a beneficiary receiving a pension or upon retirement of a contributor after attaining that age, the individual's eligibility to the benefits commonly referred to as the old age insurance benefit and the primary insurance amount of Social Security upon which the reduction in the pension shall be based, shall be computed by the board in the manner specified in the Social Security Act, except that, in determining the eligibility and the amount, only wages or compensation for services performed in the employ of the city shall be included.

(2) The reduction shall not apply to a pension for total and permanent disability payable under this section.

(3) Whenever the amount of the reduction from the pension is determined, it shall remain fixed for the duration of the pension, except that any decrease in the primary insurance amount under the Social Security Act shall result in a corresponding decrease in the amount of the reduction from the pension.

(4) The total sum, including Social Security benefits, to be received upon retirement by an employee who is a member of the system at the time of the agreement shall not be less than the allowance that would be paid by the retirement system in the absence of the agreement.