OPTIONAL SERVICE RETIREMENT ANNUITY.

(a) Instead of a service retirement annuity payable under Section 839.102, a retiring member may elect to receive one of the following optional service retirement annuities, actuarially reduced to an actuarially equivalent value and consisting of:

(1) an annuity payable during the retiring member's life and continuing after death in the same amount, throughout the life of one person designated by the retiring member before retirement;

(2) an annuity payable during the retiring member's life and continuing after death in an amount equal to one-half of the amount payable during the retiring member's life, throughout the life of one person designated by the retiring member before retirement;

(3) an annuity payable for the greater of the rest of the retiring member's life or 60 months;

(4) an annuity payable for the greater of the rest of the retiring member's life or 120 months; or

(5) an annuity payable during the retiring member's life and continuing after death in an amount equal to three-fourths of the amount payable during the retiring member's life, throughout the life of one person designated by the retiring member before retirement.

(b) An annuity selected under Subsection (a)(3) or (a)(4) that is payable after the retiring member's death shall be paid to one or more persons designated by the retiring member before or after retirement or, if no person has been designated or all designees die before all payments are made, to the retiree's estate.

(c) A person may apply for an optional service retirement annuity by filing an application for the annuity with the retirement system before the date of the person's retirement.

(d) If a person who is nominated by a retiree in the written designation under Subsection (a) predeceases the retiree, the reduced annuity of a retiree who has elected an optional lifetime retirement annuity under Subsection (a) shall be increased to the standard service retirement annuity that the retiree would otherwise be entitled to receive if the retiree had not selected that annuity option. The standard service retirement annuity shall be adjusted as appropriate for:

(1) early retirement as permitted by law; and

(2) postretirement increases in retirement benefits authorized by law after the date of retirement.

(e) The increase in the annuity under Subsection (d) begins with the monthly payment made to the retiree for the month following the month in which the person nominated dies and is payable to the retiree for the remainder of the retiree's life.

(f) The computation of an optional service retirement annuity payable throughout the life of a named individual must include the age of that individual.

(g) An optional service retirement annuity may not provide that more than 50 percent of the value of the annuity, as determined at the time of retirement, be used to provide a benefit to a person other than the person on whose service the annuity is based.