(a) (1) Except as provided in paragraph (2) of this subsection, this section applies only to an allowance based on creditable service earned before July 1, 2011, for a former member, retiree, or surviving beneficiary of a deceased member, former member, or retiree of:

(i) the Employees’ Pension System, if the deceased member, former member, or retiree was an employee of:

1. a participating governmental unit that has not elected the contributory pension benefit or the Alternate Contributory Pension Selection for its members in accordance with § 31-116 or § 31-116.1 of this article; or

2. a former participating governmental unit, other than Frederick County, that has withdrawn before July 1, 1998, while a member;

(ii) the Law Enforcement Officers’ Pension System, only if the deceased member, former member, or retiree transferred to the Law Enforcement Officers’ Pension System from the Employees’ Retirement System and did not elect to participate in the Law Enforcement Officers’ Modified Pension Benefit on or before December 31, 2000, as provided in § 26-211 of this article; or

(iii) the Local Fire and Police System.

(2) This section does not apply to an allowance that is subject to adjustment under § 29-403, § 29-405, § 29-406, § 29-407, or § 29-408 of this subtitle.

(b) A cost-of-living adjustment payable under this section shall be a simple cost-of-living adjustment computed in accordance with § 29-402(d)(3) of this subtitle.

(c) A cost-of-living adjustment payable under this section shall be subject to a cost-of-living rate cap of 3%.