(1) Effective October 1, 1986, after the retirant and retirement allowance beneficiary monthly allowance recomputation as determined in section 39 has been determined, a retirant or retirement allowance beneficiary of a deceased retirant shall receive a total retirement allowance of not less than $6,000.00 per annum. This subsection does not apply to a retirant or retirement allowance beneficiary of a deceased retirant who is eligible for an increased retirement allowance under subsection (2).

  (2) Effective October 1, 1996, after the retirant’s or retirement allowance beneficiary’s retirement allowance is increased under section 39a, if applicable, a retirant or retirement allowance beneficiary of a deceased retirant who meets the requirements of this subsection shall receive a total retirement allowance of not less than $10,800.00 per annum. This subsection only applies to a retirant or retirement allowance beneficiary of a deceased retirant, which retirant or deceased retirant retired after 25 years of service or because of duty-incurred total disability under section 5 of former Act No. 251 of the Public Acts of 1935, with a retirement allowance payable under section 24, or with a duty-incurred disability retirement allowance payable under section 26.

  (3) The increased retirement allowance under this section shall be the basis upon which future adjustments to the retirement allowance, including the increase under section 40a, if applicable, are calculated.