SECTION 1.  Section 1 of chapter 32 of the General Laws, as appearing in the 2014  Official Edition, is hereby amended by inserting after the definition of "Constitutional Officers" the following definition:-

“Cost of Living Reserve Fund”, the fund established under the provisions of subdivision (6B) of section twenty-two to provide for the reservation of monies for future cost of living liabilities of the system.

SECTION 2.   Section 1 of said chapter 32, as so appearing, is hereby further amended by inserting after the definition of "Employer" the following definition:-

“Excess investment income”, the amount in any calendar year where all realized gains from invested funds of the system results in earnings greater than the investment return assumption set in the system’s most recent actuarial valuation. Such amount shall be based on the market rate of return during a calendar year on the balance of total assets of the system at the close of business on December thirty-first of the prior calendar year, less the amount required to be derived by the investment return assumption set in said valuation. The actuary shall certify the excess investment income of each system within 90 days after the filing of the financial statement of the system required under paragraph (5), subparagraph (h) of Section 20.

SECTION 3.  Section 22 of said chapter 32, as so appearing, is hereby amended by inserting after clause (v) in paragraph (6) the following clause:-

(vi) In any calendar year where the excess investment income from the invested funds of the system, prior to making the transfers required for in clause (iii), a proportional amount of the excess investment income, equal to the percentage which the annuity savings and annuity reserve accounts balances at the close of business on December thirty-first of the prior calendar year, represented to the total funds of the system at such time, shall be transferred to the Cost of Living Reserve Fund.

SECTION 4. Section 22 of said Chapter 32 is hereby further amended by inserting after paragraph (6A) the following paragraph:-

(6B) Cost of Living Reserve Fund. -  The Cost of Living Reserve Fund of each system shall be credited all amounts set aside by a system for the purpose of establishing a reserve to meet future cost of living liabilities as contained in sections one hundred and two and one hundred and three, including such amounts as may be set aside pursuant to a funding schedule established in accordance with section twenty-two C or twenty-two D. Such amounts shall include without limitation the amount determined excess investment income as provided for in clause (vi) of paragraph (a) of subdivision (6).