(a) An employee shall make contributions to the plan based on compensation including a cost-of-living differential.
(b) The amount of a cost-of-living differential may not be included in the employee's compensation for purposes of calculating benefits paid under AS 39.35.095 - 39.35.680 unless the employee has received a cost-of-living differential for at least 50 percent of the employee's credited service.
(c) When an employee receives a benefit, and if the employee's compensation for purposes of calculating the benefit does not include a cost-of-living differential, then the administrator shall refund to the employee the amount of contributions the employee made based on the differential.
(d) In this section, “cost-of-living differential” means an adjustment to salary based on the cost of living in the geographic region where the employee works and includes a geographic pay differential under AS 39.27.020.