Sec. 3. The monthly retirement benefit payable for life to a participant who is eligible under section 2 of this chapter is the lesser of:
(1) forty dollars ($40) multiplied by the total years of service completed by the participant as a member of the general assembly before November 8, 1989; or
(2) the highest consecutive three (3) year average annual salary of the participant attributable to the participant's service as a legislator, as reported on the participant's W-2 federal income tax withholding statement and determined without regard to any salary reduction agreement established under Section 125 of the Internal Revenue Code, at the date the participant's service as a member of the general assembly is terminated, divided by twelve (12).