(2) The minimum rate is 5%; and

(3) Interest at a rate set by the board not to exceed regular interest by 2 or more percentage points must be paid on the unpaid balance beginning January 1, 1976, or the date of attaining 15 years of creditable service, if later, to the date payment is made.

C. The payment must be made to the retirement system by a single direct payment or by annual direct payments made in accordance with section 17701, subsection 4.

Sec. 3. 5 MRSA §17760, as amended by PL 2003, c. 387, §§2 and 3, is further amended to read:

§17760. Service in the armed forces

Service credit for service in the United States Armed Forces is governed as follows. Except as provided in subsection 1, paragraph B, subparagraph (1), service credit under this section is limited to 5 years.

1. Service after becoming a member. A member is entitled to service credit for the period of time during which the member's membership is continued under section 17655, subsection 1, under the following terms and conditions. Except as provided in paragraph B, service credit under this subsection is limited to 5 years.

A. A member who is otherwise entitled to service credit for military leave may not be deprived of these credits if the member's return to membership service is delayed beyond 90 days after the member's separation from the service in the Armed Forces of the United States, under conditions other than dishonorable, if the delay is caused by an illness or disability incurred in the service in the armed forces.

B. A member may not receive service credit for military leave beyond the end of the period of first enlistment or induction or beyond 5 years from the date of original call to active duty in the armed forces, whichever is less, unless:

(1) The member's return to active duty in the armed forces or the extension of the period of service beyond 5 years is required by some mandatory provision; and