Except as provided in subsection (a)(2) of this section, this section applies: on or after July 1, 1998, only to an allowance based on creditable service earned before July 1, 2011, and received by a former member, retiree, or surviving beneficiary of a deceased member, former member, or retiree of the Employees’ Pension System or the Teachers’ Pension System; and on or after December 31, 2000, only to an allowance based on creditable service earned before July 1, 2011, and received by a former member, retiree, or surviving beneficiary of a deceased member, former member, or retiree of the Law Enforcement Officers’ Pension System. This section does not apply if the member, former member, or retiree: was an employee of a participating governmental unit that did not elect the contributory pension benefit or the Alternate Contributory Pension Selection for its employees in accordance with § 31–116 or § 31–116.1 of this article; was an employee of a former participating governmental unit, other than Frederick County, that has withdrawn before July 1, 1998, while a member; or transferred to the Law Enforcement Officers’ Pension System from the Employees’ Retirement System and did not elect to participate in the Law Enforcement Officers’ Modified Pension Benefit on or before December 31, 2000, as provided in § 26–211 of this article. A cost–of–living adjustment payable under this section shall be a compound cost–of–living adjustment computed in accordance with § 29–402(d)(2) of this subtitle. A cost–of–living adjustment payable under this section shall be subject to a cost–of–living rate cap of 3%.