The fraction or percentage of final compensation, for purposes of calculating the combined prior and current service pensions under

Section or for a local safety member retiring after the effective date of his or her coverage under the federal system, but prior to termination of the coverage for members in his or her employment, shall be reduced by one-third as applied to that part of the member’s final compensation that does not exceed four hundred dollars ($400) per month. This

section shall not apply to any contracting agency nor to the employees of any contracting agency until the agency elects to be subject to this

section by amendment to its contract made in the manner prescribed for approval of contracts, or, in the case of contracts made after October 1, 1965, by express provision in the contract making the contracting agency subject to this section. This

section and

Section or 21366, as the case may be, shall supersede

Section with respect to all service to a contracting agency electing to be subject hereto. However, members in employment of the contracting agency on the effective date of the contract amendment subjecting the agency and its employees to this

section and

Section may elect, in accordance with board rules, to continue to be subject to

Section 21368, and the contracting agency shall be subject to

Section rather than this

section with respect to members who so elect. The election shall cease to be effective if, prior to the member’s retirement, his or her employer elects to be subject to

Section or or elects to terminate coverage of the federal system for persons in the member’s employment.