(1) Except as provided in section 42-1107, in the event of a member's death, the death benefit shall be paid to the following, in order of priority:

(a) To the member's surviving designated beneficiary on file with the board;

(b) To the spouse married to the member on the member's date of death if there is no surviving designated beneficiary on file with the board; or

(c) To the member's estate if the member is not married on the member's date of death and there is no surviving designated beneficiary on file with the board.

(2) The priority designations described in subsection (1) of this section shall not apply if the member has retired under a joint and survivor benefit option.