Substitute House Bill No. 5609 mandates that municipalities or special taxing districts with defined benefit pension systems must consider, when calculating an employee's pension benefits, the greater of either the wages used to determine the employee's final average salary (FAS) or the temporary total disability and temporary partial disability benefits received by the employee during the FAS calculation period. This means that if the disability benefits exceed the wages, the pension system must use the higher disability benefits for the FAS calculation. The bill explicitly states that it does not impair or alter any collective bargaining agreements that are in effect prior to July 1, 2025.

The bill is set to take effect on July 1, 2025, and is expected to increase costs for municipalities that offer defined benefit pensions, as it may lead to higher pension payouts and increased liabilities for retirement systems. The financial impact on municipalities will depend on the frequency of instances where disability benefits are included in pension calculations, which could vary over time and be subject to inflation.