Substitute House Bill No. 7276 introduces a new retirement tier called "MERS 2.0" within the Connecticut Municipal Employees Retirement System (CMERS), which will apply to members who become eligible for membership on or after specified dates in 2026 and 2027. The bill establishes key definitions and retirement eligibility criteria, including specific contribution rates for members, with public safety employees contributing at a higher rate. Additionally, the Connecticut Municipal Employees Retirement Commission is tasked with creating a defined contribution retirement plan by July 1, 2026, requiring all members to contribute a small percentage of their pay, with further contributions from MERS 2.0 members based on their other pay. The bill also allows municipalities not currently participating in MERS to adopt a new annuity plan, contingent upon unanimous approval from the commission's trustees.

Moreover, the bill modifies life insurance provisions for retired employees and members of the General Assembly, repealing certain existing law subsections and introducing new criteria based on "credited state service." Under the new provisions, retirees with 25 or more years of credited service will receive half of their pre-retirement insurance amount, while those with fewer years will receive a proportionate amount. The bill aims to provide potential savings for municipalities and the state, particularly for those opting into the new retirement tier and life insurance coverage changes. Key amendments include the requirement for MERS 2.0 members to contribute 5% or 8% of their regular pay, the calculation of retirement benefits based on the highest five years of pay, and the establishment of a minimum life insurance coverage amount for retirees.