Substitute House Bill No. 7276 introduces a new tier within the Connecticut Municipal Employees Retirement System (CMERS) called "MERS 2.0," which will apply to members who become eligible for membership on or after July 1, 2027, with provisions for nonparticipating municipalities to opt in starting July 1, 2026. The bill establishes key definitions and retirement eligibility criteria, including a requirement for members to contribute a percentage of their pay—5% for regular members and 8% for public safety employees. Additionally, it mandates the creation of a defined contribution retirement plan by the Connecticut Municipal Employees Retirement Commission, which will require contributions from both members and municipalities. The retirement benefit calculation will be based on the average annual pay during the five highest-paid years of active service, and members can retire after five years of continuous service or 15 years of active aggregate service.

The bill also modifies life insurance benefits for state employees and members of the General Assembly upon retirement, specifying that those with at least 25 years of "credited state service" will receive life insurance coverage equivalent to half of their pre-retirement amount, with a minimum of $10,000. This change narrows eligibility from the previous requirement of 25 years of "state service." Furthermore, the bill eliminates certain subsections regarding life insurance contributions and benefits, streamlining the process. Overall, the bill aims to enhance retirement benefits for municipal employees while ensuring sustainable funding through mandatory contributions and updates to existing provisions.