Substitute House Bill No. 7276 introduces a new tier within the Connecticut Municipal Employees Retirement System (MERS) called "MERS 2.0," which will apply to members who first become eligible for membership on or after July 1, 2027, with provisions for nonparticipating municipalities to enroll starting July 1, 2026. The bill establishes key definitions and retirement eligibility criteria, including specific retirement allowances based on years of service and age, with higher contribution rates for public safety employees. Additionally, the Connecticut Municipal Employees Retirement Commission is mandated to create a defined contribution retirement plan by July 1, 2026, requiring all members to contribute a percentage of their pay, with additional contributions from MERS 2.0 members based on their employment type.

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 includes amendments to streamline the process regarding life insurance contributions and benefits, clarifies enrollment requirements for nonparticipating municipalities, and modifies criteria for determining retirement benefits, including the calculation of average annual pay based on the five highest-paid years of active service. Overall, the bill aims to modernize and enhance the retirement benefits structure for municipal employees in Connecticut.