General Assembly Raised Bill No. 7276 proposes the establishment of a new tier within the Municipal Employees Retirement System (MERS), referred to as MERS 2.0, which will apply to members who become eligible for membership on or after July 1, 2026. This new tier introduces specific definitions for terms such as "active service," "average annual pay," and "public safety employee," and sets forth eligibility criteria for retirement benefits. Members of MERS 2.0 will be required to contribute a percentage of their base pay to the fund, with public safety employees contributing at a higher rate. The retirement allowance will be calculated based on average annual pay and years of service, with particular provisions for public safety employees. The bill also retains existing regulations regarding disability retirement allowances, survivors' benefits, and cost of living adjustments.

In addition to MERS 2.0, the bill introduces a cash balance plan as an alternative retirement option for municipalities, which can be adopted starting July 1, 2026. This plan allows municipalities to offer a different structure for retirement benefits, with members contributing a percentage of their base pay and municipalities also contributing a specified percentage. The bill mandates the creation of a defined contribution retirement plan, known as the MERS defined contribution plan, by the same date, requiring members to contribute a small percentage of their pay and a higher percentage of their overtime pay. Overall, the legislation aims to modernize and enhance retirement benefits for municipal employees while providing flexible options for municipalities in retirement planning.