Connecticut sets July 2026 deadline for new MERS retirement contribution plan

Connecticut's House Bill 7276, introduced on April 10, 2025, aims to reform the retirement benefits structure for municipal employees, addressing long-standing concerns about the sustainability and adequacy of pension plans. The bill proposes the establishment of a new defined contribution retirement plan, known as the MERS defined contribution plan, which is designed to provide more flexibility and security for municipal workers.

One of the key provisions of House Bill 7276 is the requirement for municipal employees to contribute a portion of their pay to this new retirement fund. Specifically, members will contribute one-fourth of one percent of their salary, along with an additional five percent of their overtime pay. Public safety employees will have a slightly higher contribution rate of eight percent for their overtime. This shift from traditional pension plans to a defined contribution model is intended to mitigate the financial risks associated with pension liabilities, which have been a growing concern for municipalities across the state.

The bill has sparked notable debates among lawmakers and stakeholders. Proponents argue that the new plan will provide employees with greater control over their retirement savings and reduce the financial burden on municipalities. However, opponents express concerns about the adequacy of retirement benefits under a defined contribution model, fearing that it may not provide sufficient income for employees in their retirement years compared to traditional pension plans.

Economically, the implications of House Bill 7276 could be significant. By transitioning to a defined contribution plan, municipalities may experience reduced long-term liabilities, potentially freeing up funds for other community services. However, there are worries about how this change might affect employee retention and recruitment, particularly in public safety roles, where competitive benefits are crucial.

As the bill moves through the legislative process, experts suggest that its passage could set a precedent for other states considering similar reforms. The outcome of House Bill 7276 will likely influence the future landscape of public employee retirement systems, shaping how municipalities across Connecticut and beyond approach employee benefits.

In conclusion, House Bill 7276 represents a pivotal shift in Connecticut's approach to municipal employee retirement, aiming to balance fiscal responsibility with the need for adequate employee benefits. As discussions continue, the bill's impact on the community and its workforce will be closely monitored by both supporters and critics alike.