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Comptroller pitches MERS 2 tier to rein in municipal pension costs; municipalities and labor seek actuarial review
Summary
Comptroller Sean Scanlon told the Finance Committee he supports creating a new MERS 2 tier to reduce the growth of employer pension contribution rates; municipalities and the Connecticut Conference of Municipalities said the change could attract towns to join and urged actuarial analysis to determine employer cost impacts.
Comptroller Sean Scanlon told the committee that House Bill 7,276 would create a new tier — “MERS 2” — inside the Municipal Employees Retirement System (MERS) to curb rising municipal pension costs while preserving defined‑benefit retirement security for new hires. Scanlon described the work his office has done with labor and municipal leaders since 2023: a sequence of reforms, a new municipal retirement commission, and now a proposed alternative tier that would shift overtime into a defined‑contribution vehicle while retaining a defined benefit for base pay.
Representatives of the Connecticut Conference of Municipalities, the Connecticut Council of Small Towns and the Connecticut Conference of Municipalities told the committee they generally support the intent of the bill, saying it could provide more predictable employer costs and could entice municipalities that currently do not participate in MERS to join. CCM asked for an independent actuarial analysis of fiscal impacts and noted concerns about how overtime would be treated in any DC match program.
Municipal witnesses emphasized that the bill would apply prospectively to new hires and that existing employees would not have their benefits reduced. Comptroller Scanlon said the earliest implementation dates in the bill would be July 1, 2026 for non‑MERS towns that choose to join, and July 1, 2027 for new hires in current MERS towns. The comptroller and the retirement services director explained options for municipalities that currently manage their own retirement plans: municipalities could join prospectively with no upfront cost, or they could purchase past service liability for an actuarially calculated cost.
Why it matters: Several towns told the panel that employer contribution rates have risen sharply and are putting pressure on municipal budgets. Lawmakers pressed the comptroller and municipal representatives to deliver actuarial data that shows how the new tier would change employer costs and long‑term funding levels.
