On June 27, 2023, Governor Lamont approved Connecticut Public Act No. 23-182, An Act Concerning Revisions to the Municipal Employees' Retirement System, a Deferred Retirement Option for Participating Members and the Development of Best Practices for Governance Structures of Municipal Retirement Plans.
As part of a larger effort to effectuate CMERS reform, the new legislation amended the Connecticut Municipal Employees Retirement System (CMERS) plan, governed by statute, in a variety of ways, particularly:
- For CMERS members who retire on or after July 1, 2025, the law:
- changes the range of potential cost of living adjustments (COLAs) to pension benefits, by increasing the maximum COLA from 6.0% to 7.5% and phasing out the 2.5% minimum COLA;
- requires a minimum one-year waiting period for a retiree's first COLA; and
- creates a pension incentive for CMERS members to continue working past age 60 with at least 30 years of service (or age 55 with 27 years of service for police and firefighters).
- The law also allows the State Employees Retirement Commission, commencing on July 1, 2025, to create a deferred retirement option plan.
- Finally, the new law requires all municipalities, including those that do not participate in CMERS, to give the State Comptroller certain information about their retirement systems by September 1, 2023. “Municipality” means any town, city, borough, school district, regional school district, taxing district, fire district, district department of health, probate district, housing authority, regional workforce development board established under section 31-3k, regional emergency telecommunications center, tourism district established under section 10-397, flood commission or authority established by special act or regional council of governments. Each municipality shall provide the following information to the State Comptroller:
- A statement of whether the municipality has formally adopted an investment policy statement and if so, a copy of such statement;
- summary plan documents for the previous five fiscal years, except that a municipality need not include such documents for a fiscal year for which there were no changes to such plan or documents;
- the five most recent actuarial valuations;
- the form and governance structure of the municipal entity, if any, that provides management or oversight of the plan;
- whether the municipality uses a third-party advisor or administrator to provide management or oversight of the plan; and
- the estimated fees paid by the municipality in each of the previous five fiscal years for investments under the plan.
Therefore, any municipal employers which have not yet reported this information to the State Comptroller should take steps to comply with these requirements. This information will be used by the State Comptroller, Treasurer and the Secretary of the Office of Policy and Management to prepare a report on the best practices for municipal retirement plans by July 1, 2024, which should include: (a) a summary of the current governance structures and management arrangements used by municipalities for their municipal retirement plans and the estimated fees paid by municipalities for investments under the plans, (b) the best practices developed under this subsection and any recommendations for legislative changes to assist municipalities with implementing or utilizing such best practices, and (c) recommendations on how the state can partner with municipalities to improve the management of municipal retirement plans, reduce fees for investments made under the plans and increase the rate of return to municipalities.
If you have any questions about this legal update or are in need of labor and employment advice, please contact Cindy Cieslak at (860) 361-7999 or [email protected], or any other attorney at Rose Kallor, LLP with whom you regularly work. Rose Kallor, LLP provides a full range of labor and employment counseling to private and public-sector employers.