HOLLIS – Both sides are happy.

That’s what Town Administrator Troy Brown said about the two-year contract recently signed by the union that represents police, fire and communications employees in town. Final approval is dependent on voter support at Town Meeting later this month.

Negotiations had been at impasse for three years, stuck on a health retiree benefit with a long-term liability of $2.8 million, according to the most recent town audit.

The retiree health benefit provided health insurance for retired union members for life, an obligation town officials said could bankrupt the local government, given the continuing increases in health insurance costs, the greater burden assumed by the town, and longer life expectancy.

There are 29 members in AFSME Local 3657, and none of them are close to retirement, said Brown, adding that the cost of paying for health insurance for the employees after they retire is staggering.

“After they retired, they would receive the same benefits for life,” Brown said.

Under the new contract, union members agreed to share a $100,000 payment from the town in lieu of the retirement benefit.

In addition to the compromise on retirement benefits, the union agreed to a 1.5 percent cost of living allowance and a 3 percent merit step increase or longevity pay in the first year, and the same increases in the second year of the contract, said union president and police officer David Turgeon.

The contract does not provide for retroactive payments.

Brown said the compromise on retirement benefits involves “a single transaction” between $500 and $3,000 to be distributed among members, with the amount depending on seniority.

“Post-employee benefits used to be handshake deals to cover benefits after you retired, and some towns were very generous,” Brown said. “Hollis was one of them.”

Brown said that in years past, the New Hampshire Retirement System contributed generously to post retirement plans.

Presently, union members pay 2.9 percent of the cost of premiums for health insurance. Under the recently negotiated contract, however, they will pay 12.5 percent of their health insurance premium in the first year of the contract and 15 percent in the second year.

“The town should be pleased,” Brown said.

Hattie Bernstein can be reached at 673-3100, ext. 24 or hbernstein@cabinet.com.