Supplemental retiree payments outside ERISA plans

P/OPINION 76-119

                                                   3(1)
                                                   3(2)


                    November 19, 1976


Dear          :

We have further considered your letters of February 19 and
March 3, 1976, concerning certain supplemental
("gratuitous") payments to pensioners. Pursuant to oral
conversations with you, we understand that you have
discontinued making such payments to the group of
approximately 1,200 pensioners referred to in the two
letters who had first started receiving such supplemental
payments in late 1974. We understand, also, that payments
to approximately 9,600 employees and survivors who were
receiving such payments prior to September 2, 1974, have
been approved for another year, effective April 1, 1976.

As you know, we announced in USDL 76-707, issued April 26,
1976, that the definition in the regulations of those
supplemental payments to retirees that will not constitute
pension plans is being revised. Based on the information
furnished to us, your program of supplemental payments
meets the requirements to be established in the final
regulations concerning such plans, as follows:

    1.   Payments come from the general assets of the
        employer.

    2.   The practice is not part of an employee benefit
        plan.

    3.   The individuals are not notified prior to their
        retirement that they will be receiving such
        payments.

    4.   Payments are not granted for more than a year at
        a time.
                             - 2 -


P/OPINION 76-119


        5.   The employer is under no legal obligation to make
          such payments.

        6.   Recipients are informed in writing of such
          conditions.

        7.   Recipients all retired prior to the end of 1976.

Therefore, you may again commence payments to the 1,200
pensioners, effective retroactive to April 1, 1976.
Payments under your practice may, if you wish, be extended
to any other pensioner retiring prior to the end of 1975,
if the above conditions are met. Payments meeting these
conditions will not constitute an employee pension plan,
an employee welfare plan, or an employee benefit plan
within the meaning of section 3(1), (2) and (3) of ERISA
and, therefore, are not covered by Title I of ERISA.

Sincerely,