UAW and Chrysler pension bargaining changes

                    U.S. DEPARTMENT OF LABOR
            LABOR MANAGEMENT SERVICES ADMINISTRATION
                     Pension and Welfare Benefit Programs
                           Washington, D.C. 20016




May 12, 1977


Mr. Douglas A. Fraser
Vice President
International Union, United                                 OPINION 77-40 A
  Automobile, Aerospace and
  Agricultural Implement Workers                            211(c)(1)
  of America                                                306(c)(1)
[Recipient address omitted]

Dear Mr. Fraser:

This is in response to the letter from you and Mr. G. Lee Philp of Chrysler
Corporation requesting an advisory opinion regarding certain provisions of
the Employee Retirement Income Security Act of 1974 (ERISA) as they relate
to several matters collectively bargained between the U.A.W. and Chrysler
Corporation.

You represent in your letter and the memorandum enclosed therewith that in
1973 the U.A.M. and Chrysler Corporation agreed upon a 6-year retirement
agreement. After bargaining in 1976, the two parties agreed to the following:

      a.   An increase in the Special Age 65 Benefit effective November 1, 1976;

      b.   An increase in the percentage benefit of the surviving spouse of
           an employee retiring on or after November 1, 1976;

      c.   An additional pension credited service to 350 asbestos employees
           out of 119,685 employees participating in the plan; and

      d.   Payment of a one-time lump sum from company assets to employees
           retiring before September 14, 1976, who are eligible to receive
           benefits as of January 1, 1978.

The amendments in the 1976 agreement were made conditional upon securing a
satisfactory ruling from the Department of Labor.

Specifically, you request an advisory opinion that these 1976 agreements do
not constitute a termination of the 1973 retirement agreement under section
211(c) and 306(c) of ERISA.

                                  -2-                   OPINION 77-40 A


Section 306(c)(1) provides that the minimum funding standards of Part 3
of Title I of ERISA shall not apply to any plan in effect on January 1,
1974, pursuant to a collective bargaining agreement until the earlier
of the dates specified in section 211(c)(1)(A) or (B). Section 211(c)(1)
provides that such plans will not be treated as not meeting the require-
ments of section 204 and 205 solely because of a supplementary of special
plan provision for any plan year before the year which begins after the
earlier of the date on which the last collective bargaining agreement
relating to the plan terminates or December 31, 1980.

Your letter does not contain sufficient information concerning the Plan's
provisions to determine whether such provisions constitute a "supplementary
or special plan provision" within the meaning of section 211(c)(2) of
ERISA. Accordingly, we cannot issue any opinion in response to your
request in that regard.

The statute does not define what constitutes termination of a collective
bargaining agreement relating to a plan for purposes of section 211(c).
However, a House Ways and Means Committee Report (House Report 93-807,
p. 51-52) stated such an agreement ". . . will not be considered terminated
if it can be (or is) reopened with respect to narrow issues only. For
example, a collective bargaining agreement would not be considered as
being terminated for this purpose if it can be reopened with respect to
the benefit payable to a surviving spouse, if it can be reopened because
of a change in payments with respect to voluntary coverage under Part B
of the Medicare benefits under the Social Security Act or if it can be
reopened to increase benefits with respect to a quite limited group of
employees." The Conference Committee Report on ERISA (House Report
93-1280, p. 267) incorporated these statements by reference.

Based on your representations, the supplementary material enclosed with
your letter, and the intent of the Congress as shown in the Committee
Reports, we conclude that the 1976 agreements on the Special Age 65 Benefit
and the increased surviving spouse benefit do not constitute termination
of the 1973 retirement agreement. Similarly, the additional pension
credited service under the 1976 agreement will not constitute a termination
of the 1973 retirement agreement because it merely increases " . . .
benefits with respect to a quite limited group of employees." Lastly, the
agreement for Chrysler Corporation to pay a lump sum to certain retirees
will not constitute a termination of the 1973 retirement agreement because
it in any event deals with a narrow issue within the meaning of the
legislative history cited above.

It should be noted that this opinion is limited to the facts and circumstances
of this request and should not be deemed to be an opinion of the Department
as to whether section 211(c) applies to the Plan. In this regard, we are

                                  -3-                   OPINION 77-40 A

issuing no opinion herein as to whether the agreements mentioned in your
letter constitute "collective bargaining agreements" for purposes of
section 211(c)(1) of ERISA or whether the Plan's participation and vesting
rules in effect on the date of enactment of ERISA were not less favorable
to participants, in the aggregate, than the rules provided under sections
202, 203 and 204 of ERISA.

Because sections 211(c) and 206(c) have parallel provisions in ERISA
section 1017(c) which is under the jurisdiction of the Internal Revenue
Service, we have conferred with representatives of the Service and they
have indicated their concurrence in the views set forth above as they
apply to that section.

                                     Sincerely,



                                     Fred W. Stuckwisch
                                     Director
                                      Office of Regulatory Standards
                                        and Exceptions