UPGWA and Chrysler pension bargaining changes

                    U.S. DEPARTMENT OF LABOR
                   Pension and Welfare Benefit Programs
                         Washington, D.C. 20216



                                                                              .

Mr. Dempsey Dillon
International Union, United
 Plant Guard Workers of                                     OPINION 77-41 A
 American, UPGWA
[Recipient address omitted]                     211(c)(1)
                                                306(c)(1)

Dear Mr. Dillon:

This is in response to the letter from you and Mr. Ronald D. Gurdak 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
UPGWA and Chrysler Corporation.

You represent in your letter and the memorandum enclosed therewith that
in 1973 the UPGWA 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; and

     c. Payment of a one-time lump sum from corporate assets to employees
        retiring before September 29, 1976, who are eligible to receive
        benefits as of January 1, 1978.

The provisions of 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 requirements
do not constitute a termination of the 1973 retirement agreement under
sections 211(c) and 306(c) of ERISA.

                                                           OPINION 77-41 A



                                  - 2 -


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 sections 204 and 205 solely because of a supplementary or 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 any such provisions constitute a "supple-
mentary 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) states 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. 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.

                                                      OPINION 77-4l A

                                  - 3 -


Notwithstanding the above, this letter 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 issuing no opinion herein as to whether
the agreements mentioned in your letter constitute "collective bargain-
ing 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 aggre-
gate, than the rules provided under sections 202, 203, and 204 of ERISA.

Because sections 211(c) and 306(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

cc:   Mr. Ronald D. Gurdak