IUE and Chrysler pension bargaining changes

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




Mr. Wesley Wells                                            OPINION 77-43 A
President
 Local #775, International Union of
 Electrical, Radio and Machine Workers                       211(c)(1)
 of America                                                 306(c)(1)
[Recipient address omitted]

Dear Mr. Wells:

This is in response to the letter from you and Mr. Kenneth Hartlage of
Local #758 and Mr. J. L. McCarthy 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 Local 775 and Local 758, International
Union of Electrical, Radio and Machine Workers (IUE) and Chrysler Corporation.

You represent in your letter and the memorandum enclosed therewith that
in 1973 the IUE 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 company assets to employees
     retiring before October 15, 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
sections 211(c) and 306(c) of ERISA.

                                                          OPINION 77-43 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 of 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. 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.

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 bargaining
agreements" for purposes of section 211(c)(1) of ERISA or whether the

                                                             OPINION 77-43


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Plan’s participation and vesting rules in effect on the date of enactment
of ERISA were not less favorable to participants, in the aggregate, then
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