Warner Gear pension pattern bargaining

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


August 8, 1977


Mr. R. P. Ehlers
Manager, Industrial Relations
Warner Gear Division                                OPINION 77-50 A
Borg-Warner Corporation
[Recipient address omitted]                                  211(c)(1)

Dear Mr. Ehlers:

This is in reply to your letter requesting our confirmation of your
interpretation of section 211(c) of the Employee Retirement Income
Security Act of 1974 (ERISA) that, based on the facts set forth in
your letter, (1) the lifetime supplement described therein constitutes
a "supplementary or special plan provision" and (2) the Retirement
Income Agreement of Warner Gear Division, Auburn Plant of Borg-Warner
Corporation Pension Plan (the Plan) is "a plan maintained on January 1,
1974 pursuant to a collective bargaining agreement" which is still
in effect.

Your letter contains the following facts and representations: The
benefits provided by the Plan have historically been patterned after
the plan maintained pursuant to the collective bargaining agreement
between General Motors Corporation (GM) and the UAW. This pattern
has existed since 1962, which was the date on which the Plan was adopted
by Warner Gear Division. Since 1962 there have been five negotiations
between Warner Gear Division and the UAW. All have been within 6
months of similar negotiations between GM and the UAW.

In 1973, GM and the other two major automobile manufacturers introduced
a six-year pension agreement containing a supplementary lifetime benefit
for certain employees which benefits commence at age 65. You believe
that this benefit clearly is a "supplementary or special plan provision"
within the meaning of section 211(c)(1) of ERISA. Warner Gear Division,
consistent with the foregoing pattern, agreed to include this supplement
in the Plan on April 20, 1974, as part of a six-year pension collective
bargaining agreement.

You believe that Warner Gear Division’s long standing tradition of pattern
bargaining with the UAW compels the determination that the Plan containing
such provisions was maintained on January 1, 1974. The UAW staggers its

                                                OPINION 77-50 A
                                                              252
                                     -2-

negotiation with the major autoworkers and their suppliers. The major
autoworkers pension collective bargaining agreement, which Warner Gear
Division had traditionally followed, was entered into prior to January 1,
1974. You believe that if it is concluded that the Plan is not deemed
to be maintained on January 1, 1974 pursuant to the collective bargaining
agreement still in effect, the result would be inequitable and would
disrupt orderly and historical collective bargaining relationships.

Section 211(c) of ERISA provides that:

  (c)(1) In the case of a plan maintained on January 1, 1974, pursuant
  to one or more agreements which the Secretary finds to be collective
  bargaining agreements between employee organizations and one or more
  employers, no plan shall be treated as not meeting the requirements
  of sections 204 and 205 solely by reason of a supplementary or special
  plan provision (within the meaning of paragraph (2)) for any plan
  year before the year which begins after the earlier of --
     (A) the date on which the last of such agreements relating to
     the plan terminates (determined without regard to any extension
     thereof agreed to after the date of the enactment of this Act),
     or
     (B) December 31, 1980.
  For purposes of subparagraph (A) and section 306(c), any plan amendment
  made pursuant to a collective bargaining agreement relating to the
  plan which amends the plan solely to conform to any requirement contained
  in this Act or the Internal Revenue Code of 1954 shall not be treated
  as a termination of such collective bargaining agreement. This paragraph
  shall not apply unless the Secretary determines that the participation
  and vesting rules in effect on the date of enactment of this Act are
  not less favorable to participants, in the aggregate, than the rules
  provided under sections 202, 203, and 204.
  (2) For purposes of paragraph (1), the term "supplementary or special
  plan provisions" means any plan provision which –-
     (A) provides supplementary benefits, not in excess of one-third
     of the basic benefit, in the form of an annuity for the life of
     the participant, or
     (B) provides that, under a contractual agreement based on medical
     evidence as to the effects of working in an adverse environment
     for an extended period of time, a participant having 25 years of
     service is to be treated as having 30 years of service.
  (3) This subsection shall apply with respect to a plan if (and only
  if) the application of this subsection results in a later effective
  date for this part than the effective date required by subsection (b).

                                              OPINION 77-50 A           253

                                   -3-

Your letter does not contain sufficient information containing the Plan’s
provisions regarding supplementary lifetime benefits 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.

In regard to your question with respect to whether the Plan was maintained
on January 1, 1974 pursuant to a collective bargaining agreement which
is still in effect, it is our opinion that, on the basis of the repre-
sentations in your letter of May 3, 1977 as to all the facts and circumstances
surrounding the agreement of April 20, 1974, the action taken by Warner
Gear Division with respect to the patterned bargaining of certain supple-
mentary lifetime benefits relates back to the pre-1974 pattern agreement
for purposes of section 211(c)(1) of ERISA. It should be noted that this
opinion is limited to the facts and circumstances of this request and
should not be interpreted as implying, as a general proposition, that
later patterned bargaining will be deemed to be concluded at the same
time as the agreement of the pattern setter for purposes of the applicability
of any ERISA provisions.

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
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.

This letter constitutes an advisory opinion as defined in ERISA Procedure
76-1 (copy enclosed). Accordingly, this letter is issued subject to the
provisions of such procedure, including section 10 thereof relating to
the effect of advisory opinions.

                                     Sincerely,



                                    Fred W. Stuckwisch
                                    Director
                                    Office of Regulatory Standards
                                      and Exemptions

Enclosure