Pattern bargaining and Kelsey-Hayes pension supplements

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



August 8, 1977

Mr. Raymond M. Lyons                                  OPINION 77-52 A
Vice President
Employee and Public Relations                         211(c)(1)
Fruehauf Corporation
[Recipient address omitted]

Dear Mr. Lyons:

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) Kelsey-Hayes Company Hourly-Rated and Salaried Employees
Within a Bargaining Unit Pension Plan - Detroit and Romulus,
Pension Plan for Hourly-Rated Employees at the Gunite Division
Kelsey-Hayes Company Pension Plan for Hourly-Rated and Salaried
Employees Within a Bargaining Unit - Heintz Division, Pension
Plan for Salaried Employees at Detroit and Romulus Plants
(Plant Guards), Kelsey-Hayes Pension Plan for Hourly Rated Employ-
ees - Jackson Plant, and Kelsey-Hayes Pension Plan for Hourly-
Rated Employees - French & Hecht Division (the Plans) are plans
" . . . 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 Plans have historically been patterned
after the plan maintained pursuant to the collective bargaining
agreement between General Motors Corporation and the UAW. This
pattern has existed since 1950, which was the date on which the
Plans were adopted by Kelsey-Hayes Company. The Plans' changes
have been the same as those provided by General Motors. The
language of the Plans is almost identical to the General Motors
Pension Plan.

In 1973, General Motors and the other two major automobile
manufacturers introduced a 6-year pension agreement contain-
ing a supplementary lifetime benefit for certain employees
which benefits commence at age 65. You believe that this

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                                                                   242

benefit is a "supplementary or special plan provision" within
the meaning of section 211(c)(2) of ERISA. Kelsey-Hayes, con-
sistent with the foregoing pattern, agreed to include this
supplement in the Plans beginning on January 31, 1974, as part
of a 6-year pension collective bargaining agreement.

You believe that Kelsy-Hayes' long standing tradition of pattern
bargaining with the UAW, in which Kelsey-Hayes has followed the
General Motors Corporation's plan benefit increases, compels the
determination that the Plans containing such provisions were
maintained on January 1, 1974. The UAW staggers its negotiations
with the major autoworkers and their suppliers. The major
autoworkers pension collective bargaining agreement, which
Kelsey-Hayes had traditionally followed, was entered into prior
to January 1, 1974. You believe that if it is concluded that
the Plans are 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 211c) 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 organiza-
  tions 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.

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                                                                      245


(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).

Based on the representations in your letter of April 1, 1977,
the supplementary lifetime benefit does constitute a "supple-
mentary or special plan provision" within the meaning of section
211(c)(2) of ERISA.

In regard to your question with respect to whether the Plans
were 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 representations in your letter of
April 1, 1977 as to all the facts and circumstances surrounding
the agreements of January 31, 1974, March 1, 1974, April 18, 1974,
July 31, 1974, and August 31, 1974, the action taken by Kelsey-
Hayes Company with respect to the patterned bargaining of certain
supplementary 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 Plans. In this regard, we are issuing no
opinion herein as to whether the agreements mentioned in your
letter constitute "collective bargaining agreements" for pur-
poses of section 211(c)(1) of ERISA or whether the Plans'
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.

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                                                                  246

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. Stuckwish
                               Director
                               Office of Regulatory Standards
                                 and Exceptions