Pattern bargaining and Rockford Clutch pension plan

U.S. Department of Labor
Pension and Welfare Benefit Programs
Opinion 77-53 A
1977-08-08

Dear Mincemoyer:

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, the Hourly Employee 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 and the UAW. This pattern has existed since 1950, which was the date on which the Plan was adopted by Rockford Clutch Division (Rockford). Since 1950 there have been eight negotiations between Rockford and the UAW. Six times negotiations have been within 3 months of similar negotiations with GM and the UAW while the last have been within 7 months.

In 1973, General Motors and the other two major automobile manufacturers introduced a 6-year pension agreement containing a supplementary lifetime benefit for certain employees which benefits commence at age

65. You believe that this benefit is a "supplementary or special plan
    provision" within the meaning of section 211(c)(2) of ERISA. Rockford, consistent with the foregoing pattern, agreed to include this supplement in the Plan on April 6, 1974, as part of a 6-year pension collective bargaining agreement.

You believe that Rockford'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 negotiations with the major autoworkers and their suppliers. The major autoworkers pension collective bargaining agreement, which Rockford 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:

1. (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 --

   1. 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
   2. 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 --

   1. 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
   2. 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).

Your letter does not contain sufficient information concerning 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 representations in your letter of April 14, 1977 as to all the facts and circumstances surrounding the agreement of April 6, 1974, the action taken by Rockford Clutch Division 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 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.