|
|
|
|
|
The Honorable Lourdes Ramos-Rivera
Representative at Large
House of Representatives
Capitol Building
San Juan, Puerto Rico 00902
|
2000-08A
ERISA Sec. 3(32)
|
|
Dear Representative Ramos-Rivera:
|
|
This responds to your request for an advisory opinion concerning the
applicability of Title I of the Employee Retirement Income Security Act of
1974, as amended (ERISA) to the “Employees Retirement System of the
Government of Puerto Rico and its Instrumentalities” (Retirement System).
You ask whether the status of the Retirement System as a “governmental
plan” under section 3(32) of ERISA would be adversely affected if the
Retirement System were to allow participation by certain employees of
General Telecommunications Electronic (GTE).
|
|
According to the information and documents furnished with your request, the
Retirement System is a statute based, public retirement plan that the
government of Puerto Rico maintains for its employees and for the employees
of certain of its governmental instrumentalities and Puerto Rican
municipalities. The Retirement System currently covers approximately 158,000
participants. You represent that, to the best of your knowledge, there are
no private-sector employees participating in the Retirement System.
|
|
Prior to March 1999, the Puerto Rico Telephone Company (Company) was a
public corporation fully owned by the government of Puerto Rico. On March 3,
1999, the Company was sold to GTE, a private communications corporation, as
part of a government policy of privatizing certain public services. The sale
involved 50% plus one share of the stock of the Company being sold to GTE.
The Puerto Rico Telephone Authority has retained 46% of the Company’s
stock and an employee option program owns the remaining shares.
|
|
After the sale of the Company to GTE, a number of individuals who were
participants in the Retirement System as employees of the Company became
employees of GTE and were no longer covered by the Retirement System. GTE
currently employs between 432 and 540 of these individuals, most of whom
have more than 10 years of service under the Retirement System. In order to
enable these individuals to accrue additional benefits and retire under the
Retirement System, a bill was introduced in the legislature of Puerto Rico
that would allow them to continue to participate in the Retirement System,
if they so request, based on their employment with GTE, with employer and
employee contributions to the Retirement System being the responsibility of
GTE and the participant.
|
|
The proposed legislation assumes that the Retirement System as it currently
operates has governmental plan status under ERISA. For purposes of this
opinion, we assume, without examining or expressing an opinion on the issue,
that the Retirement System as it currently operates constitutes a
“governmental plan” within the meaning of section 3(32) of ERISA.
Further, in the absence of complete facts pertaining to the sale of the
Company and its continuing ownership structure, we assume that the Company
after the sale to GTE is not an “agency or instrumentality” of the
government of Puerto Rico within the meaning of ERISA section 3(32).
Therefore, the sole issue to be addressed in this letter is whether the
continued participation in the Retirement System by the GTE employees in
question would adversely affect the Retirement System’s governmental plan
status under Title I of ERISA.
|
|
ERISA section 4(b)(1) provides that Title I of ERISA does not apply to any
employee benefit plan that is a "governmental plan" as defined in
ERISA section 3(32). Section 3(32) of ERISA defines the term
"governmental plan," in pertinent part, as "a plan
established or maintained for its employees by the Government of the United
States, by the government of any State or political subdivision thereof, or
by any agency or instrumentality of any of the foregoing." Section
3(10) of ERISA defines the term "State" to include Puerto Rico. It
is the view of the Department of Labor that the participation by a de
minimis number of private-sector employees in an otherwise governmental plan
will not adversely affect the plan’s status as a governmental plan.
However, if a benefit arrangement were to cover more than a de minimis
number of private sector employees, the Department may not consider it a
governmental plan under Title I of ERISA.
|
|
In view of the facts that the GTE employees in question would accrue
additional benefits under the same plan in which they previously accrued
benefits as governmental employees and that they would comprise a de minimis
number of the Retirement System’s total participants, and based on the
assumption that the Retirement System as it currently operates is a
“governmental plan” under section 3(32) of ERISA, we conclude that the
Retirement System’s “governmental plan” status would not be adversely
affected if the Retirement System were to allow continued participation by
the GTE employees in question.
|
|
This letter relates solely to the application of the provisions of Title I
of ERISA. This letter constitutes an advisory opinion under ERISA Procedure
76-1 and, accordingly, it is issued subject to the provisions of that
procedure, including section 10 thereof concerning the effect of advisory
opinions.
|
|
Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting & Disclosure
Office of Regulations and Interpretations
|
| |
|
