               UNITED STATES COURT OF APPEALS
                   FOR THE FIRST CIRCUIT
                                        

No. 91-1542

                RONALD W. CATERINO, ET AL.,

                  Plaintiffs, Appellants,

                             v.

                   J. LEO BARRY, ET AL.,

                   Defendants, Appellees.

                                        

        APPEAL FROM THE UNITED STATES DISTRICT COURT

             FOR THE DISTRICT OF MASSACHUSETTS

      [Hon. Edward F. Harrington, U.S. District Judge]
                                                     

                                        

                           Before

                    Breyer, Chief Judge,
                                       
               Cyr and Stahl, Circuit Judges.
                                            

                                        

Anthony  M.  Feeherry with  whom  Marie  P. Buckley  and  Goodwin,
                                                                 
Procter &amp; Hoar were on brief for appellants.
         
Randall E. Nash with whom  James T. Grady and Grady and Dwyer were
                                                            
on brief for appellees.

                                        

                     November 12, 1993
                                        

                            -1-

          BREYER,  Chief Judge.  For more than thirty years,
                              

New  England employees of United Parcel Service ("UPS") have

participated  in the  New  England  Teamsters  and  Trucking

Industry  Pension Fund (the  "Teamsters Pension Fund").   In

1986,  a group  of  those employees  decided they  wanted to

leave  the  Teamsters  Pension Fund.    They  hoped (through

collective bargaining) to secure their employer's assistance

in setting up a separate  pension fund covering only UPS New

England employees.  

          The employees failed to  bring about the  creation

of a separate  fund.  And, they blame  the Teamsters Pension

Fund trustees for that failure.  In particular, they believe

that the trustees have thwarted their efforts to negotiate a

plan  switch, not through direct opposition, but by refusing

to permit a transfer of any Teamsters Pension Fund assets to

any  new pension fund  that they,  together with  UPS, might

create.   They brought  this lawsuit  against the  trustees,

claiming,  in relevant part,  that the trustees'  refusal to

transfer  assets violates  various  laws, including  certain

provisions of the Employee Retirement Income Security Act of

1974 (ERISA).  See 29 U.S.C.    1104(a)(1), 1414(a).
                  

          After a  trial, the  district court  found in  the

trustees' favor.   The employees now appeal.   They argue in

essence  that  the  trustees, in  refusing  to  transfer any

assets to a newly created  fund, have violated the fiduciary

obligations that  ERISA imposes upon  them.  We can  find no

such violation, however; and, we  affirm the judgment in the

trustees' favor.

                             I

                         Background
                                   

                             A

                 The Teamsters Pension Fund
                                           

          The  large, multiemployer  Teamsters Pension  Fund

pools  contributions from  nearly two  thousand New  England

firms.   Eight trustees  (four Teamster  representatives and

four  employer representatives)  manage the  fund, investing

the pooled money  and paying guaranteed monthly  benefits to

employees  who  retire.    We  have  read  the  record  with

considerable care to  try to understand, from  the testimony

and documents,  as well  as the  briefs,  how the  Teamsters

Pension  Fund  works.   Based  on our  understanding  of the

record, we describe its significant features as follows.

          First,  employers contribute to the fund at a rate

that, in 1986, varied, among employers, between 36 cents and

$1.66 per employee  working hour.  The  precise rate depends

upon  the  results  of local  collective  bargaining.   Each

                            -3-
                             3

employer pays the collective-bargained hourly rate for every
                                                            

hour  that  any  employee works,  whether  the  employee who
               

performs the  work is young or old,  part-time or full-time,

temporary or long-term.

          Second,  a retiring  employee  receives a  pension

benefit  in  an amount  defined  by a  schedule  that varies

benefits  depending primarily upon  the employee's length of

service  and upon his, or her, employer's contribution rate.

The schedule thus pays the  same pension to two retirees who

have worked for  the same number of years  for employers who

contribute  at the  same rate.    In 1986,  for example,  an

employee  who worked for  twenty-five years for  an employer

who contributed  $1.66 per hour  (UPS' actual rate  in 1986)

would  receive a  pension of  $900 per  month.   The benefit

schedule  imposes a minimum length  of service (ten years as

of 1986, lowered  to five in 1990); no  employee is entitled

to  any pension  benefits until  he has worked  the minimum,

i.e., until his Fund  benefits have "vested."   The schedule

appears to set a maximum  length of service as well (twenty-

five or thirty years, depending on retirement age).  Once an

employee  works the maximum number of years, additional work

done does not entitle him to any additional benefit.

                            -4-
                             4

          It is  important to understand  that the Teamsters

Pension  Fund (like most "defined benefit" pension plans and

unlike  "defined contribution" plans  such as those  of many

university employees)  does not guarantee any  employee that
                               

he  will receive  a  pension that  exactly reflects  all the
                                          

contributions  made  on behalf  of that  particular employee
                                                            

over the years  (plus the investment income  associated with

those contributions).  As  we have just said, an  individual

employee who works  more than  the maximum  number of  years

loses the benefit  of some contributions made in  respect to

some of  his work  hours.  More  important, an  employee who

leaves  covered employment  before  his  Fund benefits  vest

loses the  benefit of all  contributions made in  respect to
                         

his work.  Less obviously, employees who are young also lose

the benefit of some contributions.  For example, an employee

who  works a certain  number of years,  say fifteen, between

the ages of forty  and fifty-five (and then quits)  receives

no more upon his  retirement at sixty-five than  an employee

who works the  same fifteen years between the  ages of fifty

and sixty-five; yet the contributions  made on behalf of the

first employee  are likely more valuable, for  they have had

more time to accrue investment income before retirement age.

                            -5-
                             5

          This  lack of  a  perfect fit  between  individual

contributions   and   individual    benefits   may   reflect

administrative considerations.  It may, for example, reflect

a judgment  not to  create discrepancies  in benefit  levels
               

that turn solely upon the relation between investment market

performance and the time that  an individual's contributions

are made.  But, the  most important reason for the imperfect

fit,  as the  Ninth Circuit  has  pointed out,  is that  the

"excess"  contributions made in respect to some workers help

to assure that all workers  (who work a reasonable number of
                  

years)  will  have a  decent  pension.   "A  modern  defined

benefit pension plan pools contributions for all workers . .

. to  provide reasonable  pensions for  workers who  satisfy

reasonable eligibility  standards.  The  formula necessarily

assumes  [inter alia]  that the  pensions  of a  significant
                    

number  of employees may  never vest."   Phillips  v. Alaska
                                                            

Hotel and Restaurant  Employees Pension Fund, 944  F.2d 509,
                                            

517 (9th Cir. 1991) (citation omitted), cert. denied, 112 S.
                                                    

Ct. 1942  (1992); see  also Local 144  Nursing Home  Pension
                                                            

Fund v. Demisay, 113 S.  Ct. 2252, 2260 (1993) (Stevens, J.,
               

concurring) ("That  some  portion of  [some defined  benefit

plan employees']  contributions will go  to benefit  [other]

employees  .  .  .  is,  of  course,  in  the  nature  of  a

                            -6-
                             6

multiemployer  plan.   Such  plans  .  .  . pool[]  employer

contributions for  the joint  benefit  of all  participating

employees.").  

          At  the same time,  the plan retains  an important

connection between  an individual's  contributions and  that

individual's benefits.   By tying benefit levels to years of

service and  employer  contribution rates,  the  Fund  still

ensures that those employees who do not get the full benefit

of  contributions  made on  their  behalf get  much  of that
                                                   

benefit (at least if their pension rights have vested).

          Third,   the   Teamsters   Pension   Fund   is   a

multiemployer plan.   The  fact that  it is  "multiemployer"

means  the fund  is large,  thereby  permitting trustees  to

diversify investment risks and also lowering  administrative

costs   per   pension  dollar.      Moreover,  multiemployer

"reciprocity"   permits  a  worker  to  change  jobs,  among

participating employers,  without losing the benefit of past

contributions.

          Finally,  the Teamsters  Pension  Fund contains  a

special feature  -- a "no asset  transfer" rule -- which the

UPS employees now challenge.  That rule says:

          If any employee or group of employees  .
          . .  shall cease  to be  covered by  the
          Fund  for  any reason  whatsoever,  they
          shall  not be  entitled  to receive  any

                            -7-
                             7

          assets  of the  Fund or  portion thereof
          nor shall the Trustees  be authorized to
          make any transfer of assets on behalf of
          such employees.

New  England Teamsters and  Trucking Industry  Pension Fund,

Agreement and Declaration  of Trust, Article XII,  section 9

(1958).   According to the trustees, this seemingly absolute

prohibition  is  modified  by  the  Trust  Agreement's  next

section.   That section  requires the trustees  to interpret

and apply the Agreement

          so  as to be in full compliance with all
          applicable provisions of  law, including
          the Employee Retirement  Income Security
          Act of 1974, as amended.

New England  Teamsters and  Trucking Industry  Pension Fund,

Restated Agreement and  Declaration of  Trust, Article  XII,

section 10 (1982).

                             B

                         This Case
                                  

          In 1986,  a group  of UPS  employees learned  that

they  could dramatically improve the level of their pensions

were  they, with UPS, to withdraw from the Teamsters Pension

Fund and  create their  own single-employer  plan.   That is

because, as confirmed in the findings of the district court,

UPS  employs a relatively large number of temporary workers,

for whom the company contributes for every hour  worked, but

                            -8-
                             8

who leave  the New  England trucking  industry before  their

pensions  vest.   The UPS  workforce also  includes a  large

percentage  of younger  workers.   Thus,  UPS' contributions

made  on  behalf  of its  employees  contain  a higher-than-

average  amount of  "excess" contributions.   The  Teamsters

Pension  Fund,  being  a  multi-employer fund,  spreads  the

benefits of such excess contributions among all participants

in the Fund.   In a single-employer plan,  the UPS employees

realized, they would not  have to share their  "excess" with

others.   And unshared, UPS' $1.66 per hour contribution, as
                      

of 1986, could  buy pensions of $2600 per  month (instead of

$900  per  month) for  UPS  employees who  retired  from UPS

service after twenty-five  years.  Alternatively, UPS,  in a

single-employer  plan, could fund the $900 per month pension

for employees retiring after 25 years with a contribution of

less  than 70 cents  (rather than $1.66)  for every employee

hour worked.

          The UPS  employees' brief  explains what  happened

after  they learned of  the potential benefits  of a single-

employer plan:   "In an  effort to remedy  their inequitable

treatment  within the Teamsters  Fund, the  UPS Participants

repeatedly  petitioned  their  union  leaders  to  negotiate

[through  collective bargaining  with UPS management]  for a

                            -9-
                             9

separate pension plan on their behalf" -- a plan, the record

indicates,  that  the  employees  assumed  would  involve  a

transfer  of some portion  of Teamsters Pension  Fund assets

and liabilities to  the new fund.   "However," the employees

add,  "the UPS Participants' efforts to negotiate a separate

UPS pension  plan [were]  thwarted by  the provision in  the

Teamster   Fund's  governing   documents  which   absolutely

prohibits  any  transfer of  assets  .  . .  ."   Brief  for

Plaintiffs-Appellants at 10.

          "Thwarted" in  their efforts  to take assets  from

the  Teamsters Pension  Fund, and  thereby,  in their  view,

"thwarted" in their efforts to bring about the creation of a

new fund, the UPS employees filed suit against the trustees.

They asked  the court  either (1) to  order the  trustees to

create special  benefit levels within  the Teamsters Pension

Fund for UPS participants (to  reflect, in whole or in part,

their  favorable actuarial  status), or  (2)  to loosen  the

prohibition  on asset  transfers,  thereby,  in their  view,

making it possible for them  to negotiate a plan switch with

UPS management.   They argued that the  trustees' failure to

do one or the other violated various provisions of the Labor

Management Relations  Act (LMRA), 29  U.S.C.   141  et seq.,
                                                           

and of ERISA.   As we have said, after a trial, the district

                            -10-
                             10

court  entered judgment for the trustees.  The employees now

appeal that judgment.

          The UPS employees have  simplified their claims on

appeal.  They have abandoned their demand that  the trustees

create  a special  level of  benefits  within the  Teamsters

Pension Fund.  They focus  instead upon the trustees'  rule-

based refusal to permit any transfer of assets to a new UPS-

only fund.

          The  passage of  time  has  also  simplified  this

appeal.  The Supreme Court has recently decided a case which

we awaited  before deciding  this appeal,  namely Local  144
                                                            

Nursing  Home  Pension Fund  v.  Demisay,  113 S.  Ct.  2252
                                        

(1993).   Demisay involved  LMRA- and ERISA-based challenges
                 

to  a refusal, by trustees  of a multiemployer pension plan,

to transfer  assets to another  plan.  In its  decision, the

Court  barred   the  LMRA-based  claims   on  jurisdictional

grounds, but it remanded  (without deciding) the ERISA-based

claims.   As a  result of that  decision, the  UPS employees

concede that they  "can no longer pursue a  claim for relief

under [the applicable section of] the LMRA."

                            -11-
                             11

          The  UPS  employees  now  pursue  their  remaining

claim, namely  that  the  trustees'  rule-based  refusal  to

transfer assets violates ERISA.

                            -12-
                             12

                             II

                          Standing
                                  

          We  begin with  the trustees'  assertion  that the

employees  lack standing.   They concede that  the employees

may  bring an  ERISA  action if  they  have been  "adversely

affected by the  act or  omission of  any party .  . .  with

respect to  a  multiemployer plan."   29  U.S.C.    1451(a).

They  claim, however,  that  the  employees  have  not  been

"adversely  affected"  by  the  asset  transfer  prohibition

principally   because,   in   the   trustees'   view,   "UPS

participants  could  receive  the same  level  of  [pension]

benefits  with or  without a  transfer  of assets  to a  new
                          

single-employer fund."  Brief for Defendants-Appellees at 34

(emphasis  added).  Insofar  as we understand  this somewhat

counter-intuitive argument, we cannot agree with it. 

          In   evaluating  the   argument,   we  have   kept

separately  in mind two  different groups of  UPS employees.

In the first group are those employees who, were a switch to

occur,  would not yet have any vested Teamsters Pension Fund
                                     

rights but who will keep working for several years after the

switch (e.g., a UPS employee  who worked, say, four years at

the time of the  switch, and continues to work for more than

an additional year).  Both  sides agree that a new, UPS-only

                            -13-
                             13

pension plan  would need  to give these  employees (whom  we

shall call "not-yet-vested employees") full credit for their

past years of  Teamsters-Pension-Fund-related service (e.g.,

the plan  would need  to give  the four-year  employee fully

vested,  five-year, rights after one more additional year of

work).  Everyone  also agrees, however,  that the "no  asset

transfer" rule means that the new fund would be left without

any  assets to  pay for  these  past service  credits.   The
   

employees'  counsel   estimates  the   "loss   of  the   UPS

Participants'  unvested benefits" (which we take to mean the

cost  of these  past service  credits)  at approximately  $5

million.  Brief  for Plaintiffs-Appellants at  10 n.1.   The

trustees' figures, if  anything, appear to place  the figure

higher. 

          In  the second group are those employees who, were

a switch  to  occur, would  already have  vested rights  (we
                                   

shall  call  them  "already-vested  employees").    Everyone

agrees  that a  new, UPS-only  fund  would not  have to  pay
                                              

pensions  reflecting  the  past years  of  service  of these

already-vested  employees, for  those  pension rights  would
                                     

remain the  legal  responsibility of  the Teamsters  Pension

Fund. (In practice,  the old fund pays  supplemental pension

benefits directly to the employee after retiring.)   Since a

                            -14-
                             14

new fund  would not  have to pay  for these  employees' past

years of service, it  would not need assets to  help it make

any  such  payments.   And,  thus,  the  new fund  would  be

somewhat  indifferent to the  presence of the  trustees' "no

asset transfer" rule.   The employees recognize  this point,

which is why they suggest they would ultimately ask only for

the approximately $5 million --  or some portion thereof  --

they claim it  would cost to pay the past service credits of

the not-yet-vested employees.
                  

          With this distinction  in mind, we have  turned to

the  trustees' "no standing" argument.  The argument depends

upon a table  (entitled "Transfer of Assets  and Liabilities

Vs. No Transfer -- Hancock  Numbers") that seems designed to

show   that,  if  asset   transfers  were  permissible,  the

following would  occur: (1)  the new  fund would assume  all

pension liability for  the already-vested employees;  (2) it
                                         

would  obtain assets  from the  old  fund to  help pay  that

(already-vested employee)  liability; but,  (3) for  reasons

having  to do with  the inadequate funding  of the Teamsters

Pension Fund as  a whole, these assets would  fall far short

of  the  amount   needed  to  pay  for   the  already-vested

employees; (4) the  asset shortfall (in respect  to already-

vested  employees) would more  than outweigh any  benefit to

                            -15-
                             15

the new fund through its  obtaining a share of the (roughly)

$5  million of  assets  in  respect  to  the  not-yet-vested
                                                            

employees'  pensions;   (5)  the   rules  related  to   UPS'

"withdrawal liability" (a  complicated statutory requirement

that employers  who leave a  multiemployer plan  pay a  fair

share of the fund's overall deficit) would then somehow even

things out,  so that UPS  would be neither better  nor worse

off with a transfer of assets than without one.

          The  problem  with  the table  is  that  we cannot

understand the   reasoning that underlies it.   The trustees

nowhere explain why a new  fund could not request a transfer

only  of  assets  related to  not-yet-vested  benefits  (and
    

simply  not   bother  with   a  transfer   of  assets,   and

liabilities,  related to vested benefits).   And, so long as

the  employees limit their request  in this, or some similar

way, it  seems plain to us that a rule blocking the transfer

of any  assets means a  poorer fund.  We  assume, therefore,

that the employees  have standing,  and we  proceed on  that

basis.

                            III

             Fiduciary Obligations Under ERISA
                                              

     The UPS employees' basic argument is that the trustees,

in maintaining a "no asset transfer" rule, have violated the

                            -16-
                             16

fiduciary obligations that  ERISA imposes upon them.   Those

obligations are "strict."   NLRB v. Amax Coal  Co., 453 U.S.
                                                  

322, 332  (1981).  The trustees must  discharge their duties

"with  respect to  a  [multiemployer]  plan  solely  in  the

interest of the participants and beneficiaries and . . . for

the exclusive purpose of providing  benefits to participants

and beneficiaries,"  and  they must  do  so "with  []  care,

skill,  prudence, and  diligence."   See ERISA, 29  U.S.C.  
                                        

1104(a)(1);  see also id.   1106 (describing other fiduciary
                         

duties  of trustees).   At  the same  time, where,  as here,

there is no claim of trustee self-dealing or the like, we do

not simply substitute our judgment for that of the trustees.

We review the trustees' decision at a distance.  See Mahoney
                                                            

v. Board of  Trustees, 973 F.2d 968, 970-73  (1st Cir. 1992)
                     

(refusing to apply  close scrutiny to a pension fund trustee

decision even  where mild  self-dealing  was involved);  cf.
                                                            

Unocal Corp. v. Mesa Petroleum  Co., 493 A.2d 946, 958 (Del.
                                   

1985)  ("[U]nless  it is  shown  by a  preponderance  of the

evidence  that the  [fiduciaries'] decisions  were primarily

based  on perpetuating themselves  in office, or  some other

breach of fiduciary  duty such as fraud,  overreaching, lack

of  good  faith,  or  being uninformed,  a  Court  will  not

substitute  its judgment  for that of  the [fiduciaries].").

                            -17-
                             17

The decision to maintain a "no asset transfer" rule requires

the  trustees  to  balance  obligations  that  run  both  to
                                                        

employees who  may wish to leave  the fund and to  those who
                                              

wish to stay.  As is well-established, courts set aside this

type of trustee management decision only if it is "arbitrary

and capricious in  light of the trustees'  responsibility to

all   potential   beneficiaries."     Clearly   v.   Graphic
                                                            

Communications  Int'l  Union   Supplemental  Retirement  and
                                                            

Disability Fund, 841 F.2d  444, 449 (1st Cir.  1988) (citing
               

other First Circuit cases on point).

          We  cannot say that the trustees' decision here is

arbitrary.   In reaching this conclusion, we have considered

two possible arguments.  The first (implicit in much of what

the UPS  employees say) is  that the Teamsters  Pension Fund

has treated them  unfairly while they  have remained in  the

Fund by not giving them  higher pension benefits than  other

employee    groups    with    less    favorable    actuarial

characteristics.  On this view, the sole fact that they were

earning (as  of 1986)  a $900 pension  when they  could have
                                                       

been earning a $2600 pension had the  Fund treated them as a

separate actuarial group demonstrates this unfairness.  And,

arguably,  this  "unfair"  treatment warrants  some  special

transfer of assets should they leave the Fund.

                            -18-
                             18

          The  problem  with  this  argument  is  that   the

discrepancy  between $900  and $2600  does  not, by  itself,
                                               

indicate  that   the  Teamsters  Pension  Fund  treated  the

employees unfairly (and  nor have the employees  offered any

other evidence of  unfair treatment while in the  Fund).  As

discussed above, see supra pp.  6-7, multiemployer, defined-
                          

benefit pension  funds  provide their  participants a  whole

cluster  of  benefits,  most  notably,  a  guaranteed decent

pension for all  longtime workers.   And  as also  discussed

above, such  funds do  this largely  by collecting  "excess"

contributions in respect

to  certain kinds  of employees  such  as temporary  workers

(whose  benefits  never  vest),  young workers,  and  super-

longterm   employees,   and   by   sharing   these    excess

contributions  with all the employees  in the fund, not just
                       

with  the  employees  of  employers  who  paid  the  excess.

Accordingly,  a  basic  objective of  these  funds  would be

undermined  if  every employee  group (such  as UPS)  with a

disproportionate  share of  excess contributions  (and there

may be many others) wanted special pension levels to reflect

that fact.  It is thus no coincidence that, according to the

findings of the  district court, no other  regional Teamster

pension  fund  provides  special  benefits  for  actuarially

                            -19-
                             19

favorable employee groups, and only one non-Teamster fund in

the entire country does so.

          In  short, UPS and  its employees could  have quit

the Teamsters Pension Fund at any time, but so  long as they

stayed  --  and  enjoyed   the  guaranteed,  mobile  pension

benefits  the Fund provides -- there seems nothing obviously

unfair in denying them special (e.g., $2600)  benefits.  The

UPS employees, by abandoning on appeal their demand for such

benefits, seem,  in effect, to  concede the point.   (We add

that, on appeal, the UPS employees also seem to suggest that

a new  fund would  not be  entitled to  an amount of  assets

anywhere near as large as  the amount that would reflect the

UPS employees' "excess" contribution.) 

          The  second basic argument  that the trustees have

acted arbitrarily focuses  on the "no  transfer" rule.   The

employees argue that if they quit the Teamsters Pension Fund

(because they no longer, in  the future, want to share their

excess  contributions),  the  rule would  prevent  them,  as

explained  in  the  standing section,  supra  Part  II, from
                                            

getting any assets to help  pay for the past service credits
           

of the not-yet-vested employees.  And, it would prevent  the

new  fund  from getting  such  assets  even though  UPS  has

dutifully made contributions into the old fund on  behalf of

                            -20-
                             20

these same employees.  This,  they say, is unfair.  The  UPS

employees  concede,  again  as  mentioned  in  the  standing

section, that the "no transfer  rule" is a wash with respect

to already-vested employees and, to that extent, the rule is
                 

not  unfair.   They  also  recognize that,  as  long as  the
   

Teamsters  Pension Fund  has liabilities  in  excess of  its

assets, they might not be entitled to get funds to cover all
                                                            

of the past service credits of not-yet-vested employees; yet

they say they are entitled to funds  to cover at least some.
                                                           

          Can the  trustees' decision  not to  transfer even

one dime of the Fund's assets attributable to not-yet-vested

pension  rights (keeping  those assets  for  the benefit  of

other  non-UPS   participants)  be   considered  reasonable?

Although we find  the question a  difficult one, we  believe

the  answer is  "yes" --  at least  in  the absence  of some

special circumstance that  the record here does  not reveal.

In arriving at this conclusion, we  fully recognize that the

trustees'  blanket  refusal  operates  in  practice  like  a

penalty for withdrawing from the  Fund -- a penalty somewhat

similar  to the  penalties  bank  customers  pay  for  early

withdrawals  from   CDs  and   the  like,   but  a   penalty

nonetheless.   Whether such a penalty is reasonable depends,

                            -21-
                             21

in our view,  upon whether it serves a  legitimate deterrent

purpose,  upon whether  the participants  in  the fund  know

about it  in advance, and upon  its size in relation  to its

function.

          The   penalty's   deterrent   function   here   is

legitimate.   Multiemployer,  defined-benefit pension  plans

almost inevitably produce some actuarially-favored, and some

actuarially-disfavored, groups.   Such plans  have a  strong

interest in discouraging actuarially-favored employee groups

from withdrawing.  For the employees left behind, withdrawal

means,  among other  things,  a  smaller fund,  consequently

greater  investment costs and risks, and fewer employers for

whom those employees  can work without losing  their accrued

years of  service.  Those  left behind, moreover,  also lose

the  benefit of  sharing  the departing  employer's "excess"

contributions,  say, those  related to  temporary employees.

Some departing employees, we should remind them, would be in

the same  situation had  personal circumstances  earlier led

them to  switch to actuarially-disfavored employers.   Also,

departing  employees, up until  the time of  departure, have

enjoyed  the benefits  of  the  large  fund  that  departure

disincentives have helped to maintain.

                            -22-
                             22

          Moving  to   the  next  inquiry,   we  think  that

employees  leaving the Fund might reasonably expect to incur

some such departure penalty (not to be confused, by the way,

with  "withdrawal liability,"  mentioned  supra pp.  14-15).
                                               

The governing  document of  the Teamsters  Pension Fund  has

contained  the "no asset  transfer" clause since  the Fund's

creation.  More  importantly, the penalty concerns  the loss

of  a special  kind  of  asset, namely  the  loss of  assets

related to not-yet-vested contributions.   And, participants

in many  pension funds  normally lose  such assets  entirely

when they  leave fund-covered  employment prior  to vesting.

Departing  employees  leave Teamsters  Pension  Fund-covered

employment whether  they quit  the industry  or whether,  by

switching  plans, they and their employer leave the Teamster

Pension Fund.   Of course, the two activities  -- quitting a

job and switching plans -- are not the same.  But,  they are

closely  enough   related  to   make  the   penalty  of   an

unsurprising kind (and, of course, from the point of view of

the remaining participants,  the effect of departure  is the

same).

          It  also  seems  to  us  that  the  size  of   the

withdrawal  penalty  is  relatively  modest.    The   record

suggests  that the  employees can  take  advantage of  their

                            -23-
                             23

actuarially favorable position by leaving the Teamster  Fund

even without an asset transfer, albeit not quite to the same
                              

degree.   In absolute terms, we have  already mentioned that

the employees  appear to  value the  not-yet-vested employee

liability  at roughly  $5  million;  we  have  also  already

mentioned  that the employees  recognize that they  would be

entitled,  the Teamsters Pension  Fund being in  debt, to an

amount  of assets  to  cover  only some,  not  all, of  this
                                       

liability -- i.e., an  amount less than $5  million, perhaps

much  less.  (Our  own crude calculations,  based on figures

from the trustees' table, puts  the amount at $3.7 million.)

Whatever  the  exact figure,  it  is a  fairly  small amount

compared  to other amounts such as UPS' annual contributions

($18 million dollars as of 1986, according to the employees'

actuaries) or  the "withdrawal liability"  UPS would  likely

have  to pay  upon departure  (in  the tens  of millions  of

dollars, again as of 1986).

          Finally, if the "no asset transfer" rule costs the

new fund too much, there is  a safety valve.  The  employees

can  automatically entitle  themselves to  a  share of  fund

assets should the  matter become so critically  important to

them that they take the  drastic step of changing collective

                            -24-
                             24

bargaining representatives (i.e., of leaving the Teamsters).

See ERISA, 29 U.S.C   1415(a).
   

          Ultimately,  the   weighing  of   the  conflicting

interests here at  issue -- those of  departing employees in

obtaining the nonvested share of assets versus those of most

fund participants in discouraging departures -- is up to the

trustees  (who reflect the  interests both of  employers and

the   employees,   through   their   collective   bargaining

representatives).  The question is close  enough so that, in

our view,  the ultimate  weighing is not  up to  the courts.

The treatment  of the  departing employees  (that they  must

forfeit unvested  rights) is  not so unfair  as to  make the

rule arbitrary.   We do  not say that  any rule that  blocks
                                          

asset  transfers is  reasonable, nor  that  the present  "no

transfer"  rule  is  reasonable in  all  circumstances.   We
                                       

simply  say that the  record before us  does not demonstrate

that it  is arbitrary as applied to the circumstances before

us.  Thus, we do not find a violation of the basic fiduciary

obligations that ERISA imposes upon trustees.

                             IV

                   ERISA Section 4234(a)
                                        

                            -25-
                             25

          The  UPS employees also  claim that the  "no asset

transfer" rule violates  ERISA section 4234(a),  which says,

in relevant part, that

          [a]   transfer   of    assets   from   a
          multiemployer plan to another plan shall
          comply with  asset-transfer rules  which
          shall  be adopted  by the  multiemployer
          plan and which . . . do not unreasonably
          restrict the transfer of plan assets  in
          connection  with  the transfer  of  plan
          liabilities.

29 U.S.C.    1414(a).  They argue (1) that  the provision is

applicable  to the instant case, (2)  that the trustees have

failed to "adopt[]" any "asset-transfer rules," and (3) that

any such  rules they  might have  adopted are  "unreasonably

restrict[ive]."  

          The  trustees do  not  agree  that  the  provision

applies  to this  case.   Specifically,  they argue  that it

applies only where a fund's trustees intend to transfer some

of  its liabilities  -- not  the situation  here --  and the

question is  whether, or to  what extent, the  trustees must

allow assets to accompany the transferred liabilities.  This

is the interpretation  of the statute that the Third Circuit

has endorsed, and with which, for the reasons stated in that

opinion, we  agree.   See Vornado, Inc.  v. Trustees  of The
                                                            

Retail Store Employees' Union  Local 1262, 829 F.2d  416 (3d
                                         

Cir. 1987).

                            -26-
                             26

          Even assuming that the provision applies, however,

we cannot accept the employees' claim that the trustees have

failed to  "adopt[]" any  "asset-transfer rules."   The  "no

asset  transfer" is  itself a  rule  about asset  transfers.
                           

Moreover, that rule  is not quite as absolute  as it sounds,

for the trustees acknowledge that, if ERISA's fiduciary duty

rules require them to transfer assets, the rule permits them

to comply.   The  Trust Agreement  itself,  in Article  XII,

section 10, says  that they  must do  so.  See  supra p.  8.
                                                     

Further, the  asset transfer prohibition, as so interpreted,

is not "unreasonably restrict[ive]," for the very reasons we

have set forth in Part III, supra.
                                 

          For  the  reasons  stated,  the  judgment  of  the

district court is  Affirmed.
                   Affirmed
                           

                            -27-
                             27
