GE Freezing Pension Plans For 20000 Employees

Darnell Taylor
October 7, 2019

General Electric announced Monday it will freeze pension plans for some 20,000 US workers with salaried benefits, along with the supplementary pensions of 700 others as a measure to cut billions of dollars in debts.

GE said the freeze is effective January 1, 2021, and both moves are expected to help lower net debt between $4 billion and $6 billion.

"Returning GE to a position of strength has made several decisions, and today's decision to freeze the board is no exception, "Chief Human Resources Officer Kevin Cox said".

Shares rose 2.6% to $8.79 in premarket trading.

"Today's actions more closely aligns GE benefits with current industry standards and competitive market practices", the company said Monday in a statement. GE is also freezing United States supplementary pension benefits for about 700 employees.

Wadia said that the majority of companies his firm tracks have frozen their pension funds, but some - primarily in financial services or the not-for-profit sector - have pension plans where beneficiaries continue to accrue benefits.

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Shares of GE gained more than 17% this year through Friday's close.

GE is also planning to offer a limited-time pension buyout to 100,000 former employees that haven't started receiving monthly payments from their pension plans.

GE's stock traded down about 0.6% early Monday, at $8.51 in a 52-week range of $6.40 to $13.25. GE and its financial arm have borrowed about $105.8 billion as of June 30, with industrial net debt at $54.4 billion. GE had 283,000 employees worldwide at the end of a year ago, including about 97,000 in the U.S.

The company said it expects the effort to shrink its pension deficit by $5-8 billion and reduce its net debt by $4-6 billion.

GE's pension plans are among its biggest liabilities and were underfunded by about $27 billion at the end of 2018.

The impact of these changes will contribute to GE's progress toward a goal of reducing its leverage to less than 2.5 times net debt-to-EBITDA by the end of next year.

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