GE freezes pensions for 20K, trimming up to $6B in debt

Andrew Cummings
October 7, 2019

Supplementary pension benefits also will be frozen for about 700 employees.

The move will cut GE's pension deficit by as much as $8 million, the company said.

By freezing the USA pensions, pre-paying about $4.5 billion in contributions due in 2021 and 2022 and offering lump sums to about 100,000 retirees, GE said it expects to cut pension underfunding by $5 billion to $8 billion.

GE's stock has slumped since Larry Culp took the reins to become chief executive officer a year ago, underscoring the magnitude of the challenge he took on when he agreed to steer the company through one of the worst slumps in its history. He has also chopped the company's dividend to a penny. It faces approximately $54 billion in industrial net debt.

Visit the Markets Insider homepage for more stories. The stock later surrendered - trading at 8.55 as of 9:30 a.m. The company stopped allowing new employees to enter the pension plan in 2012. General Electric Co. said Monday, Oct. 7, 2019, that it will freeze its pension plan for about 20,700 salaried workers as part of its debt-cutting plan.

The company said it will also be freeze supplementary benefits for about 700 U.S. employees who became executives before 2011.

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.

General Electric will end future contributions to its retirement plan for salaried employees, the company announced Monday in its lastest cost-cutting move.

GE expects to record a non-cash pension settlement charge in the fourth quarter, but did not specify the amount.

The move will also help reduce the company's pension deficit by about $5 billion to $8 billion.

Pension obligations represent about $21 billion of GE's overall debt.

GE said it will continue to evaluate options to strengthen its balance sheet.

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.

Other reports by iNewsToday