Published: Mon, October 07, 2019
Markets | By Otis Pena

GE freezes pension benefits

GE freezes pension benefits

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

GE's stock has slumped since Larry Culp took the reins to become chief executive officer previous year, 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. Since that time, he has put together a number of measures to streamline the company while raising cash to reduce debt - including chopping the company's dividend to a penny, according to Reuters. It faces approximately $54 billion in industrial net debt. GE said it will contribute 3% of eligible compensation to a 401 (k) plan, and will provide matching contributions of 50% on as much as 8% of eligible compensation.

Industrial conglomerate General Electric said in a statement on Monday that it plans to freeze pension benefits for about 20,000 employees in an attempt to reduce its debt pile and improve its balance sheet. The stock later surrendered - trading at 8.55 as of 9:30 a.m.

The company, which closed its pension plan to new entrants in 2012, said retirees already drawing pension benefits won't be affected.

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For the pension buyouts, GE is offering a one-time lump-sum payment to former employees who have not started monthly pension plan payments. We are committed to helping our employees through this transition, he added.

GE also said it plans to make early payments to cover its 2020 pension obligations using funds it raised by selling its stake in Wabtec, a transportation business, and selling part of its stake in Baker Hughes, the oil and gas company.

"Returning GE to a position of strength has required us to make several hard decisions, and today's decision to freeze the pension is no exception", Cox said.

GE's pension plans are among its biggest liabilities and were underfunded by about $27 billion at the end of 2018. GE said it expects to take a non-cash, pretax charge against its fourth-quarter earnings.

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