Beginning in 2021, about 20,000 employees in GE's main USA pension plan will stop accruing new benefits, under the plans GE unveiled Monday.
The company said the change won't impact already retired GE workers.
Pension benefits accrued through December 31, 2020, will not be affected by the pension plan freeze, but no additional benefits will be accrued after this date, GE said.
General Electric Co. said it would freeze pension plan benefits for about 20,000 USA employees as it takes steps to slash its pension deficit and improve its financial position. Executives appointed after January 1, 2021, will be provided a new contribution benefit plan, according to the company. The aim of the move is to reduce GE's pension deficit by about $5 billion to $8 billion and reduce its net debt between $4 billion and $6 billion.
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As part of the pension freeze, the industrial conglomerate said it will freeze supplementary pension benefits for approximately 700 employees who became executives before 2011.
Shares of GE stock were up 0.18 percent as of 11:36 a.m. ET on Monday. We are committed to helping our employees through this transition, he added. GE advanced 18 per cent this year through Friday, matching the S&P 500 Index. The company stopped allowing new employees to enter the pension plan in 2012. He is a former GE employee, though he took a buyout of his pension plan years ago.
GE and its finance arm had total borrowings of about $105.8 billion as of June 30, with industrial net debt at $54.4 billion.
"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", Chief Human Resources Officer Kevin Cox said. GE has sold its Life Sciences unit to Danaaher Corporation for $21.4 billion.