- General Electric freezes pensions to 20,000 US officials to reduce billions of future pension obligations and trim debt.
- Around 700 employees in their supplementary pension program, aimed at executives, will also have frozen pension benefits.
- 19659004] The company said the change will not affect already retired GE workers.
General Electric announced that it will freeze pensions to 20,000 US officials, a measure intended to reduce the pension deficit and trim debt. The move will shave GE's pension deficit by as much as $ 8 billion and net debt by as much as $ 6 billion.
As part of the pension freeze, the industrial conglomerate said it would freeze additional pensions for about 700 employees who became managers before 2011. Supplemental pension plans are typically designed for senior employees and offer benefits beyond the typical pension plan.
"Returning GE to a position of strength has required us to make more difficult decisions, and today's decision to freeze the pension is no exception," said Kevin Cox, GE Human Resources Manager.
As part of such efforts, the company said last month that it would spend $ 5 billion on paying down debt. But efforts to reduce debt can also hurt employee morale at a time when CEO H. Lawrence Culp Jr. tries to turn the troubled conglomerate .
"The effect on employee engagement / morale for some of these retirement measures will hardly be positive, but in a situation of" corporate battlefield surgery ", this tends to be a typical, if unfortunate, accident," noted Barclays analyst Julian Mitchell in a research note Monday.
turnaround specialist, last year was paid more than $ 15.3 million, or 345 times the median GE employee's salary of about $ 43,500, according to Equilar.
What is a pension freeze?
A pension freeze effectively seeks new benefits from accruing to a retirement account, according to the Pension Rights Center. GE said that the 20,000 workers affected by the change will not accrue additional benefits nor will they provide employee benefits after January 1, 2021.
GE said that the pension freeze would not affect GE pensioners who are already collecting pension benefits or employees with production gains .  Like other companies, GE has phased out pensions amid pressure against self-managed pension schemes such as 401 (k) s. GE said it has not allowed new employees to participate in its pension plan since 2012.
"Today's actions adapt GE "The benefits outweigh current industry standards and competing market practices," the company said in a statement on Monday.
GE also said that it offers a one-time election to around 100,000 former employees who have not started their monthly pension payments. The company said it will send out notifications to qualified employees and will pay the lump sum in December.