GE is trying to reduce its debt, and that means an estimated 20,000 employees woke up this morning to learn their pensions were being frozen.
They’re workers who have salaried benefits, though also affected are approximately 700 employees’ U.S. supplementary pension benefits. The latter is for people who became executives before 2011, effective January 1, 2021.
The company announced today that it was going to pre-fund about $4-5 billion of estimated minimum ERISA funding requirements for 2021 and 2022 and offer a limited time lump-sum payment option to approximately 100,000 eligible former employees who have not started getting their monthly pension payments yet.
According to GE, these moves will cut its pension deficit by about $5-$8 billion and its industrial net debt by approximately $4-$6 billion.
Wall Street seemed to like the decision. GE’s stock was $8.63, up 6 cents or 0.70%, in pre-market trading.
“Returning GE to a position of strength has required us to make several difficult decisions, and today’s decision to freeze the pension is no exception,” Kevin Cox, chief human resources officer, said in a statement. “We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees. We are committed to helping our employees through this transition.”