GE freezes pension plan for 20,000 employees

GE Imagination at Work

Industrial conglomerate General Electric said on Monday it was freezing the pension plan for about 20,000 U.S. employees with salaried benefits.

Seven hundred employees who became executives before 2011 will have their supplementary benefits frozen, and no changes will be made for retired employees. The changes, which go into effect Jan. 1, 2021, will reduce GE’s pension deficit by about $5 billion – $8 billion and net debt by approximately $4 billion – $6 billion.

Boston-based GE said there would be no change for retirees already collecting pension benefits.

“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 at GE, said in a press release.

“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.”

The company said it will use some of the money it has received from the sale of its BioPharma, BHGE and Wabtec transactions to pre-fund up to $5 billion of its Employee Retirement Income Security Act payments for 2021 and 20212. Retired employees who have not started receiving monthly payments will have the option to receive a one-time lump-sum payout.