GE freezes pension plan for 20,000 employees
By Jonathan Garber / FOX Business News https://www.foxbusiness.com/markets/ge-freezes-pension-plan-for-20000-employees
General Electric is still trying to defend itself against accusations of accounting issues. SEC said they are monitoring the situation.
General Electric is making sweeping changes to its pension plan for approximately 20,000 employees, sending shares higher ahead of Monday’s opening bell.
Seven hundred employees who became executives before 2011 will have their supplmentary benefits frozen, and no changes will be made for retired employees. The changes will reduce GE’s pension deficit by about $5 billion - $8 billion and net debt by approximately $4 billion - $6 billion.
“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 2022. Retired employees who have not started receiving montly payments will have the option to receive a one-time lump-sum payout.
General Electric, once an industrial icon, is in the midst of trying to engineer a turnaround after last year shares lost more than half their value amid a slew of problems. The battered company has undertaken a massive restructing plan aimed at reducing debt by selling off non-core assets. In August, the company was accused by the whistleblower Harry Markopolos, who alerted authorities about Bernie Madoff's ponzi scheme, of hiding its problems through fradulent accounting.