To its pension plan, General Electric is making extensive changes for approximately 20,000 employees, sending shares higher ahead of Monday’s opening bell.
In 2011, seven-hundred employees became executives, they will have their additional benefits frozen, however, there are no changes for retired employees. The changes will decrease GE’s pension debt by approximately $5 billion – $8 billion and net debt by about $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,” chief human resources officer at GE, told in a press release. He added, “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 has received funds from the sale of its BioPharma, BHGE and Wabtec transactions. Some of this fund, company will use to pre-fund up to $5 billion of its Employee Retirement Income Security Act payments for 2021 and 20212. Retired employees who have not begun getting monthly payments, they have the option to receive a one-time lump-sum payout.
Once an industrial icon, General Electric is in the middle of trying to manage a turnaround after shares lost more than half of their value amid a slew of problems last year. The battered company has initiated a huge restructuring plan intended at decreasing deficit by selling off non-core assets.
