The company, which closed its pension plan to new entrants in 2012, said retirees already drawing pension benefits won’t be affected. GE will offer a lump-sum payment to 100,000 eligible former employees who haven’t started receiving their monthly pension payments.
“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,” GE’s chief human resources officer, Kevin Cox, said in the statement. GE had 283,000 employees worldwide at the end of last year, including about 97,000 in the U.S.
GE aims to reduce the net debt of its industrial businesses by $25 billion, and Culp has said he wants to reduce GE’s debt-to-earnings ratio to 2.5 times by the end of next year. The pension changes come several weeks after the company announced a $5 billion debt tender.
Since taking the helm in October 2018, Culp has been aggressive in his effort to fix the ailing company. He sold GE’s biopharmaceutical business to Danaher Corp. for $21.4 billion, divested a jet-leasing unit and unloaded part of GE’s stake in Baker Hughes, easing investors’ liquidity concerns.
The portfolio changes have helped bring in about $38 billion in new cash, giving the company funds for the pension moves. GE said it expects to take a non-cash, pretax charge against its fourth-quarter earnings.
--With assistance from Frank Connelly, Molly Smith and Katherine Chiglinsky.
This article was provided by Bloomberg News.