USA TODAY International Edition
GE freezes benefits, offers pension buyouts
General Electric is offering buyouts to about 100,000 pensioners and freezing the retiree payments for about 20,700 salaried pensioners.
The move is part of the company’s effort to shed debt as it continues to downsize amid financial struggles.
GE said the buyout offer would take the form of lump- sum payouts to former U. S. employees who have not yet begun receiving their pensions.
“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 chief human resources officer Kevin Cox 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.”
The company expects the moves to reduce its pension deficit by $ 5 billion to $ 8 billion while slashing its industrial net debt by about $ 4 billion to $ 6 billion.
GE has been on a campaign to reduce the complexity of its operations and sell assets for the last several years as the company has faced pressure to improve its performance.
GE already had closed its pension to new entrants in 2012. The company said the latest action would not affect retirees who already are receiving their benefits and would not affect “employees with production benefits.”
Other major companies that have offered pension buyouts to certain employees in the past include General Motors and Verizon Communications.
“This move shows that GE is looking to pull any and all levers to restore its financial health,” CFRA Research stock analyst Jim Corridore said in a research note. “Overall, we remain convinced that the company is moving in the right direction with lower debt, and leadership positions in aviation, health care and renewable energy, with less focus on oil and gas.”