GE freezes pension plan for 20000 US employees

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The company said this morning that in an effort to improve its financial condition, GE will prefund $4 billion to $5 billion in estimated pension funding requirements for 2021 and 2022 at the same time as it freezes its pension plan for about 20,000 employees with salaried benefits and another 700 or so executives with supplementary pension benefits. Pension liabilities exceed assets by more than $559 billion for all the companies in the index.

GE closed its pension plan to new employees in 2012, which it said was part of its plan to deleverage the pension program by the end of 2020.

The shares rose less than one per cent to $8.59 before regular trading in NY.

The industrial conglomerate said the move would reduce its pension deficit by $5 billion to $8 billion, and shrink its net debt by $4-$6 billion.

The company said it will also be freeze supplementary benefits for about 700 United States employees who became executives before 2011. Culp said last month at an industry conference that interest rates could create a US$7-billion headwind for the pension this year. Companies nationwide have been capping or freezing defined-benefit pension plans, which promise regular retirement payments for the remainder of a beneficiary's life. A potential ruling will represent Ireland's first decision related to US companies since privacy laws went into effect. He is a former GE employee, though he took a buyout of his pension plan years ago.

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GE expects to record a non-cash pension settlement charge in the fourth quarter, but did not specify the amount.

"Returning GE to a position of strength has required us to make several hard decisions, and today's decision to freeze the pension is no exception", said Kevin Cox, chief human resources officer at GE, in a prepared statement.

As of Friday's close, the company's market cap was just under $75 billion.

Culp has slashed GE's quarterly dividend to a penny and has sold - or announced plans to sell - non-core businesses.

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