GE Unveils Pension-Plan Changes -- Update
October 07 2019 - 8:26AM
Dow Jones News
By Colin Kellaher
General Electric Co. unveiled a series of changes to its pension
plans aimed at cutting the conglomerate's pension deficit by up to
$8 billion and its net debt by up to $6 billion.
Boston-based GE said Monday it plans to freeze its U.S. pension
plan for roughly 20,000 employees with salaried benefits, along
with U.S. supplementary pension benefits for about 700 employees
who became executives before 2011.
The company said it would also offer lump-sum payouts to former
employees who haven't started collecting on their pensions.
GE plans to pre-fund up to $5 billion of coming pension
requirements as it deploys some of the roughly $38 billion it is
netting from divestitures.
Shares of GE, which closed Friday at $8.57, rose 1.5% in
premarket trading Monday.
GE, which closed its pension plan to new entrants at the start
of 2012, said the freeze, effective Jan. 1, 2021, won't affect
retirees already collecting pension benefits or employees with
production benefits.
The company also said it plans to pre-fund $4 billion to $5
billion of its estimated minimum funding requirements for 2021 and
2022 as it continues to deploy the cash it is raising from such
deals as the $21 billion sale of its biopharma business to Danaher
Corp. and the sales of its holdings in Baker Hughes and Wabtec.
GE last month launched a tender offer for up to $5 billion in
notes as it puts its incoming cash to work under its deleveraging
plan. The company on Monday said the plan is on track, adding that
it will continue to evaluate further options to reduce its leverage
and strengthen its balance sheet.
GE also said it would offer lump-sum payments to about 100,000
former employees who haven't started collecting monthly pension
payments, adding that those distributions will come from existing
pension plan assets.
GE said it expects the moves will reduce its pension deficit by
about $5 billion to $8 billion and pare its net debt by $4 billion
to $6 billion.
The company said it would record noncash pension curtailment and
settlement charges in the fourth quarter.
Write to Colin Kellaher at colin.kellaher@wsj.com
(END) Dow Jones Newswires
October 07, 2019 08:11 ET (12:11 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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