GE Unveils Pension-Plan Changes -- Update

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 [e-mail]

(END) Dow Jones Newswires

October 07, 2019 08:11 ET (12:11 GMT)

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