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article imageGE to freeze pension plans for about 20,000 employees to cut debt

By Karen Graham     Oct 7, 2019 in Business
General Electric Co said on Monday it was freezing the pension plan for about 20,000 U.S. employees with salaried benefits, as the industrial conglomerate looks to cut its huge debt pile.
This action includes supplementary pension benefits for about 700 employees in the country, reports Nasdaq. The aim of the move is to reduce GE's pension deficit by about $5 billion to $8 billion and reduce its net debt between $4 billion and $6 billion. The freeze is expected to go into effect on January 1, 2021.
GE's Chief Executive Officer Larry Culp took over the reins of the company about 12 months ago. Since that time, he has put together a number of measures to streamline the company while raising cash to reduce debt - including chopping the company's dividend to a penny, according to Reuters.
GE and its financial arm have borrowed about $105.8 billion as of June 30, with industrial net debt at $54.4 billion. Shares of GE tumbled more than 5 percent last week over a broad market selloff and as GE bear Stephen Tusa of JPMorgan warned of weakness in its aviation unit.
However, shares jumped Monday after the company announced it is freezing pension plans for about 20,000 U.S. employees. The stock later surrendered - trading at 8.55 as of 9:30 a.m.
The company also said there would be no change for retirees already collecting pension benefits; the pension plan has been closed to new entrants since 2012, according to Market Watch. And for the close to 100,000 former employees who have not yet started their monthly pension plan payments - for a limited time, the company will offer a limited-time lump-sum payment option.
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