General Electric Co.’s stocks fell 0.1% on Monday after a seesaw of its stocks, which went down as much as 1.1% and up 0.9%. The turbulent stocks of the company come after it announced that it would be freezing the pension benefits of about 20,000 U.S. employees with salaried benefits.
The move is part of GE’s efforts to catch up with its pension deficit of about $8 billion. The company said it is also going to freeze the supplementary pension benefits for about 700 employees, and it will be offering a limited-time lump-sum payment option to about 100,000 former employees.
Furthermore, the company also said there is no change for GE retirees already collecting pension benefits or employees with production benefits. However, affected employees will no longer be able to accrue additional pension benefits, nor can they make additional payments to their own pension plans. The new policy will start to be implemented on January 1, 2021.
By that time, GE will also contribute 3% of eligible compensation to employee 401(k) plans and provide matching contributions of 50% on up to 8% of eligible compensation.
The adjustments in the company’s pension policy aim to catch up with GE’s $5 billion to $8 billion pension deficit. It will also reduce the company’s net debt by $4 billion to $6 billion.
“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,” said Chief Human Resources Officer Kevin Cox. “We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees.”
