GE GE Aerospace

By Thomas Gryta and Colin Kellaher 

General Electric Co. said it was freezing its pension plan for about 20,000 U.S. workers and offering pension buyouts to 100,000 former employees, as the conglomerate looks for ways to pare its debt.

Chief Executive Larry Culp has made paying down debt one of his priorities since abruptly becoming CEO a year ago. GE's traditional pension plans, which were underfunded by $27 billion as of the end of 2018, are one of the company's biggest liabilities.

The company said it would contribute up to $5 billion in cash to the pension plan next year to meet funding requirements. GE contributed $6 billion to shore up the plan last year.

GE closed the plan to new participants in 2012 but the company is still responsible for lifetime payments to more than 500,000 retirees, workers and beneficiaries. Like many large employers, GE has shifted to 401(k) retirement plans in place of its traditional pension program.

GE shares were up 12 cents to $8.69 in premarket trading. The stock, which tumbled in 2017 and 2018 after GE slashed its profit projections and gutted its dividend, is little changed from where it started the year.

On Monday, GE said it would freeze its pension plan for roughly 20,000 U.S. employees with salaried benefits, along with U.S. supplementary pension benefits for about 700 employees who became executives before 2011.

The freeze, effective Jan. 1, 2021, won't affect retirees already collecting pension benefits, GE said. It will record a noncash charge on the move in the fourth quarter.

Mr. Culp has called 2019 a "reset year" for GE. The company recently gave up control of oil services firm Baker Hughes, triggering a charge likely exceeding $8 billion in the third quarter.

GE's main pension plan covered about 243,000 retirees and beneficiaries, 144,500 vested former employees and approximately 43,000 active employees as of the end of 2018. GE also is responsible for other pension plans that are the legacies of acquisitions that cover another 180,000 people.

GE said Monday it will offer lump-sum payments to about 100,000 former employees who haven't started collecting monthly pension payments. Those payments will come from existing pension plan assets.

The company said the changes would cut its pension deficit by up to $8 billion and its net debt by up to $6 billion. On Monday, it said moves in the past month will cut debt by $9 billion to $11 billion. The company has been selling assets, including its locomotive business, to reduce the roughly $100 billion in debt it had at the start of 2019.

Write to Thomas Gryta at thomas.gryta@wsj.com and Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

October 07, 2019 08:45 ET (12:45 GMT)

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