General Electric (NYSE:GE) Freezes The Pension Of Its Workers

Flavia Carruth - October 8, 2019

General Electric (NYSE:GE) says that about 20,000 of its employees won’t be receiving their pension benefits. The company says it will be necessary to freeze these pension benefits in a bid to cut down its debt pile. This move is also targeted towards improving the company’s balance sheet.

A close look into the matter

An official working with General Electric says the move will see them cut down their debt by about $4-6 billion. The latest announcement has resulted in a 3% rise in the company’s shares, and hopefully, the trend might continue. That is if the company continues with proper strategies.

One can only imagine the reaction of the 700 employees in the US whose supplementary pension benefits will be frozen. This is not something they expected, but the company says it is for the best.

The Employee Retirement Income Security Act operates under some very strict principles. That is to ensure that companies adhere to set standards in terms of giving pensions to employees. In this effect, GE has committed to pre-fund the minimum requirements for 2020 and 2021. This means it will channel between $4 billion to $5 billion in the undertaking.

Remarks by company officials

The CEO of GE Larry Culp wants to push the company forward. Culp thinks that proper restructuring plans will save the company in the current nightmare of cash flow concerns. The mounting debt has been alarming, and major business struggles have also been at play. Restructuring plans will touch many aspects of the company, including resource management.

Reports indicate that in June, the company had a debt amounting to about $105.8 billion. This came to light after the company announced its second-quarter earnings.

The Chief Human Resources Officer of GE Kevin Cox has also spoken about the freezing of the pensions. He reveals that it hasn’t been easy for them to take the steps they have made so far. According to him, getting back to its position of strength had come with their determination, and making difficult decisions.

Cox adds that they won’t be afraid to make more difficult decisions if the occasion calls for it. What matters the most for them is to sharpen its competitive edge in the dynamic business world.

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Flavia Carruth

Hi, I am Flavia and have done my MBA with finance as specialization and a Bachelor in Economics with 4 years of experience as Financial Analyst in leading Software Firm. I have passion for article writing, report making and stock market Analysis.

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