General Electric announced on October 7th that it will be freezing the pension plans of 20,000 workers in an effort to clean up the company’s balance sheet. The company has one of the largest pension shortfalls in all of Corporate America, thanks to years of inattention, low-interest rates, and shrinking profits.
The freeze will affect current salaried workers, but not those already receiving their pension. Half of GE’s $54 million of industry net debt is made up of pension obligations.
“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,” says Kevin Cox, GE Chief Human Resources Officer Kevin Cox.
GM’s pension plan for new hires ended in 2012, with many large corporations shifting the responsibility of retirement to the individual. The pension freeze will go into effect January 2021, meaning those workers will not earn new pension benefits but will keep what they have already earned.