General Electric said it will freeze the pensions of 20,000 U.S. salaried workers, a measure designed to reduce its pension deficit and trim debt. The move will shave GE's pension deficit by as much as $8 billion and its net debt by as much as $6 billion.
As part of the pension freeze, the industrial conglomerate said it will freeze supplementary pension benefits for approximately 700 employees who became executives before 2011. Supplemental pension plans are typically designed for higher-ranking employees and offer benefits beyond the typical pension plan.
"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 Kevin Cox, chief human resources officer at GE.
A pension freeze effectively puts a hold on new benefits from accruing to a retirement account, according to the Pension Rights Center. GE said the 20,000 workers affected by the change won't accrue additional benefits nor make employee contributions after January 1, 2021.
GE said the pension freeze won't impact GE retirees already collecting pension benefits or employees with production benefits.
Like other corporations, GE has been phasing out its pension amid a push toward self-directed retirement plans such as 401(k)s. GE said it hasn't allowed new workers into its pension plan since 2012.
"Today's actions more closely aligns GE benefits with current industry standards and competitive market practices," the company said Monday in a statement.