GE hasn’t been able to drum up many good headlines of late, and the news doesn’t seem to be getting much better with a pension freeze.
In an attempt to reduce its debt, the Boston-based company said last week that it would freeze pension plans for about 20,000 U.S. employees with salaried benefits, a move that the company expects to reduce its pension deficit by up to $8 billion.
The company said its pension plan has been closed to new entrants since 2012, and the action “closely aligns” with current industry standards and competitive market practices.
GE said it will pre-fund up to $5 billion of estimated minimum Employee Retirement Income Security Act funding requirements for 2021 and 2022.
The action was one of several difficult decisions the company has had to make to return GE to its former glory, Chief Human Resources Officer Kevin Cox said in an announcement.
“We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees,” he said. “We are committed to helping our employees through this transition.”
According to the Pension Rights Center, GE is just the latest of several large corporations doing the same in the last few years.
In fact, the organization since 2004 has tracked 205 instances of companies announcing changes to its pension plan, including freezes, terminations, and changes to benefits formulas.
You will likely recognize most of the companies on that list. In recent years, the list included:
- UPS, announced in 2017
- L. bean, announced in 2017
- DuPont, announced in 2016
- American International Group, effective 2016
- United States Steel Corp., announced in 2015
- Boston Red Sox, Anaheim Angels, announced 2014
- Washington Post, announced 2014
- Lockheed martin, announced 2014
According to MarketWatch, employees in those or similar situations should take several steps:
- Look into your benefits to see how much you have accrued and how much more you need to reach your retirement goals.
- Assess what other retirement income they can expect, like 401(k) savings, Social Security and spouse’s benefits and savings.
- Ask a finance professional whether you should take take monthly payments or a lump-sum.
- Plan to save more between more between now and retirement.