SCHENECTADY, N.Y. (NEWS10) — Struggling General Electric said it has come up with a plan to tackle crippling debt that’s caused uncertainty and several rounds of recent layoffs.
The plan is a pension freeze that would affect 20,000 employees.
The announcement is General Electric’s response to years of shriveling profits and an effort to shave away an expanding debt load.
A company spokesperson tells NEWS10 ABC: “The pension freeze would affect about 20,000 non-union salaried U.S. employees.”
GE says current retirees are not going to be affected.
Under the freeze, covered employees stop earning more pension benefits moving forward such as increases based on salary and years of employment.
Similar problems with pensions have been seen in the Capital Region. The most notable case is with St. Clare’s Hospital when retirees were told that earlier projections of the fund were miscalculated and it was drastically underfunded.
“Now you really, I don’t want to say fend for yourself, but you pretty darn near need to fend for yourself,” financial advisor Hugh Johnson said.
Johnson suggests we think of retirement benefits as a three-legged stool being a pension if you have one, social security and personal investments like a 401k or an IRA.
“I urge everybody to start young to contribute to the plan whether it’s an IRA or 401K or just simply a savings plan,” Johnson said.
GE’s pension plan has been closed to new entrants since 2012 joining other major companies which are moving away from guaranteed retirement plans.
“So, the point is, you got to fend for yourself,” Johnson said. “Build your own IRA or 401K plan and, you know, hope for the best.”
GE said they are offering buyouts to 100,000 former employees who have not started yet begun their monthly pension payments.
The freeze goes into effect Jan. 1st 2021.