General Electric (GE) - Get Report , the struggling industrial group, said it would reduce its pension liabilities by as much as $8 billion, with further debt reductions planned for the coming months.
GE said it would freeze its U.S. pension plan for around 20,000 employees with salaried benefits, as well as supplementary benefits for around 700 additional employees, in a move it expects will reduce liabilities by between $5 billion and $8 billion and net debt by between $4 billion and $5 billion. GE also said that around 100,000 former employees who haven't started receiving their monthly payments would be given a limited-time option to accept a lump sum alternative.
"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 GE's chief human resources officer Kevin Cox. "We carefully weighed market trends and our strategic priority to improve our financial position with the impact to our employees. We are committed to helping our employees through this transition."
GE shares were down slightly in trading Monday to $8.57.
Prior to Monday's announcement, GE's pension was estimated to have a $31 billion shortfall in terms of meeting obligations to around 620,000 current and former employees, around 430,000 of which are covered by U.S. pension law. The overall liability was last pegged at around $92 billion, and was covered by around $62 billion in assets.
New CEO Larry Culp, who has insisted 2019 would be a "year of change" for the group, has targeted asset sales of around $38 billion to address both the company's longer-term debt profile and its underfunded pension liabilities.
Earlier this year, Culp reached a deal to sell GE's Biopharma division to Danaher Corporation (DHR) - Get Report for around $21 billion, and said it would trim its holding in Houston-based oil services group Baker Hughes (BHGE) - Get Report to less than 50% as it moves to raise $3 billion and reduce its overall debt.