GE Freezes Pension Plan

General Electric Freezing Pension Plans

GE freezes pension plan for 20,000 employees

General Electric is pulling the plug on its pension plan, and that’s a surefire way to derail workers’ retirement planning.

GE GE, +0.29%  announced on Monday it was freezing pensions for 20,000 employees with salaried benefits in an attempt to reduce its $8 billion pension deficit, and that it would also freeze supplementary pension benefits for about 700 workers. Current retirees already receiving their pension payments will not be affected and no new hires have been enrolled in the pension plan since 2012. (Read more)

Do you want to work into retirement?

Private companies are moving away from pension plans. Only 16% of Fortune 500 companies offered a defined-benefit plan (otherwise known as a pension plan) in 2017, down from 59% of the same employers in 1998, according to London-based insurance company Willis Towers Watson. Instead, some — not even close to all — private companies offer employees defined-contribution plans that require employees voluntarily save for themselves (but might include an employer match). Only a third of Americans are saving in such a plan, according to U.S. Census Bureau researchers, and that’s only if their employers offer such a plan. Only 14% of private companies do provide a 401(k), and they’re usually larger companies. (https://www.marketwatch.com/story/even-people-with-pensions-work-into-their-retirement-years-2018-09-14)

GE is not the only company in this situation.

“It’s often the employees who end up losing out. Freezing pensions has become a more popular strategy for companies in recent years. A decade ago, about 20% of Fortune 500 companies with pension plans in place since 1998 had frozen their plans, according to Willis Towers Watson. Since then, that figure has swelled to 42%.” – Bloomburg (read more)

Pensions are not guaranteed. How does your retirement look if you lost yours?

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