General Electric Co., Stamford, Conn., closed its defined benefit pension plan to salaried employees hired after Dec. 31, according to Anne Eisele, director-financial communications.
New salaried employees instead “will receive a new retirement contribution equal to 3% of eligible pay to their GE 401(k) account,” she said in an e-mail.
Current employees and retirees are not affected by the closing, she added in the e-mail.
GE's principal defined benefit plans have a combined $42 billion in assets. The company has $18.115 billion in 401(k) assets.
GE revealed the change at an annual investor outlook meeting Dec. 14, she wrote in the e-mail.
“Pension has been a drag for a decade,” Jeffrey R. Immelt, GE's chairman and CEO, said at the meeting, according to a transcript. “If you think about GE, this was 14 cents a share in 2001. It's negative 13 cents a share next year. Costs have grown, driven by non-cash amortization, which has distorted really in many ways the operating performance of the company.”
“I think in our case, as in everybody's case, pension is pressured by the '08 market and some of the previous years in the decade,” Mr. Immelt added, according to the transcript.
“We're going to take our pension earnings growth rate assumption from 8.5(%) to 8(%), and the discount rate will be what it is. I think it's like 5.5(%) right now or something like that. But, it'll probably be lower in — going into 2011 than it was going into 2010.
“All new employees that join GE after Jan. 1 will enter into a defined contribution plan not a defined benefit plan, so we've made our benefit plans contemporary and as we've continued to do that over the last decade.”