General Electric, Boston, will freeze its U.K. defined benefit funds effective Jan. 1, as part of plans to solidify its financial position.
The change will affect 2,700 staff and follows a 60-day consultation process with participants, completed in April.
The freeze relates to the GE Pension Plan — which has been closed to new entrants since September 2011 — and the GEAPS (2006 Section) in the U.K., a notice on GE's website said. The firm's U.K. DB obligation was about $14 billion at the end of 2020. The firm does not publicly disclose the size of its plans. The move furthers GE's objective of actively managing pension fund-related costs and risks, but will take a hit in the shape of a non-cash curtailment charge. Plan obligations will be remeasured in the second quarter, a spokesman confirmed.
All affected participants will be automatically enrolled into GE's defined contribution plan, which features a 10% employer contribution rate. The rate will be increased for two years to 12%.
The conglomerate proposed the changes in January but said in Thursday's notice it had made some small changes following "careful consideration and deliberation" and based on feedback from participants during the consultation process. Changes include the maintaining of early retirement terms in line with current entitlements; improvements to ill-health early retirement; and the provision of group education sessions on retirement saving.
"Continuing to solidify GE's financial position requires us to make difficult decisions, and this change to our U.K. defined benefit pension schemes is no exception," Kevin Cox, chief human resources officer, said in the notice. "After thoughtful discussions with our plan members during the consultation period, our program balances our business imperative to actively manage GE's pension obligation with employee impact and current industry standards."