Jacob Crosse
General Electric (GE) executives, at the behest of voracious shareholders and Wall Street hedge fund managers, announced Monday that they had made the “difficult decision” to freeze the pension benefits belonging to 20,000 GE employees beginning January 1, 2021.
In little more than year, an additional 700 employees will also have their supplementary pension benefits frozen, while 100,000 employees, who have yet to start receiving any benefits but would eventually be eligible will be offered a one-time lump sum payment in lieu of any future benefits.
This craven maneuver is expected to save the multinational conglomerate between $4 and $6 billion in net debt, while reducing future pension benefits by a further $5 to $8 billion. This enormous sum however is not nearly enough for the vampires on the trading floor or the executives running the company. Current CEO Larry Culp has previously stated his intentions to slash nearly $25 billion in GE's debt. Pension obligations, which GE has purposefully and criminally underfunded for decades, accounts for nearly half of the multinational conglomerate’s $54 billion debt.
GE worker inspecting F-class gas turbine in Greenville
In a prepared statement, GE Chief Human Resources Officer Kevin Cox didn’t specify that his or any other executives’ benefits and compensation would be affected by the announced freeze. Instead the burden of returning GE to a more “favorable market position”—GE’s stock has fallen in value more than 32 percent over the last 12 months—would unwillingly fall on rank and file workers. The executive went on to state that “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.”
According to the website Glassdoor.com the salary of an average General Electric executive is $200,602 in base pay with an average yearly additional cash bonus of $41,785. In total, Glassdoor estimates that the average GE executive could expect to “earn” $260,749 in yearly compensation in 2018. This is over six times as much as the estimated $47,060 median wage of a US worker according the Bureau of Labor Statistics for the first half of 2019.
The “freezing” of a pension plan usually precedes the outright termination of the plan or benefit. As of 2012 GE has not offered a defined pension plan to any new employee. Current retirees receiving benefits will not be affected, for now. However, future benefits may be terminated at any time by the company.
The Pension Benefit Guaranty Corporation (PBGC) in the United States is severely underfunded and would be the last and only recourse for the thousands of American General Electric workers and retirees who are currently, or are slated to receive some form of earned pension benefits in the future.
The new plan that GE workers have access to will be a 401(k) plan. The main difference between a typical pension and the now ubiquitous 401(k) is that while an employer may match contributions up to a certain percent of a worker's paycheck towards the plan typically, the worker is not guaranteed a base level of payments upon retirement. That is because 401(k) contributions are invested into various stocks and bonds that may not exist or hold value once a worker has reached the age of retirement. Companies however prefer this model as it shifts the burden of providing for retirement away from the company and onto the worker while injecting liquidity into the casino known as Wall Street.
General Electric has been a pillar of American capitalism for 127 years, posting a 2018 revenue of over $127 billion. However its profitability has tanked in recent years, posting a loss of $22.4 billion last year, while also laying off thousands of workers. GE stock has also been adversely affected by the grounding of the Boeing 737 Max, of which GE produces the engines for.
GE’s stock initially jumped 2.6 percent in pre-market trading upon news of the planned freeze, however, by the end of the trading day it eventually settled back down below 0.1 percent of its opening price, as investors and stockholders weren’t satisfied with the proposed dollar amount to be taken from workers.
Similar to the auto industry, and Sears, GE—known for producing, appliances, turbines, engines, and lighting, in addition to founding media giant NBCUniversal, which it sold to Comcast in 2013—is attempting to appease Wall Street by dismantling the conditions and benefits workers had won in previous generations of struggle by stripping away healthcare, pensions, and decent wages.
J.P. Morgan analyst Stephen Tusa, in an article published by CNBC, wrote that GE expects to announce more cuts to employee benefits in the future.
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