Can someone explain in detail what the poster meant about setting up corporate to file bankruptcy and how it was related to GE Transportation and Appliance spin-off to Wabtec and the Chinese. How does that affect the pension GE owes me?? I’m confused brothers..
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Hey poster who replied regarding corncobs. GE doesn't need knuckleheads like U working for them. Did U sit in the back of the class in grade school? I bet U didn't even finish HS? Your parents did a terrible job with U... Dont do it to your kids... They deserve much better.....
@ZjY9QVt-1nds i know its hard to deal with not knowing but that is the world we live in not just GE. But don't let situation beat you down. Have confidence in your skills and work ethic. The job market is good and people i know that got let go are very happy with new companies. I like working at GE and don't want to leave but layoffs are the reality. Good luck to you.
I like many on the lower pay scale do not have a pension. So no worries on this topic but my job on the other hand I do worry. The CEO has made it publicly known that he is committed to cutting “another $1.6 billion on power.” I guess when my facility gets hit I’m out the door alone with my co workers of last year. That’s why they call this a job for lower pay scale for us in upstate ny.
It doesn’t. Unless your pension is more than about $5500/month you won’t lose a penny. If your pension is that high, you were a long service, highly compensated employee and should have a healthy 401k. Stop worrying and live life.
Forbes already communicated the risk and outlined the plan. Everything is always put in the public before it actually happens.
As cash flows continue to be negative and as GE continues to be locked out of the debt markets, leadership will be forced to contemplate the unimaginable in order to save the parts of the business like Aviation and Gas Power that due to national defense reasons must survive even a parent company bankruptcy.
Forbes article from November 16, 2018
GE Pensioners And Stockholders Contemplate The Unthinkable
After the cost of insuring General Electric’s debt hit a six year high on Monday and the stock continued its precipitous decline, GE retirees began to ask about the unthinkable. I know this because I got more than a 100 responses to my last article on Forbes. What would happen to their pensions if GE went bankrupt? No one is saying that a bankruptcy filing is imminent, but with few signs of a turnaround at GE, it’s time to consider the worst case scenario. General Electric’s pension plan is insured by a government agency called the Pension Benefits Guaranty Corporation’s (PBGC) Single-Employer Plan. Here’s what the PBGC says you are guaranteed.
What Would The PBGC Pay?
Right off the bat, it should be noted that the PBGC does not guarantee health benefits. For 2018, the PBGC’s guarantee limit for the single-employer plan is spelled out here.
If your current pension benefit is less than the PBGC’s guarantee limit in the table in all likelihood you will continue to receive the same amount that you get from GE’s plan now.
The numbers in the table are determined by a formula established by law about 40 years ago. Each year the guarantee limits go up, never down and they are set without regard to the financial condition of the plan.
Who Makes Up The Shortfall?
You may wonder, as I do, how the PBGC can pay the same benefits when GE’s 2017 annual report says their plan’s assets are short by close to $29 billion. Who makes up for the shortfall?
First, let’s break down the shortfall. The PBGC only insures the plan that covers U.S. employees and retirees. That plan accounts for about $18 billion of the shortfall. The rest of the shortfall, about $11 billion, is due to a Supplemental Pension Plan covering higher paid executives and other plans that cover international employees all of which are not insured by the PBGC.
An expert on the PBGC, who I spoke to on background, explained that the shortfall is made up for by insurance premiums paid by pension funds that are still ongoing. PBGC receives no funds from general tax revenues. The PBGC is not backed by the full faith and credit of the U.S. government. It is more like Fannie Mae and Freddie Mac. No one knows who would pay if the PBGC couldn’t meet its obligations.
In its 2018 Annual Report, the PBGC reports that the Single-Employer Plan had assets of $109.9 billion and liabilities of $107.5 billion for a net of 2.4 billion, a big improvement from last year’s -10.9 billion.
At the end of 2017, the portion of GE’s pension plan that is insured by PBGC had assets of $50.4 billion and liabilities of $68.3 billion for a net underfunding of -17.9 billion.
If the PBGC were to take over GE’s pension plan, the financial stability of Single-Employer plan would suffer greatly. The Plan would have assets of about $163 billion and liabilities of about $176 billion for a net underfunding of about $13 billion. That does not mean payments would stop, or even be reduced. But it means that eventually, the plan would run out of money before it could meet its obligations. To make the program financially sound, something has to change.
Would the government come to the rescue with a bailout of GE as it did for Fannie and Freddie? It has happened before but I would not count on it happening again.
The General Motors And Chrysler Bailout
The last time the PBGC faced a similar situation was in 2009 when President Obama bailed out General Motors and Chrysler thereby keeping up to $20 billion of unfunded pension liabilities off the PBGC’s books. In 2009, the PBGC’s Single-Employer plan was underfunded by about $21 billion.
When President Obama bailed out General Motors and Chrysler in 2009, the primary justification was to save an estimated 1 million jobs after the financial crisis had nearly frozen access to credit for vehicle loans and sales had plunged by 40%. The U.S. Treasury paid a total of $80.7 billion for stock in GM, GMAC, and Chrysler. By the end of 2014, the stock was sold for $70.5 billion for a loss of $10.2 billion. However, by preventing GM and Chrysler from dumping a combined $20 billion of unfunded pension liabilities onto the PBGC, the bailout indirectly saved the PBGC.
GE’s UK Retirees Get Lucky
On Tuesday, GE announced that it was selling 166 million shares of Baker Hughes to raise about $4 billion and will transfer some UK pension liabilities to Baker Hughes on a fully funded basis. GE’s UK pensioners are the lucky ones. This sale carries a whiff of desperation because the Baker-Hughes shares GE is selling for about $24 per share were acquired just in 2016 in a complex transaction which according to Jeff Immelt, who was CEO at the time, cost the company $76 per share (see page 17 of this November 7, 2016 presentation).
The Sum Of The Parts
I continue to hear from knowledgeable retirees that the Aviation, Healthcare, and Power businesses are worth more than the $8 per share that the market now values General Electric. However, small shareholders don’t determine company strategy. Not even knowledgeable shareholders who used to run parts of the company.
https://www.forbes.com/sites/kenkam/2018/11/16/ge-pensioners-and-stockholders-contemplate-the-unthinkable/#323b336c68e3
Listen Bucktooth & remove the corncobs from your ears, you were instructed to take the lump sum & not the monthly annuity. Now, you are about to lose it. No confusion.