GE's Pension Deficit Is Set to Soar
General Electric (NYSE: GE) has taken aggressive steps to reduce its debt this year. In fact, CEO Larry Culp recently told investors that the company is on track to reap $38 billion in asset sale proceeds in 2019, with the biggest chunk coming from GE's pending deal to sell its biopharma business to Danaher for $21 billion.
However, General Electric has lots of liabilities on its balance sheet other than debt, most notably a massive pension deficit. GE's pension funding shortfall peaked at more than $31 billion as of the end of 2016 before improving significantly over the following two years. Unfortunately, GE's pension underfunding is on pace to jump by about $7 billion this year due to a big decline in interest rates. Yet that looming increase in the company's pension deficit is less of a problem than it might seem at first glance.
Low interest rates have caused GE's pension deficit to grow dramatically. Image source: Getty Images.
Source Fool.com
