AP Images / Richard Drew

General Electric announced on Monday it plans to freeze pension benefits for about 20,000 employees in an attempt to shrink its pension deficit and shore up its balance sheet.

The industrial conglomerate said the move would reduce its pension deficit by $5 billion to $8 billion, and shrink its net debt by $4-$6 billion.

The effort comes as GE CEO Larry Culp works to bring the company back from a decline in its power-equipment business, address cash flow concerns, and control mounting debt.

Shares of GE rose about 3% in early trading on the news.

Visit the Markets Insider homepage for more stories.

Industrial conglomerate General Electric said in a statement on Monday that it plans to freeze pension benefits for about 20,000 employees in an attempt to reduce its debt pile and improve its balance sheet.

The company said it expects the effort to shrink its pension deficit by $5-8 billion and reduce its net debt by $4-6 billion.

Shares of GE rose as much as 3% on the news.

About 100,000 former GE employees who haven't started receiving pension benefits will also be offered a limited time lump-sum payment, the company said. GE is also freezing US supplementary pension benefits for about 700 employees.

The company also plans to pre-fund between $4 billion and $5 billion of its estimated minimum requirements for 2020 and 2021 under the Employee Retirement Income Security Act, which establishes baseline standards for pension plans in the private sector.

The move comes as GE CEO Larry Culp is guiding the company through a restructuring plan in the face of major cash flow concerns, mounting debt, and a struggling power business. GE had a total of around $105.8 billion in debt as of June 30, according to the company's second-quarter earnings report.

"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," Chief Human Resources Officer Kevin Cox said in a statement.

Shares of GE gained more than 17% this year through Friday's close.

Read more: The world's most accurate economic forecaster sees a 'prolonged global slowdown' on the horizon — and warns it can only be narrowly avoided

Markets Insider

NOW WATCH: Jeff Bezos is worth over $160 billion — here's how the world's richest man makes and spends his money