General Electric Co. will issue new debt to prefund $6 billionin pension contributions next year, according toan investor update presentation from the company.

The news came as Boston-based GE announced a massiverestructuring of its sprawling business units, and a 50 percent cutin its dividend.

GE sponsors two principal defined benefit pension plans, and nearly 50legacy plans the industrial giant assumed over decades ofacquisitions, according to the firm’s 2016 10-K filing with theSecurities and Exchange Commission.

The company holds $71.5 billion in benefit obligations in the GEPension Plan, which accounts for about 467,000 beneficiaries, andthe GE Supplementary Plan, an unfunded plan for higher-levelemployees. GE closed access to the defined benefit plans for newhires in 2012.

The smaller legacy plans account for another $22.5 billion inpension obligations, putting total obligations at $94 billion.

All together the plans hold $62.9 billion in assets, making fora $31.1 billion funding shortfall, or a funded status of 67percent.

GE’s funding shortfall is by far the largest among S&P 500companies, according to analysis by Bloomberg.

According to SEC filings, GE’s policy is to make the minimumcontribution to its pension plan required by the Pension BenefitGuaranty Corp., the federal agency that insures private-sectorsingle employer defined benefit plans.

But the filing also says the company may determine to makeadditional contributions. In 2016, $330 million was contributed tothe GE Pension Plan. A $1.7 billion contribution has already beenmade this year.

Could be a record

The $6 billion debt-financed contribution is one of the largeston record, according to a blog post by Justin Owens and Bob Collie,pension analysts with Russell Investments.

The new cash will cover funding obligations through 2020. In2016, GE paid out $3.4 billion in pension benefits.

Owens and Collie say that GE’s discretionary contribution abovePBGC’s minimum requirements, and the use of corporate debt to fundit, are both trends among the nation’s largest pensionsponsors.

Among the 19 sponsors that comprise Russell’s $20 billionclub—plans with at least that much in pensionliabilities—discretionary contributions are peaking.

So far, $15 billion in extra funding has been made in 2017.FedEx and DuPont used a combination of debt and cash to pump and$1.5 and $1.7 billion, respectively, toward their obligations;Verizon invested $3.4 billion in discretionary funding, minimizingfunding requirements over the next three years; and Boeing paid$3.5 billion down, which the company said will cover fundingobligations through 2021, according to Russell’s post.

GE’s move represents a “dramatic shift” in the company’s fundingpolicy, say Owens and Collie.

Increasing PBGC variable premiums are forcing sponsors’ hand.The variable rate of 3.4 percent that companies pay on unfundedliabilities is scheduled to rise to 3.8 percent next year, and 4.2percent in 2019.

Five years ago the variable rate was 1 percent. “At thoselevels, many sponsors are concluding that it simply doesn’t makesense to allow a significant deficit to persist in the plan,” writeOwens and Collie.

Corporate tax reform may offer an incentive to the largest plansto make more discretionary contributions before the end of theyear.

“If the corporate tax rate looks set to fall in future years,then there’d be a big advantage to contributing in 2017, henceobtaining a deduction at a higher rate, rather than deferringcontributions,” say Owens and Collie.