Palo-Alto-based Hewlett Packard Co. will shell out $810 million in lump-sum pension buyout payments to former, non-retired employees, according to a recent 10-Q filing with the Securities and Exchange Commission.
The company reported that about half of eligible former employees accepted the buyout, which was offered in January 2015 and ended April. It did not report how many were offered the buyout.
The company froze its U.S. defined benefit plan in 2008. HP has significant off-shore pension liabilities—$19.2 billion according to reports—and said in the recent filing that it contributed $471 million to non-U.S. pensions in the six months ending April 30, 2015.
In October 2013, HP reportedly had U.S. defined benefit assets of $11.9 billion, and pension obligations of more than $13.7 billion, for a funding ratio of about 87 percent, according to the most recent numbers.
Wilshire recently reported the aggregate U.S. corporate pension funding level had improved to 84.9 percent, while BNY Mellon’s average improved to 91.6 percent, owed in part to rising interest rates, which positively affect sponsors’ future liabilities.
Increased mortality rates published by the Society of Actuaries last year, which HP adopted in assessing its liabilities, led to an $870 million increase in contributions to the U.S. pension plan.
In October 2014, the company announced its plans to split into two public companies, after reporting consecutive years of revenue losses.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
