EDS 2020 Lump-Sum Offer. HP/HPE Alumni

Make sure that HP and Fidelity have your current postal address. Even if not classified by the company as a "Retiree" or if you are long gone from the company -- in case of pension plan changes, employment lawsuits, settlements, or other issues. (HP Inc. is the overall legal successor to companies acquired by Hewlett-Packard before the company was split into HP Inc and Hewlett Packard Enterprise, including DEC, EDS, etc.)

If you were employed in the U.S. by EDS or "EDS, an HP Company" before Jan 1, 2009 -- you may have an EDS pension, administered by HP: Update address at former company

Payout -- when and how much? They have to follow IRS regulations. For example, they must declare the terms and dates in the original offer -- and can't change the terms or dates.

The "Opportunity is here" brochure says "...total lump-sum present value of your benefits as of August 1, 2020" and "Your actual lump-sum payment amount will be determined based on the IRS required interest rates and mortality table in effect for August 2020."

The brochure also says "October 2020" for each the three payout options under "How benefits are paid."

The key document for a US employee retirement or health plan is the legal Summary Plan Description (SPD). It includes plan details and an address at the employer for appeals. The current SPD takes precedence over any other written, online, or verbal information you may have been given -- but is still subject to change. The employer's plan administrator is required by law to provide the SPD upon request. How to obtain and decode: https://www.hpalumni.org/SPD-decode

If you are having problems, see the legal contacts specified in the controlling legal document -- the Summary Plan Description -- which was not
included in the mailings.

The HPAlumni Assn has a copy of the SPD at
https://www.hpalumni.org/EDSRetirementPlanSPD-HP_Final_2012_HP_EDS_Retirement_Plan_SPD.pdf [Browser tab displays: "HA Normal" -- where "HA" means "Hewitt Associates."]

Aug 13 update: People who choose to take the lump-sum buyout report difficulties with transmitting the acceptance paperwork, the Spousal Consent form, confirmation paperwork, and payout amount. These issues -- and workarounds -- are being discussed on the "EDS Alumni" group on Facebook, operated by Melinda Lockhart: https://www.facebook.com/groups/370163043180343/

"Your final lump sum is expected to be higher than what was communicated in your initial estimate because interest rates have declined from March to July. The exact amount of your final lump sum will be posted below in early September 2020."

"Please beware [sic] that if your election forms are not returned or not complete by August 17, 2020, you will not receive the lump sum despite your electronic submission."

Deadline extended to July 22. People who have not elected to take the lump-sum buyout are being notified via email and website. One EDS Alumni LinkedIn Group member got this email: "Last chance: Deadline extended for lump-sum election opportunity. Election deadline extended to July 22: There’s still time to make an election." Another member reports that the NetBenefits website on Fidelity now says that the "...deadline for your decision on the lump sum benefit option has been extended to July 22nd, 2020." (July 15, 4pm and 11pm July 16.)

You can back out, but the final deadline is unclear at this time. From a thread on Facebook: (July 15, 6AM)

Ray: "If folks are unsure of what to do, select it now and you have until Oct 1 to back out. (you can back out, but not change to any of the 4 cash out options)."

Andy: "That's what I heard on one of the conference calls. But when I called Fidelity yesterday and spoke to a rep they told me I have until August 29 to cancel my election. Did you see the October 1 date in writing anywhere?"

Ray: "Andy, we heard it on the call too and my wife wrote it down. I spoke with my Fidelity guy yesterday and he said Oct 1. If anyone is unsure, call the HP Retirement Election at 1-866-602-0406."

To reduce HP's long-term pension costs, a lump-sum pension buyout offer has been made to some who have a legacy EDS pension plan and have not started taking monthly annuity payments. Deadline: July 15, 2020. Two members of the "EDS Alumni" group on Facebook report that the offer has also been made to some people who started collecting their EDS pension in October 2019 or later. (July 16.)

The account is growing at 5% per year if you left EDS after July 1, 1998. HP pension does not grow; this offer has not been made to legacy HP employees.

What if HP goes under? The plan is backed by a trust fund -- and is listed on the federal PBGC website as insured. (Full payout not guaranteed for larger pensions -- $5,812 per month maximum for someone who starts taking pension at 65. See this table:
https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee )

Fidelity is HP's financial advisor, not yours. The "Opportunity is here" booklet is a sales brochure. Member report: "The agent did say a risk is the fact that the fund is backed by HP" but didn't mention PBGC." [The Federal pension plan insurance program.]

From the non-profit Pension Rights Center: "Because of interest rate assumptions, loss of legal protections, and insurance of benefits, retirees will lose a significant part of the value of their pension by taking a lump sum. Often retirees think... they can do a better job investing it themselves in the stock market... rarely, if ever, can people replicate the security of a pension." Pension Rights Center

Yes: "The most advantageous time to take a lump sum is when interest rates are low. Given that they are VERY low right now, this is probably a good deal for those whose financial circumstances allow them to treat it as an investment asset..."

No: "Do not take the cash value, I had two pensions, [EDS] and Deloitte. The [EDS] had three times the cash value of the Deloitte pension and nine times the monthly payout. In four years I have drawn out what was equal to the cash value. I wish I could find other annuities that paid such a return."
Another member: "If your only source of funding is your pension, be very very risk adverse and that means fight shy of lump sums!!!!"

Read the fine print -- and the key legal document that is not included in the mailings -- as detailed below.

Key document not included in the mailing: "EDS Retirement Plan Summary Plan Description" (the "SPD") -- which covers many key details, including annual interest credit, QDRO, and surviving spouse provisions.

There are at least two vintages of the EDS plan. Download the SPD from Fidelity that specifically applies to you -- based on when you left EDS.

For example, the "Updated as of January 2012" copy of the SPD does not apply if you left EDS before July 1, 1998.
It says on page 1: "Benefits for participants who terminated from EDS before July 1, 1998 are subject to separate provisions not described in this SPD. For more information about these benefits, contact the HP Retirement Services Center."
https://www.hpalumni.org/EDSRetirementPlanSPD-HP_Final_2012_HP_EDS_Retirement_Plan_SPD.pdf

If you left EDS on or after July 1, 1998 -- and have not cashed out or started taking the pension -- the account has been and will continue to grow at 5% per year. "Personal Pension Accounts ...continue to receive Interest Credits, even after ceasing to earn Pay-Based Credits. Your PPA is credited with Interest Credits at a predetermined rate that’s adjusted annually each January 1 subject to a minimum rate of 5% per year. Interest Credits continue to accumulate until your PPA is paid to you or converted to an annuity at retirement." [Page 9 of the Summary Plan Description.

Members report that this offer has not been made to people who have a legacy HP pension plan.