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U.S. HP Pension Transition 2021

Advice and reference info from members. (Updated Jan 17, 2022.) Comments: info@hpalumni.org

Join the HPAA Finance Group. Deals with employee stock, 401(k), pensions, and other personal finance issues from an ex-HP/HPE perspective.

HP Inc. is the legal successor to the companies acquired by Hewlett-Packard before the company was split into HP Inc. and Hewlett Packard Enterprise. Responsibility for commitments to former employees of Compaq, EDS, etc. remain with HP Inc. -- regardless of whether the employee's last business unit ended up in HP or HPE. Includes employment verification and any retiree health, pension, etc. plans. HPE is responsible for commitments to former employees of companies acquired by HPE.

HP Inc, Hewlett Packard Enterprise, DXC, and Perspecta are completely separate companies. Details: HP Breakup

EDS pension. If you were employed in the U.S. by EDS or "EDS, an HP Company" before January 1, 2009 you may have an EDS pension that you have forgotten about. https://www.hpalumni.org/edsPension

If your pension is among those that were converted to an insured annuity provided by Prudential, Fidelity and Prudential indicate that you will receive two end-of-year statements -- from Fidelity, for the portion of the year they administered your pension, and from Prudential for the rest of the year. Must be mailed by Jan 31; were available online Jan 17.


If you have been receiving monthly payments from an HP, DEC, or EDS pension plan...

[The independent HP Alumni Association is operated by volunteers. This note -- at https://www.hpalumni.org/pension2021 -- is based on HPAA discussions with HP, DEC, and EDS retirees. Not officially endorsed or supported.]

Summary:

If you have been receiving monthly U.S. HP, DEC, or EDS pension payments that commenced on or before November 1, 2020 -- your pension is probably among the 41,000 converted from a company pension administered by Fidelity to an insured annuity provided by Prudential. The amount and terms of your benefits have not changed.

This change does not currently apply to you if you have not yet started receiving benefits or if your benefits started after November 1, 2020.

Also does not apply if there is a Qualified Domestic Relations Order on file at Fidelity, which is HP's primary pension administrator.

We've heard of some corner-case glitches in the conversion. For example, it appears that some retirees living outside the U.S. were erroneously converted to Prudential -- per report by a Canadian DEC>Compaq>HP retiree on the independent "DEC Connection" site.

Fidelity is HP's primary pension administrator. They have the historical records. Fidelity can verify the postal mailing address on your account and whether or not your pension was one of the 41,000 accounts that were converted. They can look up the pension option you selected. (At various times available pension options may have included lump sum, monthly payment, reduced monthly payment with survivor benefit, etc.)

HP notification in September:

"...we are transferring the administration and payment obligation of your pension benefit to Prudential through the purchase of a group annuity contract... The group annuity contract covers most eligible retirees, their surviving beneficiaries, and alternate payees receiving monthly pension payments from the Pension Plan that commenced on or before November 1, 2020.

"The amount and terms of your benefits will remain the same as your current benefits. This change will happen automatically effective November 1, 2021... Payments made to your bank via direct deposit will continue without interruption. You will receive a Welcome Kit from Prudential in mid/late October..."

The HP notice includes a detailed four-page FAQ, including "How will my pension benefit be protected."  HPAA copy of the notice: https://www.hpalumni.org/pension2021-notice.pdf

Action:

Three possible courses of action -- depending on your situation:

A. If you have a U.S. HP, DEC, or EDS pension plan, have been receiving monthly payments that commenced on or before November 1, 2020 -- and have *not* received a mailing from Prudential, log into your Fidelity account to determine if the pension change applies to you. Also check that Fidelity has your current postal address and, if applicable, current beneficiary information.
https://netbenefits.fidelity.com 
(If you can't log in, or you have questions, call Fidelity at 1-800-457-4015 from 7:30 a.m. to 11:00 p.m. Central Time, Monday through Friday.)

B. If you have received a mailing from Prudential (a 6" x 9" envelope with forms and a booklet), set up a Prudential account and fill in the enclosed form (or update the information online) with your current personal and emergency contact information. The mailing includes a Benefit Statement, "How is my annuity payment protected," and instructions on changing your beneficiary. HPAA copy:  https://www.hpalumni.org/pension2021-statement.pdf 

C. Everyone else: Log into your Fidelity account to check that Fidelity has your current contact information, terms of your plan, and current beneficiary information.
https://netbenefits.fidelity.com 
(If you can't log in, or you have questions, call Fidelity at 1-800-457-4015 from 7:30 a.m. to 11:00 p.m. Central Time, Monday through Friday.) 

Note: HP has made no statement as to if, or when, a similar change might apply to other participants.

Background:

- The non-profit Pension Rights Center discusses the records you should keep about your pension -- and the underlying insurance coverage differences between a pension and an annuity: https://www.hpalumni.org/pensionrights

- EDS folks who retired from GM report that their GM company pension plans were converted to Prudential annuities many years ago -- and that the original terms are being lived up to by Prudential.

- The HP, DEC, and EDS pension plans have very different terms. Members report that HP is living up to the specific terms of each plan.

- For any retirement or health plan, the details are given in the Summary Plan Description -- a legal document that takes precedence over any other written, online, or verbal information you may be given. The plan administrator is required to provide an SPD for your specific plan upon request -- generally by logging into your account. (Member advice on interpreting SPDs: https://www.hpalumni.org/SPDs )

- Acquired companies. EDS and DEC pensions are legal obligations of HP Inc. -- regardless of whether the employee's last business unit ended up in HP or HPE. DEC pensions have been paid since 1998 by Compaq and now by HP Inc. (Other acquired companies did not have pension plans and had not built up pension trust funds to pass to an acquiring company.)

Financial details:

HP SEC filing: "HP entered into an agreement with The Prudential Insurance Company of America to purchase an irrevocable group annuity contract and transfer approximately $5.2 billion of the HP Inc. U.S. Pension Plan obligations... Prudential will assume responsibility for pension benefits and annuity administration for approximately 41,000 retirees and beneficiaries. This transaction will not change the amount or timing of monthly retirement benefit payments."  HP July 31, 2021 10Q filing 
"Select retirees, such as certain individuals with Qualified Domestic Relations Orders, were excluded from this transfer of benefits." --HP spokesperson

Nov. 23, 2021 Wall Street Journal: "HP Inc. reported strong earnings and gave an upbeat outlook... including a one-time $1.78 billion legal settlement."

From HP's Nov. 23 SEC filing:

"...litigation judgment in connection with Oracle's discontinuation of software support for HP's Itanium-based line of mission-critical servers... shared equally between HP and HPE..."

"...transfer of certain pension obligations as part of an irrevocable group annuity contract with The Prudential Insurance Company of America."

https://investor.hp.com/financials/sec-filings/sec-filings-details/default.aspx?FilingId=15376597

--cg, HPAA operations
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