Pension 2021. HP/HPE Alumni

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U.S. HP Pension Transition 2021

Advice and reference info from members. (Oct 4, 2023) Question? Email: info@hpalumni.org

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

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

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 on Nov 1, 2015. In general, responsibility for commitments to former U.S. employees of Compaq, DEC, EDS, etc. remain with HP Inc. -- regardless of whether their last business unit ended up in HP or HPE. (Canada and UK: HPE. Other countries vary.
Country-by-country details)
HP Inc, Hewlett Packard Enterprise, DXC, and Perspecta are completely separate companies.

Empower: In Sep 2021, 41,000 HP, DEC, and EDS pensions were converted from a company pension administered by Fidelity to an insured annuity provided by Prudential. The amount and terms of benefits did not change.
In Apr 2022, Prudential sold their "full-service retirement business" to Empower Annuity Insurance Company of America -- "the second-largest retirement provider in the U.S."
https://ssologin.prudential.com/app/retirementrba/Login.fcc?
Here's the letter sent by Empower to annuitants:
https://docs.empower-retirement.com/Empower/PRU/Empower-Transition-Disclosure-Participant.pdf (HPAA copy)

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: https://www.hpalumni.org/edsPension

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

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 in September 2021 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.

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.)

Specifically, ""Our pension and other post-retirement benefit costs and obligations depend on various assumptions. Our major assumptions relate primarily to discount rates, mortality rates, expected increases in compensation levels and the expected long-term return on plan assets....In August 2021, 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 Pension Plan obligations. Under the agreement, Prudential assumed responsibility for pension benefits and annuity administration for approximately 41,000 retirees and beneficiaries, with no changes to the amount or timing of monthly retirement benefit payments. This transaction... was funded by the assets of the Pension Plan... with no cash flow impact." 2021 HPInc Annual Report

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 did *not* receive a mailing from Prudential in 2021, log into your Fidelity account to determine if the pension change applied 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 1-800-457-4015 (If no password, keep hitting #.) (Outside US 1-508-787-9902 collect.) Members advise that local Fidelity offices are focused on sales.

B. If you have received a mailing from Prudential, 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 1-800-457-4015 (If no password, keep hitting #.) (Outside US 1-508-787-9902 collect.) Members advise that local Fidelity offices are focused on sales.

What you need to know about pensions. 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.pensionrights.org/resources/commonly-asked-questions/

Glitches. We've heard of some corner-case issues in the conversion:

- If you have ever had an account at Prudential -- such as a life insurance account or an account that has been closed -- annuity payments work correctly, but you may need to contact Prudential support to fully set up your pension account under a different login.

- Some retirees living outside the U.S. were erroneously converted to Prudential.

HPAA's directory of financial benefits contacts for former HP employees: https://www.hpalumni.org/contacts-HPI-financial

HP notification in September 2021:

"...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

If your pension was among those that were converted to an insured annuity provided by Prudential, Fidelity and Prudential indicated that you received two end-of-year statements for 2021: one 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, 2022; were available online Jan 17.

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

Background:

- 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.

- 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

- Acquired companies. EDS and DEC pensions are legal obligations of HP Inc. -- regardless of whether their last business unit ended up in HP or HPE. (Canada and UK: HPE. Other countries vary.
Country-by-country details)
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

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