HP ships off $5.2 billion in pension liabilities
HP Inc., Palo Alto, Calif., has entered into an agreement to purchase a group annuity contract from Prudential Insurance Co. of America to transfer about $5.2 billion in U.S. pension plan liabilities.
The transaction, which removes nearly half of the computer hardware company’s U.S. pension plan assets from its balance sheet, is scheduled to close in the company’s fiscal year fourth quarter ending Oct. 31.
When completed, the group annuity purchase will transfer the benefit-paying responsibility for about 41,000 retirees and beneficiaries in the HP Inc. Pension Plan, the company disclosed in its 10-Q filing with the SEC on Sept. 3.
According to the plan’s most recent Form 5500 filing, there were a total of 41,074 retired or separating participants receiving benefits as of Oct. 31. Also as of that date, the HP Inc. Pension Plan had $10.9 billion in assets as of Oct. 31, 2020, according to that Form 5500 filing.
It is the second major pension risk transfer transaction for HP in as many years.
In the quarter ended Oct. 31 2020, the company paid about $2 billion to former employees in its primary U.S. pension plan who elected to receive lump sums the company offered. About 12,000 former employees vested in the HP Inc. Pension Plan who had yet to retire at that time elected the lump-sum option during the window that began June 5 and closed July 3.
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