Retirement and Post-Retirement Benefit Plans

Pension Benefit Expense

The Company's total net pension benefit cost recognized in the Condensed Consolidated Statement of Earnings was $65 million and $29 million for the three months ended January 31, 2017 and 2016, respectively. The amount for the first quarter of fiscal 2017 includes pre-tax expense of $33 million related to the Everett Transaction, which has been recorded within Separation costs in the Condensed Consolidated Statements of Earnings and a pre-tax benefit of $6 million resulting from remeasurements of certain Hewlett Packard Enterprise pension plans in association with the Everett Transaction, which has been recorded within Defined benefit plan settlement charges and remeasurement benefit in the Condensed Consolidated Statements of Earnings.



	Three months ended January 31,
	Non-U.S. Defined Benefit Plans						Post-Retirement Benefit Plans
	2017			2016			2017			2016

Service cost	$	55		$	64		$	1		$	1
Interest cost	91			141			1			2
Expected return on plan assets	(181		)	(254		)	—			(1		)
Amortization and deferrals:
Actuarial loss (gain)	104			79			(1		)	(1		)
Prior service benefit	(6		)	(6		)	—			—
Net periodic benefit cost	63			24			1			1
Settlement loss	—			4			—			—
Special termination benefits	1			—			—			—
Net benefit cost	$	64		$	28		$	1		$	1

Employer Contributions and Funding Policy

The Company's policy is to fund its pension plans so that it makes at least the minimum contribution required by local government, funding and taxing authorities.

HPE previously disclosed in its Consolidated Financial Statements for the fiscal year ended October 31, 2016 that it expected to contribute approximately $348 million in fiscal 2017 to its non-U.S. pension plans, approximately $2 million to cover benefit payments to its U.S. non-qualified plan participants and approximately $3 million to cover benefit claims for the Company's post-retirement benefit plans. During the remainder of fiscal 2017, HPE now anticipates making additional contributions of approximately $290 million to its non-U.S. pension plans, approximately $2 million to its U.S. non-qualified plan participants and expects to pay approximately $2 million to cover benefit claims under the Company's post-retirement benefit plans.

In connection with the Everett Transaction, there will be a transfer of pension liabilities for certain pension plans to Everett SpinCo, Inc. As of January 31, 2017, the transfer is targeted to be completed at or near April 1, 2017. The approximate net pension liability to be transferred is pursuant to the transaction agreements, wherein the Company is obligated to fund the transferred net pension liability in excess of $570 million. The Company initially estimated the total funding amount to be in the range of $2.0 billion to $3.0 billion. The Company currently estimates the total funding amount to be approximately $1.9 billion, which equals the payment made by the Company in the first quarter of fiscal 2017. However, the exact amount of the funding will not be known until the transaction completion date.

During the three months ended January 31, 2017, the Company contributed $1,943 million to its non-U.S. pension plans, which includes the $1,885 million of funding payment associated with the Everett Transaction, and paid $1 million to cover benefit claims under the Company's post-retirement benefit plans.

The Company's pension and other post-retirement benefit costs and obligations depend on various assumptions. Differences between expected and actual returns on investments and changes in discount rates and other actuarial assumptions are reflected as unrecognized gains or losses, and such gains or losses are amortized to earnings in future periods. A deterioration in the funded status of a plan could result in a need for additional company contributions or an increase in net pension and post-retirement benefit costs in future periods. Actuarial gains or losses are determined at the measurement date and amortized over the remaining service life for active plans or the life expectancy of plan participants for closed plans. During the first quarter of fiscal 2017, the Company changed its method used to estimate the service and interest cost components of net periodic benefit cost for defined benefit plans to a full yield curve approach with costs calculated at individual annual spot rates.