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Retirement and Post-Retirement Benefit Plans
 12 Months Ended
Oct. 31, 2019
Retirement Benefits [Abstract]  
Retirement and Post-Retirement Benefit Plans Retirement and Post-Retirement Benefit Plans
Defined Benefit Plans
The Company sponsors defined benefit pension plans worldwide, the most significant of which are the United Kingdom ("UK") and Germany. The pension plan in the UK is closed to new entrants, however, members continue to earn benefit accruals. This plan provides benefits based on final pay and years of service and generally requires contributions from members. The German pension program that is open to new hires consists of cash balance plans that provide employer credits as a percentage of pay, certain employee pay deferrals and employer matching contributions. There also are previously closed German pension programs that include cash balance and final average pay plans. These previously closed pension programs comprise the majority of the pension obligations in Germany. 
Prior to the Everett and Seattle Transactions, the Company went through an analysis to determine which defined benefit plans would be assigned to either the Company or to Everett or Seattle. The Company's plans either transferred in their entirety to Everett or Seattle, remained in their entirety with the Company, or were split, thus resulting in the transfer of plan assets and liabilities between existing and newly created plans. The Everett plans were legally established in the first and second quarter of fiscal 2017 and transferred and reported as discontinued operations in the second quarter of fiscal 2017. The Seattle plans were legally established in the third quarter of fiscal 2017 and transferred and reported as discontinued operations in the fourth quarter of fiscal 2017. In fiscal 2017, as a result of the Everett and Seattle Transactions, the Company transferred out plan assets of $8.3 billion, a benefit obligation of $8.1 billion and an accumulated other comprehensive loss of $1.9 billion.
Post-Retirement Benefit Plans
The Company sponsors retiree health and welfare benefit plans, the most significant of which is in the U.S. Generally, employees hired before August 2008 are eligible for employer credits under the Hewlett Packard Enterprise Retirement Medical Savings Account Plan (“RMSA”) upon attaining age 45. Employer credits to the RMSA available after September 2008 are provided in the form of matching credits on employee contributions made to a voluntary employee beneficiary association. Upon retirement, employees may use these employer credits for the reimbursement of certain eligible medical expenses.
As a result of the Everett and Seattle Transactions, any employees who were involuntarily terminated during fiscal 2017 were fully vested in their RMSA balances and are able to take a distribution out of their plan balances.
Defined Contribution Plans
The Company offers various defined contribution plans for U.S. and non-U.S. employees. The Company's defined contribution expense was approximately $181 million in fiscal 2019, $158 million in fiscal 2018 and $157 million in fiscal 2017. U.S. employees are automatically enrolled in the Hewlett Packard Enterprise Company 401(k) Plan ("HPE 401(k) Plan"), when they meet eligibility requirements, unless they decline participation. Effective January 1, 2018, the HPE 401(k) Plan's quarterly employer matching contributions are 100% of an employee's contributions, up to a maximum of 4% of eligible compensation. In calendar year 2017, the annual employer matching contributions in the HPE 401(k) Plan were 50% of an employee's contributions, up to a maximum of 6% of eligible compensation.
As a result of the Everett and Seattle Transactions, any plan participants who were involuntarily terminated during fiscal 2017 were fully vested in their Company matching contributions and earnings thereon, and are able to take a distribution out of their plan balances.
Pension Benefit Expense
The Company's net pension and post-retirement benefit costs that were directly attributable to the eligible employees, retirees and other former employees of Hewlett Packard Enterprise and recognized in the Consolidated Statements of Earnings for fiscal 2019, 2018 and 2017 are presented in the table below.
 
As of October 31,
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
Defined
Benefit Plans
 
Post-Retirement
Benefit Plans
 
In millions
Service cost
$
85

 
$
105

 
$
139

 
$
1

 
$
1

 
$
3

Interest cost(1)
215

 
225

 
213

 
7

 
7

 
6

Expected return on plan assets(1)
(511
)
 
(567
)
 
(548
)
 
(1
)
 
(1
)
 
(2
)
Amortization and deferrals(1):
 

 
 

 
 

 
 

 
 

 
 

Actuarial loss (gain)
235

 
211

 
264

 
(4
)
 
(3
)
 
(2
)
Prior service benefit
(15
)
 
(17
)
 
(17
)
 
—

 
—

 
—

Net periodic benefit cost
9


(43
)

51


3


4


5

Curtailment gain(1)
—

 
(1
)
 
(1
)
 
—

 
—

 
—

Settlement loss(1)
13

 
20

 
15

 
—

 
—

 
—

Special termination benefits(1)
2

 
6

 
5

 
—

 
—

 
—

Plan credit allocation(2)
—

 
—

 
(14
)
 
—

 
—

 
(1
)
Net benefit (credit) cost from continuing operations(3)
24

 
(18
)
 
56

 
3

 
4

 
4

Summary of net benefit (credit) cost:
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
24

 
(18
)
 
56

 
3

 
4

 
4

Discontinued operations
—

 
—

 
81

 
—

 
—

 
1

Total net benefit (credit) cost
$
24

 
$
(18
)
 
$
137

 
$
3

 
$
4

 
$
5


 
(1)
These non-service components of net periodic benefit cost were included in Non-service net periodic benefit credit in the Consolidated Statements of Earnings.
(2)
Plan credit allocation represents the net cost impact of employees of HPE covered under Everett or Seattle plans and employees of Everett or Seattle covered under HPE plans.
(3)
Net benefit cost from continuing operations for the Company's U.S. defined benefit plans, included in the table above, was not material for fiscal 2019, 2018 and 2017.
The weighted-average assumptions used to calculate the net benefit (credit) cost from continuing operations in the table above for fiscal 2019, 2018 and 2017 were as follows:
 
As of October 31,
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
Defined
Benefit Plans
 
Post-Retirement
Benefit Plans
Discount rate used to determine benefit obligation
2.1
%
 
2.0
%
 
2.0
%
 
4.9
%
 
4.5
%
 
4.2
%
Discount rate used to determine service cost
2.3
%
 
2.4
%
 
2.0
%
 
4.4
%
 
3.7
%
 
3.7
%
Discount rate used to determine interest cost
1.8
%
 
1.7
%
 
1.8
%
 
4.7
%
 
4.2
%
 
3.8
%
Expected increase in compensation levels
2.5
%
 
2.3
%
 
2.4
%
 
—

 
—

 
—

Expected long-term return on plan assets
4.3
%
 
4.4
%
 
4.4
%
 
2.6
%
 
2.6
%
 
3.1
%

To estimate the service and interest cost components of net periodic benefit cost for defined benefit plans that use the yield curve approach, which represent substantially all of the Company's defined benefit plans, the Company has elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows.
Funded Status
The funded status of the plans was as follows:
 
As of October 31,
 
2019
 
2018
 
2019
 
2018
 
Defined
Benefit Plans
 
Post-Retirement
Benefit Plans
 
In millions
Change in fair value of plan assets:
 

 
 

 
 

 
 

Fair value—beginning of year
$
12,167

 
$
12,610

 
$
52

 
$
50

Transfers
(5
)
 
6

 
—

 
—

Addition/deletion of plans(1)
(14
)
 
181

 
—

 
—

Actual return on plan assets
1,542

 
93

 
1

 
1

Employer contributions
166

 
158

 
5

 
6

Participant contributions
24

 
25

 
4

 
4

Benefits paid
(387
)
 
(450
)
 
(8
)
 
(9
)
Settlement
(67
)
 
(104
)
 
—

 
—

Currency impact
8

 
(352
)
 
—

 
—

Fair value—end of year(2)
$
13,434


$
12,167


$
54


$
52

Change in benefit obligation:
 

 
 

 
 

 
 

Projected benefit obligation—beginning of year
$
12,668

 
$
13,069

 
$
160

 
$
170

Transfers
(7
)
 
5

 
—

 
—

Addition/deletion of plans(1)
(12
)
 
181

 
—

 
—

Service cost
85

 
105

 
1

 
1

Interest cost
215

 
225

 
7

 
7

Participant contributions
24

 
25

 
4

 
4

Actuarial (gain) loss
1,710

 
(40
)
 
17

 
(9
)
Benefits paid
(387
)
 
(450
)
 
(8
)
 
(9
)
Plan amendments
12

 
22

 
—

 
—

Curtailment
—

 
(4
)
 
—

 
—

Settlement
(67
)
 
(104
)
 
—

 
—

Special termination benefits
2

 
6

 
—

 
—

Currency impact
(18
)
 
(372
)
 
(2
)
 
(4
)
Projected benefit obligation—end of year(2)
$
14,225

 
$
12,668

 
$
179

 
$
160

Funded status at end of year
$
(791
)
 
$
(501
)
 
$
(125
)
 
$
(108
)
Accumulated benefit obligation
$
13,995

 
$
12,446

 
$
—

 
$
—

 
(1)
Includes the addition/deletion of plans resulting from acquisitions. Fiscal 2018 amounts relate primarily to the addition of a Belgium plan.
(2)
As of October 31, 2019 and 2018, the Company's U.S. defined benefit plans had zero plan assets and a projected benefit obligation of $6 and $5 million, respectively.
The weighted-average assumptions used to calculate the projected benefit obligations were as follows:
 
As of October 31,
 
2019
 
2018
 
2019
 
2018
 
Defined Benefit Plans
 
Post-Retirement Benefit Plans
Discount rate
1.2
%
 
2.1
%
 
3.4
%
 
4.9
%
Expected increase in compensation levels
2.5
%
 
2.5
%
 
—

 
—


The net amounts recognized for defined benefit and post-retirement benefit plans in the Company's Consolidated Balance Sheets were as follows:
 
As of October 31,
 
2019
 
2018
 
2019
 
2018
 
Defined Benefit Plans
 
Post-Retirement Benefit Plans
 
In millions
Non-current assets
$
864

 
$
829

 
$
—

 
$
—

Current liabilities
(45
)
 
(40
)
 
(6
)
 
(6
)
Non-current liabilities
(1,610
)
 
(1,290
)
 
(119
)
 
(102
)
Funded status at end of year
$
(791
)

$
(501
)

$
(125
)

$
(108
)

The following table summarizes the pre-tax net actuarial loss and prior service benefit recognized in Accumulated other comprehensive loss for the defined benefit plans:
 
As of October 31, 2019
 
Defined
Benefit Plans
 
Post-Retirement
Benefit Plans
 
In millions
Net actuarial loss
$
3,300

 
$
9

Prior service benefit
(40
)
 
—

Total recognized in accumulated other comprehensive loss
$
3,260


$
9


The following table summarizes the net actuarial loss and prior service benefit for plans that are expected to be amortized from Accumulated other comprehensive loss and recognized as components of net periodic benefit cost (credit) during the next fiscal year.
 
As of October 31, 2019
 
Defined
Benefit Plans
 
Post-Retirement
Benefit Plans
 
In millions
Net actuarial loss (gain)
$
261

 
$
(1
)
Prior service benefit
(14
)
 
—

Total expected to be recognized in net periodic benefit cost (credit)
$
247


$
(1
)

Defined benefit plans with projected benefit obligations exceeding the fair value of plan assets were as follows:
 
As of October 31,
 
2019
 
2018
 
In millions
Aggregate fair value of plan assets
$
3,585

 
$
2,314

Aggregate projected benefit obligation
$
5,238

 
$
3,644


Defined benefit plans with accumulated benefit obligations exceeding the fair value of plan assets were as follows:
 
As of October 31,
 
2019
 
2018
 
In millions
Aggregate fair value of plan assets
$
3,574

 
$
2,291

Aggregate accumulated benefit obligation
$
5,088

 
$
3,495


Fair Value of Plan Assets
The Company pays the U.S. defined benefit plan obligations when they come due since these plans are unfunded. The table below sets forth the fair value of non-U.S. defined benefit plan assets by asset category within the fair value hierarchy as of October 31, 2019 and 2018.
 
As of
October 31, 2019
 
As of
October 31, 2018
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
In millions
Asset Category:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Equity securities
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

U.S. 
$
172

 
$
8

 
$
—

 
$
180

 
$
187

 
$
7

 
$
—

 
$
194

Non-U.S. 
836

 
222

 
—

 
1,058

 
344

 
225

 
—

 
569

Non-U.S. at NAV(1)
 
 
 
 
 
 
—

 
 
 
 
 
 
 
473

Debt securities
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Corporate
—

 
1,702

 
—

 
1,702

 
—

 
1,221

 
—

 
1,221

Government(2)
—

 
5,254

 
—

 
5,254

 
—

 
4,621

 
—

 
4,621

Government at NAV(3)
 
 
 
 
 
 
897

 
 
 
 
 
 
 
692

Alternative investments
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Private Equity
—

 
2

 
42

 
44

 
—

 
2

 
40

 
42

Hybrids(4)
—

 
1,343

 
472

 
1,815

 
—

 
1,259

 
132

 
1,391

Hybrids at NAV(5)


 


 


 
491

 


 


 


 
506

Common Contractual Funds at NAV(6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities at NAV


 


 


 
1,398

 


 


 


 
1,929

Fixed Income at NAV


 


 


 
724

 


 


 


 
639

Emerging Markets at NAV


 


 


 
318

 


 


 


 
275

Alternative investments at NAV


 


 


 
379

 


 


 


 
378

Real Estate Funds
8

 
203

 
39

 
250

 
6

 
186

 
37

 
229

Insurance Group Annuity Contracts
—

 
54

 
37

 
91

 
—

 
59

 
38

 
97

Cash and Cash Equivalents
252

 
310

 
—

 
562

 
167

 
256

 
—

 
423

Other(7)
30

 
302

 
1

 
333

 
39

 
250

 
1

 
290

Obligation to return cash received from repurchase agreements(2)
—

 
(2,062
)
 
—

 
(2,062
)
 
—

 
(1,802
)
 
—

 
(1,802
)
Total
$
1,298

 
$
7,338

 
$
591

 
$
13,434

 
$
743

 
$
6,284

 
$
248

 
$
12,167

 
(1)
In fiscal 2018, included various worldwide equity index funds with the objective to provide returns that are consistent with the FTSE All World indexes. While the funds were not publicly traded, the custodians stroke a net asset value at least monthly. There were no redemption restrictions or future commitments on these investments. The funds were liquidated during fiscal year 2019.
(2)
Repurchase agreements, primarily in the UK, represent the plans' short-term borrowing to hedge against interest rate and inflation risks. Investments in approximately $4 billion of government bonds collateralize this short-term borrowing at October 31, 2019 and 2018. The plans have an obligation to return the cash after the term of the agreements. Due to the short-term nature of the agreements, the outstanding balance of the obligation approximates fair value.
(3)
Includes a fund that invests in various government bonds issued by worldwide governments, interest rate swaps, and cash, to match or slightly outperform the benchmark of the future liabilities of the funds. While the funds are not publicly traded, the custodians strike a net asset value daily. There are no redemption restrictions or future commitments on these investments.
(4)
Includes funds, primarily in the UK, that invest in both private and public equities, as well as emerging markets across all sectors. The funds also hold fixed income and derivative instruments to hedge interest rate and inflation risk. In addition, the funds include units in transferable securities, collective investment schemes, money market funds, asset-backed income, private debt, cash, and deposits.
(5)
Includes pooled funds that invest in asset-backed securities awaiting investment into non-liquid secured income opportunities. Units are available for subscription on the first day of each calendar month at net asset value. There are no redemption restrictions or future commitments on these investments.
(6)
HPE Invest Common Contractual Funds (CCFs) are investment arrangements in which institutional investors pool their assets.  Units may be acquired in four different sub-funds focused on equities, fixed income, alternative investments, and emerging markets. Each sub-fund is invested in accordance with the fund’s investment objective and units are issued in relation to each sub-fund. While the sub-funds are not publicly traded, the custodian strikes a net asset value either once or twice a month, depending on the sub-fund. There are no redemption restrictions or future commitments on these investments.
(7)
Includes international insured contracts, derivative instruments, mortgage backed securities, and unsettled transactions.
Post-retirement benefit plan assets of $54 million and $52 million as of October 31, 2019 and 2018, respectively, were invested in publicly traded registered investment entities and were classified within Level 1 of the fair value hierarchy.
Changes in fair value measurements of Level 3 investments for the non-U.S. defined benefit plans were as follows:
 
Fiscal year ended October 31, 2019
 
Alternative
Investments
 
 
 
 
 
 
 
 
 
Private
Equity
Hybrids
 
Real
Estate
Funds
 
Insurance
Group
Annuities
 
Other
 
Total
 
In millions
Balance at beginning of year
$
40

$
132

 
$
37

 
$
38

 
$
1

 
$
248

Actual return on plan assets:
 



 
 

 
 

 
 
 
 
Relating to assets held at the reporting date
1

69

 
2

 
—

 
—

 
72

Relating to assets sold during the period
—

—

 
—

 
—

 
—

 
—

Purchases, sales, and settlements
1

271

 
—

 
(1
)
 
—

 
271

Transfers in and/or out of Level 3
—

—

 
—

 
—

 
—

 
—

Balance at end of year
$
42

$
472

 
$
39

 
$
37

 
$
1

 
$
591


 
Fiscal year ended October 31, 2018
 
Alternative
Investments
 
 
 
 
 
 
 
 
 
Private
Equity
Hybrids
 
Real
Estate
Funds
 
Insurance
Group
Annuities
 
Other
 
Total
 
In millions
Balance at beginning of year
$
33

$
—

 
$
57

 
$
52

 
$
1

 
$
143

Actual return on plan assets:
 

 
 
 

 
 

 
 

 
 

Relating to assets held at the reporting date
6

2

 
—

 
(7
)
 
—

 
1

Relating to assets sold during the period
5

—

 
—

 
—

 
—

 
5

Purchases, sales, and settlements
(4
)
130

 
(20
)
 
(7
)
 
—

 
99

Transfers in and/or out of Level 3
—

—

 
—

 
—

 
—

 
—

Balance at end of year
$
40

$
132

 
$
37

 
$
38

 
$
1

 
$
248


The following is a description of the valuation methodologies used to measure plan assets at fair value.
Investments in publicly traded equity securities are valued using the closing price on the measurement date as reported on the stock exchange on which the individual securities are traded. For corporate, government backed debt securities, and some other investments, fair value is based on observable inputs of comparable market transactions. The valuation of certain real estate funds, insurance group annuity contracts and alternative investments, such as limited partnerships and joint ventures, may require significant management judgment. The valuation is generally based on fair value as reported by the asset manager and adjusted for cash flows, if necessary. In making such an assessment, a variety of factors are reviewed by management, including, but are not limited to, the timeliness of fair value as reported by the asset manager and changes in general economic and market conditions subsequent to the last fair value reported by the asset manager. Cash and cash equivalents includes money market funds, which
are valued based on cost, which approximates fair value. Other than those assets that have quoted prices from an active market, investments are generally classified in Level 2 or Level 3 of the fair value hierarchy based on the lowest level input that is significant to the fair value measure in its entirety. Investments measured using net asset value as a practical expedient are not categorized within the fair value hierarchy.
Plan Asset Allocations
The weighted-average target and actual asset allocations across the benefit plans at the respective measurement dates for the non-U.S. defined benefit plans were as follows:
 
Defined
Benefit Plans
 
 
 
Plan Assets
Asset Category
2019
Target
Allocation
 
2019
 
2018
Public equity securities
 

 
22.0
%
 
28.7
%
Private/hybrid equity securities
 

 
20.3
%
 
18.7
%
Real estate and other
 

 
4.3
%
 
4.2
%
Equity-related investments
49.8
%
 
46.6
%
 
51.6
%
Debt securities
48.9
%
 
49.2
%
 
44.9
%
Cash and cash equivalents
1.3
%
 
4.2
%
 
3.5
%
Total
100.0
%
 
100.0
%
 
100.0
%

For the Company's post-retirement benefit plans, 100% of the plan assets are invested in cash and cash equivalents.
Investment Policy
The Company's investment strategy is to seek a competitive rate of return relative to an appropriate level of risk depending on the funded status of each plan and the timing of expected benefit payments. The majority of the plans' investment managers employ active investment management strategies with the goal of outperforming the broad markets in which they invest. Risk management practices include diversification across asset classes and investment styles and periodic rebalancing toward asset allocation targets. A number of the plans' investment managers are authorized to utilize derivatives for investment or liability exposures, and the Company may utilize derivatives to effect asset allocation changes or to hedge certain investment or liability exposures.
Asset allocation decisions are typically made by an independent board of trustees for the specific plan. Investment objectives are designed to generate returns that will enable the plan to meet its future obligations. In some countries, local regulations may restrict asset allocations, typically leading to a higher percentage of investment in fixed income securities than would otherwise be deployed. The Company reviews the investment strategy and provides a recommended list of investment managers for each country plan, with final decisions on asset allocation and investment managers made by the board of trustees or investment committees for the specific plan.
Basis for Expected Long-Term Rate of Return on Plan Assets
The expected long-term rate of return on plan assets reflects the expected returns for each major asset class in which the plan invests and the weight of each asset class in the target mix. Expected asset returns reflect the current yield on government bonds, risk premiums for each asset class and expected real returns, which considers each country's specific inflation outlook. Because the Company's investment policy is to employ primarily active investment managers who seek to outperform the broader market, the expected returns are adjusted to reflect the expected additional returns, net of fees.
Employer Contributions and Funding Policy
During fiscal 2019, the Company contributed approximately $166 million to its non-U.S. pension plans and paid $5 million to cover benefit claims under the Company's post-retirement benefit plans.
During fiscal 2020, the Company expects to contribute approximately $182 million to its non-U.S. pension plans. In addition, the Company expects to contribute approximately $2 million to cover benefit payments to U.S. non-qualified plan participants. The Company expects to pay approximately $6 million to cover benefit claims for its post-retirement benefit plans. 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.
Estimated Future Benefits Payments
As of October 31, 2019, estimated future benefits payments for the Company's retirement plans were as follows:
Fiscal year
Defined
Benefit Plans
 
Post-Retirement
Benefit Plans
 
In millions
2020
$
471

 
$
10

2021
445

 
10

2022
467

 
10

2023
486

 
10

2024
503

 
11

Next five fiscal years to October 31, 2029
2,740

 
58